My state says I need to charge business tax??

[tekwrite]

I have been freelancing for almost ten years. All of my clients are out of state and I provide writing services solely by the Internet. I file as a sole proprietorship on my 1040 and pay quarterly estimated taxes to the IRS.

I cannot imagine charging clients a sales tax!

[prestonhunter]

re: "My state says I need to charge business tax"

This seems to be a very simplistic, reductive statement.

I'm sure you can find accountants and tax professionals who can help you with this.

Tax filing is not "one thing." There are multiple ways to comply with tax laws.

[kkears]

Did you get some sort of official letter notifying you of a change? And did the notification refer to this as "sales tax" or "business tax" (you mention both)? Are you sure this isn't referring to the business taxes YOU pay as a sole proprietor?

[kochubei_valeria]

Hi Ken, 

While we aren't able to provide tax advice here and you may need to talk to a tax professional about your specific situation, I encourage you to check out this help center article for general information. 

[tlsanders]

Business tax and sales tax are different. 

You should be able to find all of the information you need here: https://www.tn.gov/content/dam/tn/revenue/documents/tax_manuals/august-2022/Business-Tax.pdf

[25005175]

All of my clients are out of state and I provide writing services solely by the Internet... I cannot imagine charging clients a sales tax!

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In the US, states generally impose sales tax on all finished goods purchased via the Internet, depending on the billing address and the supplier's address. States generally impose sales tax on a variety of B2C and B2B services as well. It varies by law on whether the sales tax must be collected by the seller for conveyance to the state or paid directly by the buyer. On any online FG purchase, if sales tax was not collected by the seller, then it must be paid by the buyer when filing their quarterly estimated taxes or year-end tax returns.

[williamtcooper]

Ken,

Go to Reports and then Transaction History. Upwork has been pulling out some type of State Sales Tax for this purpose or at least on my funds. As Valeria stated, ask your Tax accountant because the laws vary from state to state. Have a great day!

[patchworksvideo]

Sales tax rules are incredibly complicated. As many pointed out, sales taxes and income taxes are very, very different things. "Business" taxes are yet another thing! This post uses all three terms almost interchangeably.

You really should talk to an accountant or tax advisor. And keep in mind that many who may know income/business-income taxes up and down, might not be as knowledgeable about sales taxes.

At the very least, they can give you some insight about what the state said, and why the state said it, as we here have no context to go by.