In the previous module, we discussed processing funds. If you choose to go with a third-party merchant account provider that is located in another state and your customer is in the same state as your merchant account provider, the customer will also need to pay taxes at the time of purchase. If you are shipping a product to a state where your business (or your merchant account provider) does not have a location, you do not need to collect sales tax.

Always check your local tax laws, because the tax situation for online sales may change at any time. Many states and brick-and-mortar businesses are pushing for an Internet sales tax. Some states say that they are being deprived of millions of dollars of tax revenue, while traditional retailers say that e-commerce ventures have an unfair sales tax advantage. Click the image to the right to consider this in an example news story from South Carolina in January 2010.