I'm no tax expert and I don't like giving tax advice. So I'm going to refer you to your tax accountant, your state sales tax commission, and the Internal Revenue Service with your questions. But before you go, you should know--

IRS

The Internal Revenue Service does NOT want you to count your publishing expenses the year you incur them. They want you to "amortize" your costs over the sales life of your book.

They particularly do NOT want you counting your book expenses or losses against other income to reduce your taxes.

If you paid money to produce your book, the IRS considers you a publishing firm bound by the tax laws for the publishing industry.

The IRS also considers income you make from the sale of your book as self-employment income. Among other things, this means you must pay social security taxes on this income.

Visit the IRS online or call them toll free at 800 829-1040. I have always found IRS officials to be polite and fair-minded, especially when you truly want to comply with income tax requirements. (It's when they call YOU that you have something to worry about.)

Sales tax

Your state tax commission wants every nickel it can get from the sale of your books. (Wouldn't you if you were a tax commissioner for your state?)

Call your tax commission and ask for the state tax forms for retail sales. Fill them out and send them in until you're pretty sure you won't be selling any more books in your state. Then cancel your tax number.

You owe sales tax ONLY for books you sell to end users in your state. You do NOT owe sales tax for books you hand over to an agent or sell at a trade discount to a bookstore or other retail outlet.

You do NOT owe sales tax for books you sell over the Internet or by direct mail unless you ship the books to someone in a state where your publishing business has a physical presence.

Keep alert. This is changing all the time. Check with all applicable tax entities to be sure you're in compliance.

Suggestions if you are a seminar speaker or will be making book tours

Before you go on a trip where you will be offering your books for sale outside your state, call the tax commission for each state you will be visiting and ask for a temporary sales tax number for books you will be selling in that state. Add the appropriate sales tax to the price of your book, keep track of your total sales, and send the tax in promptly to the tax commission as directed.

It is highly unlikely that the tax commissioner is going to send surveillance staff to your seminar to make sure you have paid your required sales tax on every book that changes hands. However, the public relations benefit of acknowledging that you are a guest in that state and willingly paying the state's required tax has value far beyond the few cents per book that you will pay in taxes. Another thing to think about is that person who doesn't like you for some reason or other. Don't give such a person an opportunity to turn you in for failure to pay sales tax.