Etsy is unveiling a new feature in their checkout allowing sellers to apply their state sales tax to the checkout. It starts Thursday, August 28th. For some time, people will be able to checkout using both the old and new checkouts and this sales tax will only apply to the *new* checkout. Paypal has had this feature for some time, I recommend setting it up in both Paypal and Etsy.
To set sales tax rates in Etsy:
1. Go to http://www.etsy.com/your/taxsettings.
2. Select the U.S. state, Canadian province, or other country from the drop-down lists and click the Add Tax Rate button.
3. Enter the tax rate in the Tax Rate box.
4. Repeat for each additional U.S. state, Canadian province, or other country where you want to collect sales tax. If you want the rate to apply to shipping charges, check the box "Apply rate to shipping."
5. Click the Save button.
To set sales tax rates in Paypal:
1. Login at http://www.paypal.com
2. Click on the blue "Merchant Services" tab at the top of the page
3. Under Shipping & Tax, click on "Tax Calculator"
4. Under Set Up Domestic Sales Tax Rate, Click on "Add Sales Tax"
5. Select your state and type in the sales tax rate, then click Continue.
That's it! Once done, it should say "active" under the status