Of the many things developers must be careful of, you would least expect sales tax to be one of them.  One of the first things I researched when starting my company was sales tax.  Each state is different.  Let me repeat myself, each state is different!  However, the following is my interpretation of how the Arkansas Sales Tax applies to developers in the state of Arkansas.

According to the document I just received in the mail it says, “if your business makes a retail sale of property and delivers the tangible property through common carrier, your truck, mail, or by any other shipping or delivery method to your customer”.  Later it says, “The terms ‘receive’ and ‘receipt’ mean taking possession of tangible personal property or making first use of services.”

My interpretation (which should not be authoritative in any way) takes the following away: if you write a program and deliver the source code via a CD or other media through the mail, you must charge sales tax.  However, if you deliver it through e-mail, or other network method, no sales tax should be charged.  So, if you deliver your source code first through the Internet, then send a backup copy via snail mail or carrier, you should be alright.

If you’re selling licensed software, send the key or installable software through the Internet first.  Because if you send anything through the mail or carrier first, more than likely you should charge sales tax.

I’d be curious to know how other states deal with sales tax, so please post back your comments.