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Posts Tagged ‘destination-based sales tax’

Washington DOR Site and ZIP+4 tax collection

Wednesday, May 13th, 2009

http://dor.wa.gov/Content/FindTaxesAndRates/RetailSalesTax/DestinationBased/OnlineSellers.aspx

“The Department of Revenue recognizes that sellers using online shopping carts face unique challenges to change to destination-based sales tax. Some shopping carts have limited capabilities in calculating sales tax. For example, some will only accept one tax rate per state; others apply tax rates only using a 5-digit ZIP code. As you may know, Washington has about 16 different sales tax rates within multiple taxing jurisdictions (about 355) and 5-digit ZIP codes do not accurately correspond with tax rates or taxing jurisdictions.

It is ideal if the shopping cart can use the actual delivery address or the corresponding ZIP+4 code, either of which will deliver an accurate tax rate and taxing jurisdiction. However, that is not available to many sellers at this time.

Although calculating sales tax by address or ZIP+4 codes is most accurate, we understand that it is currently not possible for everyone. In the interim, the Department’s expectation is that sellers will do their best to determine the correct tax rates to collect and to report the sales to the correct jurisdictions when filing their tax returns. If the sales tax collection method used results in the over- or under-collecting of tax, sellers are still required to remit all tax to the Department of Revenue, or if requested, refund the over-collected tax to the customer.”

lifted unceremoniously from the DOR site for your review.

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You can read the whole article on the DOR site, but we wanted to be sure to state emphatically that there IS a zip+4 sales tax collection solution that is NOT only available, it’s in use today. If you have a store that needs the most accurate tax collection mechanisms available today, AccurateTax is here.

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Posted in Washington Sales Tax | 1 Comment »

Destination-based sales tax – way of the future?

Thursday, March 19th, 2009

In 2008, Washington state joined the ranks of those states that are moving to the Destination-based sales tax model. This was pretty well advertised in Washington circles and many online storeowners in Washington state showed the requisite amount of concern over being able to handle this newly created issue.

While storeowners in the other 49 states seemed to breathe a collective sigh of relief at not having a physical presence in Washington state the fact is that Washington is not the only state that currently has rules that apply to destination-based sales tax collection.

Florida, Texas, California and New York all have varying degrees of rules that require storeowners that transact business with customers in these respective states to collect and report sales tax based on where the products that are sold are ultimately delivered.

Obviously, there are two schools of thought on these newly created sales tax burdens – 1) storeowners are playing a “come and get me” game hoping that states don’t actually have the time or money to track down sales that are made in their states and 2) the “I don’t care what the tax rules are I just want to be compliant” crowd. No matter which crowd you hang your hat in, one thing is for sure in a down economy, the money reservoirs that states used to be able to find from in-state vendors is drying up. Here in Florida, we’re dealing with huge budget deficits for our public education system and many of the state legislators are reluctant to raise any taxes locally, but at the same time seem perfectly fine with collecting taxes on outside-the-state vendors who ship items to Florida residents. I doubt this is a problem that is unique to Florida these days and am sure other states are reviewing their own possibilities in this arena.

Whether the states are successful in seeking sales tax collections from outside vendors will be the true test. Will the federal government insert itself into the mix, knowing that some of these states are facing huge deficits and even potential bankruptcies?

No one can say for sure, but as the axiom says, “may you live in interesting times”, well, I guess 2009 qualifies.

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Posted in General Items | No Comments »

Washington State Sales Tax – Streamlined??

Saturday, March 7th, 2009

In July 2008, Washington State decided it wanted to join the Streamline Sales Tax effort (an issue we’ll cover a lot in other posts), but the big crux of what this meant to storeowners was that they wanted to move to a destination-based sales tax…meaning that the sales/use tax should be collected not based on where the storeowner’s location is, but rather where the products are delivered.

Generally speaking, this probably makes a lot of good sense for the local communities. Charging sales/use taxes based on the actual destination means that items being purchased by local people benefits the local community, not just the state. Of course, that’s just one perspective. From the storeowner’s point of view, this action is tantamount to opening Pandora’s box.

Two sides of this equation that affect storeowners – compliance and reporting. On the compliance side, clearly the storeowner is now expected to manage their sales tax information for the entire state as rates can fluctuate widely across counties, not to mention that rate changes can occur at any given point in time. So, keeping tax rate data current and properly configured is one issue. The other side of the equation is reporting. Knowing what was collected and what needs to be reported to the state is where the “rubber hits the road” so to speak. Having accurate tax reports that show what amounts were collected, from which counties/areas and for what time periods becomes a godsend.

Back in July 2008, NetBlazon received quite a few calls from Washington State storeowners in need of a solution to handle their compliance and reporting needs, which is why we decided to create the AccurateTax TaxTools product suite. Of course, it now seems that there are a great many states that are interested in getting in on this action, so we will continue to document those tax rules here and as always, we’re open to your own interpretations of these laws.

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Posted in Tax Rules, Washington Sales Tax | 1 Comment »