If you plan to make sales that are subject to sales tax in a state, you must register to collect the tax by applying for a sales permit for each separate place of business you maintain in the state. We're using the term "sales permit" here in a generic sense to refer to the document a seller must secure before making taxable sales in a state. Depending on the state, such document may be referred to as a "permit," "license," or "certificate of registration."

In some states, it's a criminal offense to operate without the requisite permit, so you should secure a permit before you make your first sale. Once you receive the permit, you must display it at your place of business.

Although the cost of sales permits is generally nominal, you may be required to furnish a deposit or a surety bond as part of the registration process. Many states require new sellers to post such deposits or bonds to secure the timely payment of their taxes.

Use tax registration. In recent years, most states have stepped up their attempts to require out-of-state retailers such as mail-order sellers and telemarketers to register for the purpose of collecting their use taxes. What you need to know is that a state can't compel you to register or to collect its use tax unless you have established a physical presence within the state.

This requirement is related to the fact that a state's taxing power extends only as far as it borders. So, before a state can subject you to any of its tax obligations, you must have done something within the state to justify the state's exercising its powers over you. And, merely making sales to residents of the state is not alone sufficient to establish the requisite connection (termed "nexus" by tax people). Rather, the U.S. Supreme Court has ruled that nexus will not exist unless you engage in some minimal level of physical activity within the state.

What's sufficient to create this requisite presence? Here are some possibilities:

• You maintain an office, store, or other business facility in the state.
• You or your employees enter the state to take orders, perform services, or otherwise do business on your behalf.
• Real property that you own or lease is located in the state.
• Personal property that you own or lease is stored or used in the state on a more than occasional basis.

We do know that if you truly limit your contacts with a state to communicating with customers in the state by mail or common carriers, you won't be obligated to collect the state's use tax. Presumably, a similar standard will apply with respect to telemarketers and to retailers who sell over computer networks and the Internet (so-called "cybersellers").