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iPhone App and Sales Tax

Yes, I know, you are not a tax lawyer or an accountant (well, maybe you are), but does anybody know how sales tax works with iPhone App store?

Does Apple collect and pay it? Or would I be required to take care of it?
Jason Moore Send private email
Tuesday, May 26, 2009
 
 
I'm pretty sure that Apple acts as the reseller and payment processor, and therefore handles all of those details for you.
Jason Send private email
Tuesday, May 26, 2009
 
 
Rob Ringham on this group sells an iPhone app.  Maybe he can give us a definate answer.  But I think that the Apple store does it all for you.
SteveM Send private email
Tuesday, May 26, 2009
 
 
My son does an iPhone app (actually, 2 of them) and I assume Apple handles them (since they don't reduce his take).

BTW, 70 units in 30 days on the first app, only 1 unit on the second (showed up on the app store yesterday) is pretty cool.  Granted, it's only $5.00, but it's better than a poke in the eye with a sharp stick.
schlabnotnik Send private email
Tuesday, May 26, 2009
 
 
The App Store charges sales tax automatically.  I would presume they do this for all states due to their presence with bricks & mortar Apple stores.  It does bring up some interesting questions though.  How do you as the developer prove to your state's tax agency that Apple collected sales tax for you?  When you submit your income tax forms and list software sales on it, what happens when the state auditors looks for your sales tax payments and doesn't find them?  I would have to assume that this is solved some how.  Maybe Apple sends you a quartly record of these payments.  And does your affiliation with Apple put any out-of-state sales tax obligations on you even for your non-iPhone apps?  I haven't developed an iPhone app so all of this is just random thoughts and speculation.
Dave76 Send private email
Tuesday, May 26, 2009
 
 
>> How do you as the developer prove to your state's tax agency
>> that Apple collected sales tax for you?

Does EA or Activision have to prove to the state taxing authority that Best Buy or Wal-Mart is collecting sales tax for them?  How about APress when Borders sells a copy of Joel's book?

Honestly, I don't know the details of how this works, but I have to assume the responsibility for sales tax falls on the retailer.
Jason Send private email
Tuesday, May 26, 2009
 
 
For a country founded on a tax revolt and which became a subsequent tax haven for a century or so, the USA sure has a big mess when it comes to collecting/paying taxes.
Bruce Chapman Send private email
Tuesday, May 26, 2009
 
 
>> Does EA or Activision have to prove to the state taxing authority that Best Buy or Wal-Mart is collecting sales tax for them?  How about APress when Borders sells a copy of Joel's book?

Yes.  The retailer must provide proof to the publisher that they  intend to resale the product and collect sales tax on those sales.  Otherwise, EA, Activision, and APress would be required to collect sales tax from Best Buy, Wal-Mart, and Borders. 

As an example, here's the NJ form that the retailer fills out and gives to the publisher to provide this proof:
http://www.state.nj.us/treasury/taxation/pdf/other_forms/sales/st3.pdf

So my question stands.  When the state auditors show up, how do you prove that Apple collected the tax for you?  Does Apple send the appropriate certificate to you?
Dave76 Send private email
Tuesday, May 26, 2009
 
 
As an addenda, I note that when I buy a $4.99 item in the app store, my CC get's hit for $5.40 (state sales tax is 8.25%).

So, they're collecting it, it's probably pretty safe to assume they're disbursing to the proper agency.
schlabnotnik Send private email
Wednesday, May 27, 2009
 
 
It's a straightforward retailing agreement. Apple is responsible for whatever sales tax might need to be collected. I've never needed to provide any proof of Apple's reseller status to a tax authority, but I imagine it wouldn't be hard to get the appropriate documentation if you needed it.

It can be a bit trickier for folks outside the US, but there are documents on the iPhone developer site that cover the essential details.

And when in doubt, ask an accountant.
Mark Bessey Send private email
Thursday, May 28, 2009
 
 
Apple is the retailer, you, the developer simply get a commission on Apple's sales.  Therefore, Apple is the only party responsible for paying sales tax.  Apple doesn't buy your software either, so in places with VAT, you don't have to collect tax from Apple.  Essentially, you give the rights to your iPhone app over to Apple, in return for a commission on Apple's revenue from that app.  In most places, you will have to pay tax on your commission income, but whether or not Apple collected and submitted the correct amount of sales tax is not your problem.
RGlasel Send private email
Thursday, May 28, 2009
 
 

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