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View Poll Results: Do you collect state taxes?
Yes 6 75.00%
No 2 25.00%
I had no idea I was supposed to do that 0 0%
Voters: 8. You may not vote on this poll

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Old 23rd March 2008, 10:06 AM   #1
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Default Collecting State Taxes On Your E-commerce Site

Do you have to collect taxes from every state regardless of your business location? The reality is, most e-commerce businesses do not. There has been discussion of a nationwide state tax pool. The poll question is "Do you currently collect state tax from every qualifying state?" I'd like to discuss your thoughts, feelings and any systems you may have in place.

Ken Fenner
Roof Cleaners PA
Roof Cleaning Service for the Philadelphia Suburbs

Last edited by PressureProsInc; 23rd March 2008 at 10:11 AM.
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Old 23rd March 2008, 01:53 PM   #2
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You are only required to collect sales taxes when your product is delivered to someone in your own state or a state in which your company has a physical presence. This also applies to states where services are taxed.

Of course, other considerations that would influence charging or not charging tax would apply with online sales, as well. Such as someone buying for resale or someone with some other type of state exemption. Of course, you would want a copy of their exemption documents.

If you are a single state operation, no problem. You simply charge sales tax online as you would in the real world. Again, this is for sales that go to someone within your state.

If someone in your state places an order to be delivered to someone in another state, you do not charge sales tax. On the other hand, if someone in another state places an order with you, even if they live in a state with no sales tax of it's own, they have to pay your state's sales tax, since the item will be used in your state.

Or, you can charge none at all. BUT - YOU are still responsible. Most states don't care if you charge sales tax or not, as long as you pay them the amount that should have been collected. Some states, however< are very particular and want you to always show sales tax as a seperate line item and of course, collect it.

The physical presence comes into play for companies with locations in more than one state. This would include factories, warehouses, distribution centers, sales offices and other real property owned or leased. It does not include having a company salesperson living in the state and working out of their home.

There is a lot of talk about internet taxes, but most refer to taxint the service itself, not sales tax. There is a hnadful of state tax commissioners who are trying to put together a universal sales tax deal where everyone selling online becomes a tax collector for all 46 states with sales taxes.

Don;t look for that anytime soon. It's been going on for over a decade and it is just too cumbersome for small businesses to handle.

However, there is no reason for someone selling online not to easily collect sales tax on sales within their state. Virtually all of the "shopping cart" programs include a sales tax option and even the really simple purchase methods like PayPal's Buy Now buttons have provsions for sales tax.

Bottom line - in some states you may be breaking the law by not collecting sales tax on online sales. In all states with sales tax you are responsible for paying the taxes, whether you collect them or not.

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