The days of not being charged sales tax on internet purchases are over. It was fun while it lasted.
The Washington Post says: “A bill that would give states the authority to collect sales taxes on all Internet purchases passed a major procedural hurdle in the Senate. It would hand local governments as much as $11 billion per year in added revenue that they are legally owed — but that hasn’t been paid to them for years.”
Oh well… we will just have to pay a little more for online purchases, right?
Well – I’m not so sure we can dismiss it that easily.
Consider this. Have you ever sold anything on eBay or Craigs List? Did you collect sales tax for the proper tax jurisdictions, and submit payment?
Have you ever posted to Facebook something like “anyone want to buy my old TV?”
Do you use a credit card swiping device on your smartphone to accept credit card payments?
The point is this. There are many ramifications to internet sales /use tax collection and disbursement, not least of which is the fact that it’s not very clear what is considered an internet sale and what is not.
Even if there is a provision in the law to exclude “small businesses”, which for argument sake lets define as businesses with a revenue less than $1 million per year – we still need to understand if this is revenue from online sales or total revenue.
Consider this very real-world example: Widget Association XYZ has a “not-for-profit” status with the IRS. They put on a nice conference every year in Vegas. This year they sold out 2 weeks after opening up registrations. Great news, right? Perhaps not. Widget Association XYZ has now exceeded the $1 million per year threshold b/c the conference occurred towards the end of the year. Worse yet, they did not collect sales tax from the online registrations. Now what?
Traditionally a very strong online sales period in the United States is the end of the year. What if you go over the $1 million mark at the very end of the year?
The answers to these questions are of great importance to virtually anybody who sells anything in the United States.
Internet sales tax is not straight-forward. Here’s a great post explaining Internet sales tax.
My company “SharePoint AMS” has a product that adds an e-commerce engine to the SharePoint platform. We have decided the only way to completely protect our customers from the ever changing tax laws (both in the US and abroad) is to automate the sales and use tax calculations of the transaction.
Regardless of the e-commerce engine you use, please speak with a professional tax consultant (preferably a tax attorney) to make sure you properly understand internet sales taxes. You can bet nearly all local governments in the US will be doing the same.