Kagi Frequently Asked Question

Question:

What about taxes?

Answer:

Basically Kagi is a mail order company and subject to the same tax rules. Fortunately, we primarily sell bits, not molecules. We do not ship anything. In California, bits are not taxable. If you ship the bits on a floppy, the bits become molecules and thus become taxable. We sell the right to use software or services that a payer already has. If we delivered software, we would be selling molecules and we would need to deduct California state sales tax on each sale within California.

Kagi does need to deduct sales taxes under one specific situation. If the payer is in California and they have purchased molecules from Kagi, the California state sales tax would need to be deducted from that sale.

Of course, each software author must declare their income to the appropriate tax authorities and Kagi must file 1099-MISC tax documents with the USA tax authorities stating how much royalty income has been transferred to each software author. Taxes need to get paid, they just don't need to be deducted by Kagi.

Modification Date: Tuesday, February 27, 1996