Etsy will support sales tax collection when it begins rolling out a new Checkout later this week. As of Wednesday, sellers can go to their account settings and set tax rates for U.S. states, Canadian provinces, and countries where they would like to collect sales tax (http://www.etsy.com/your/taxsettings.). Sellers can also indicate whether the tax rate for each region should apply to shipping charges.

Etsy sellers who have already set up sales tax settings on PayPal will still need to set sales tax rates on Etsy. Those sellers who don't want Etsy to apply sales tax to their orders do not need to do anything.

The sales tax settings only apply to the new Checkout, so they won't affect orders until Etsy ramps up the new Checkout late this week. (Etsy began rolling out a new Checkout earlier this month.) Sales tax will apply to PayPal and non-PayPal orders in the new Checkout.