Off Subject: Internet Sales Tax

I have an online business.  I have only paid sales tax in the states my business has a “nexus” with.  The Supreme Court just ruled that states should be able to tax online sales even if the company does not have a physical presence in that state – no nexus required other than sales in the state.

I agree.  I think the decision is way late in coming. But there is a major problem.

Amazon benefited hugely in avoiding taxes early on and this made up for the cost of shipping goods.  Now they will benefit again since small businesses can not manage the cost and complexity of paying taxes in 5000 taxes districts across America with all the required businesses licenses and filings required in every state.

In many states your sales tax is determined based on the street address and not uniform across the state or even zip codes.  Since online sales are taxed on the address shipped to or your credit card’s billing address, knowing the tax requirements of every sale is impossible.  So small businesses will be forced to sell on Amazon or some other large companies service that will handle the tax issue for them.

Again, I agree with the states on this one. They need to make up for lost revenue.

But the states need to get their act together and simplify paying taxes for online sells via a single unified system.  While there have been some efforts to streamline online sales tax by the states, a simply solution for retailers will not happen anytime soon.

Hopefully, Paypal or other payment systems will come to the rescue, but states have to eliminate some requirements that a brick and mortar company can easily handle since they only have sales in one location requiring only one business license, one sales tax rate, and one quarterly filing.

Did you know that many states require individuals who buy things online and delivered to their house to pay a “use” tax on those items directly to the state if the online business did not collect it.

Have you been keeping track and filing your “use” tax annually?  Did you download your Amazon order list, add up the total cost, determine your sales tax rate for your home address and submit to your state revenue system last year?  Did you?

It is only one state.

Uh Oh!

Under the current system it is time and cost prohibited to keep track of 50 state’s tax system, filing requirements, business license requires, etc, etc.  Just because some states will exempt sales of under 100K, how do businesses know which ones do not exempt small businesses and what laws changed since last month across the country.

My guess is Amazon is smiling and saying thank you to the Supreme Court – perfect timing.




Categories: Perspectives

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