US sales tax on software is not one question, it is fifty
There is no national sales tax in the United States. Each state writes its own rules, decides for itself whether software delivered over the internet is taxable at all, and sets the point at which selling into it creates a duty for a company that has never been there. This page describes the shape of that, then what changes when the seller on the transaction is us rather than you.
Why the US is the hard market to get right
- There is no federal sales tax
- The tax is administered by states, so there is no single rate, no single registration, no single return and no single authority to ask. What you learn about one state tells you very little about the next.
- States disagree about SaaS itself
- Some treat software delivered as a service as taxable, some treat it as a non-taxable service, and some draw the line by how it is delivered or who is buying it. The identical product can be taxable in one state and not in the one next to it.
- Nexus stopped meaning presence
- Economic nexus means a volume of sales into a state can create a collection duty with no office, employee or server there. Each state sets its own measure, which is how a purely remote business acquires obligations simply by growing.
- Some rates are set below the state
- A number of states let local jurisdictions levy their own sales tax, and a few let them administer it separately. The correct rate can then depend on an address rather than on a state.
- What is bundled changes the answer
- How a product is delivered, and whether support, professional services, hardware or downloadable software travel with it, can change how a state classifies the sale. Two products at the same price are not guaranteed the same treatment.
- Registering is where the work starts
- Each registration brings its own returns on its own schedule, due whether or not there were sales in the period. The administrative volume, rather than the tax itself, is what makes this expensive to run in-house.
What changes when we are the seller of record
- 01
The sale is made by us
The customer's contract is with Fungies. The receipt comes from us and their statement shows the descriptor set on the account, so your company is not the seller on that transaction.
- 02
The state treatment is our determination
Whether a sale is taxable in the buyer's state, at what rate, and what supports that conclusion is decided by the registered seller. That is us, so it is our determination to make and our record to keep.
- 03
We collect, remit and file
The tax collected goes to the state it is owed to, on that state's schedule, under our registration. None of it passes through your accounts and no return carries your name.
- 04
You are left with a simpler question
Net revenue lands in your payout account, and your accountant is looking at income or corporation tax on that revenue rather than at a map of state obligations.
Four things that catch software companies out
The exposure is backdated, not forward-looking
An obligation that started when you crossed a state's measure did not wait for you to notice it. Finding out later means back-filing the periods in between, with interest and penalties, and reconstructing what was owed on revenue you have already spent.
Selling to businesses is a different problem from selling to consumers
Some states treat a business buyer differently, and an exemption generally has to be evidenced rather than assumed. As the seller of record, that determination and the paperwork behind it sit with us.
A live subscription stays exposed for as long as it runs
Rules change, and they change underneath subscriptions signed years earlier. Tax here is recalculated on each charge rather than fixed at signup, which is what stops an old subscription from quietly charging under retired rules.
This does not cover your whole US footprint
If your company has US employees, an office, registrations it already holds, or revenue through other channels, those facts create obligations of their own and our being the seller on our transactions does not touch them. That is the point to talk to an accountant who knows your situation rather than to trust a marketing page.
What sellers say once they have switched
★★★★★ 4.8/5 from 10 reviews on G2 →
Vadim Finayev “We work with quite a few merchants of record, but none comes close to the support and speed of implementation of Fungies. If you want a payment partner that actually gives you the feeling they want to work with you — rather than leaving you on read for three days or randomly restricting your account — you are in the right place.”
David Elliott “I researched the options and Fungies was the best fit for functionality and customisation within a store builder you can connect to your own domain. Taking a small percentage of sales, instead of charging a subscription for every environment and plugin, is refreshing.”
Elnura Abdimanap Kyzy “The platform is user-friendly, integrates easily with APIs and webhooks, and simplifies managing digital products and subscriptions. We were up and running quickly and support has been responsive throughout. Fungies is clearly tailored to the needs of SaaS businesses.”
Francisco Magnone Rienzi “Fungies has been a great partner — fast setup, competitive pricing, and real humans providing quick answers. They are constantly rolling out new features, and I am excited to see what is next.”
US sales tax questions
Who is liable, where, and what moves when we are the seller.
Sell into the US without running a fifty-state project
Start selling and let the state registrations, the returns and the correspondence sit with the seller of record. Keep your accountant for your own numbers.