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What you say is technically correct, but not applicable. Applicable law, including consumer protection laws, for this site is Californian law.

And those end user price tags that must include taxes are of the consumer protecion variety. This is of course my opinion and I am not a lawyer, but I would be very surprised, if I were wrong here.

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Yep, not a lawyer either so I've no idea how you square that circle. If it was physical goods it would "simply" be a case of not shipping to those territories.

In any case it's a secondary issue compared to actually charging and collecting the correct tax.