Tax Rules Blog Posts
eBay Sales Tax Fraud
Possibly some of the most difficult and confusing tax laws that online sellers have to deal with are sales tax laws. Part of what makes these laws such a headache is that they are different for every state, and the nature of your business combined with a particular state’s laws will determine if you have to collect and remit sales tax on purchases made by customers in that state. These determinations must be made for each state, and for any state you do have to collect sales tax in, you first have to register for and receive a permit to… Read More
Strange State Laws (Concerning Sales Tax and Other Things)
While most people are aware of how their state law applies to them in various situations they’re likely to encounter in their everyday lives, these laws have to be built to accommodate all eventualities. This can lead to some strange interpretations and applications of statutes, as well as some interesting stand-alone policies. Some of these reflect the interests of special groups, but many are just the result of a common-sense idea that was extended to an absurd degree. Groceries vs Prepared Foods One source of confusion for states involves determining exactly what the difference is between groceries and prepared foods…. Read More
Should I Charge Sales Tax on Shipping Charges in my E-commerce Store?
Each state is a little different in terms of the way it handles sales tax, and this includes the determination of whether or not shipping charges are taxable. The following is a state-by-state breakdown of the taxability of shipping, handling and any other charges associated with the delivery of taxable items shipped to the purchaser. It should be noted that the following regulations apply only to shipments of goods that are already subject to sales tax under the laws of the state in question. No state requires sales tax to be collected on shipping charges associated with the delivery of… Read More
Exploring the Taxability of Uber and Lyft
Since the enactment of most state sales tax laws in the middle of the 20th century, the economies in these states have grown and evolved considerably. It used to be that the sale of tangible goods from brick-and-mortar stores made up a bulk of the economic activity across the country, and so sales tax laws were built around this structure. Services have begun to take a larger and larger share of total consumer sales over time, however, and that has led states to begin rethinking their sales tax laws and what they cover. Ride sharing services like Uber and Lyft… Read More
Do You Pay Sales Tax on Water?
It’s July, and here in Florida, like many places, it’s HOT outside. Like, unbearably hot. It doesn’t take more than a few minutes outside before you start feeling thirsty. Try going for a bike ride or run, and about 5 minutes in, you’ll start actually fantasizing about a tall glass of ice cold H2O. Water is ubiquitous – we drink it, cook with it, bathe with it, swim in it. Water is one of the basic necessities of live. Without it, we would die. So would the rest of the planet. One would think that something so prominent, so NECESSARY, wouldn’t… Read More
Voluntary Disclosure Process For Erroneous Reporting
It’s every online retailer’s nightmare: a dreaded audit or costly penalties and fines for erroneous sales tax reporting. And yet, the ever-changing landscape of sales tax regulations that affects ecommerce retailers means that errors in reporting are a real possibility for even the most conscientious of vendors. Is there a way retailers can protect themselves from exorbitant fees and charges due to erroneous reporting? Voluntary disclosure may be able to help in cases where retailers realized that an error has been made. What is voluntary disclosure? For tax reporting, voluntary disclosure is a program that can waive penalties and fees… Read More
5 Surprising Business Activities that Create a Sales Tax Nexus
In most cases, a business needs to collect sales tax in the states in which they are located. This concept, called nexus, means that if the business has a physical presence in a state, that state can compel the business to collect sales tax from its customers. Nexus is pretty cut-and-dry when you’re thinking about the place where you work, or your business headquarters. If you’re a brick-and-mortar store with a single location, this is pretty straightforward. Everyone who comes into your store should pay your local sales tax rate on purchases (not accounting for topics like exempt sales and… Read More
How to Know When Your Services Are Taxable
Naturally, sales tax applies to products, and while rules may vary, they are fairly straightforward in terms of when it is required. What’s more challenging, however, is knowing when services are taxable. In the past, services typically did not incur sales tax, but as small businesses make headway into industries that were formally only controlled by a handful of companies (like telecom), states have become more interested in collecting taxes on services. It’s critical that you understand under what circumstances and in which states sales tax applies to a service. The rules governing service related sales tax are complex and… Read More