It may not seem fair to have to pay tax to a foreign government, but in our global, digital economy, international laws make it a legal obligation.

Double taxation treaties (“DTT’s”) are agreements between countries, used to protect the government’s taxing rights and thwart tax evasion. Whilst most DTT’s will protect a foreign business from a corporation/income tax perspective, consumption taxes like VAT and Sales Tax are almost always payable (by sellers), where the customer is based.

The tax office with jurisdiction over your buyer has the legal right to impose taxes on your business. Of course – as with all taxes – you can choose to evade the tax, but this is probably not a good idea. Firstly, the tax offices are developing sophisticated methods to identify tax evaders, and more importantly, if you get caught – the consequences can destroy your business.

Remember, notorious gangster Al Capone avoided law enforcement for decades until he was finally nabbed for … you guessed it… tax evasion!

Here are Capone’s 6 reasons why it’s a great idea to evade tax payable to the US government:

1. You want your store shut down

There is a precedent in international law for governments to demand your platform or marketplace to shut down your store if you are not charging tax correctly. Thousands of Amazon shops were suspended when the European tax offices cracked down in 2020 – and there is no reason the US states won’t do the same to the likes of Shopify, WooCommerce, or payment providers like Stripe and PayPal.

2. You love paying significant penalties

You might think the chances are minimal of US state tax offices finding you. But do you really want to risk angering the US government? States have the right to legally demand all historic taxes you should have paid to them, and they will add ruinous penalties on top of that.

Each US state has the right to impose its own penalties. For example, New York will penalise you 10% of the tax due for the first month plus 1% for each additional month or part of a month. California will also whack you with 10% of the tax payable, but they also reserve the right to charge a “Collection Cost Recovery Fee”, which is at their discretion.

It’s really good for businesses to have massive debts to pay, especially when it’s the US government who you owe money to.

3. You want to fail due diligence (“DD”)

As a growing eCommerce or tech business, you surely have aspirations of selling your business one day, or even better… listing it on an exchange? There’s good news for owners and founders who want those life-changing deals to fall apart when your buyer or banker performs due diligence on your records. Tax compliance and risk governance is a fundamental component of all DD processes.

When the accountants determine that you have not complied with US sales tax rules, they might not automatically fail you (although many will), but they will almost certainly impact the commercial negotiations.

4. You hate having a good reputation

A popular tactic implemented by tax offices around the world is the classic Name and Shame strategy. If they believe you have evaded taxes, you will go onto a naughty list, which will invariably be shared with the press.

If you want to destroy all the valuable brand equity your business has built up, the best plan is to be called out in an article on the internet as tax evaders. It will inspire confidence in your shareholders and customers alike. Just ask OnlyFans, who recently lost a case against the UK tax office and reportedly had to cough up £11m.

5. You want your product and website black-listed

As part of its enforcement efforts, the US government has the right to specify certain companies and products that it deems to be in conflict with its interests. This is usually because they think the company is involved in terrorism, or the product might be used for criminal purposes – but they can also ban products sold by companies that they believe are evading tax.

Additionally, they can instruct payment providers not to accept digital payments to your website, e-wallet, or gateway.

If you’ve always wanted to be black-listed by the American government, then evading your sales tax is a great way to achieve that goal.

6. You don’t want to pay your due to society

If you believe in capitalism, then taxes are a positive benefit to society. Consumption taxes like sales tax in the USA are specifically designed to protect the poorer elements of society, and most fiscal authorities will designate sales tax proceeds to programs that aim to improve the local economy and infrastructure.

In the current economic climate, it’s in our interests for government to maximise their tax revenue. The state of Texas recently announced that tax revenues increased by 26%, the majority of which is allocated to relieve economic pressure on local communities.

If you want your customers to live in recessive economies where they struggle to pay their bills and definitely can’t afford to buy your product, then it’s a great idea not to pay the taxes that you owe.


Understand your compliance obligations. There are criteria that govern when you have to register for sales tax in the USA (known as Nexus Obligations) – and it pays to understand as early as possible when you might get trapped in this tax net.

There are structures you can take advantage of to reduce the compliance burden, and tax compliance processes you can implement to make it simple and automated to comply.

Contact Yonda today for a complimentary nexus assessment.