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Holidays, Sales Tax and Shopping Online

This holiday season, lots of shoppers will be staying home to do their purchases. With more options for shipping and convenient delivery, and extra bargains, e-commerce store owners and site developers should provide their customers with tools that can help them navigate the confusion of online shopping.

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One reason shoppers may be hesitant to do heavy Christmas shopping at an online vendor is that they are uncertain what the sales tax will add to their bill and if, in fact, they even need to pay any. In addition, some vendors are confused themselves and may be breaking the law by not collecting the proper taxes from consumers. Here are some tips that allow you to help your customers and protect your business from costly legal issues:

  1. Understand precisely where your business stands with regard to taxes in each state. You are still liable for taxes if a state has ruled that you do not need to have an office or storefront presence in order to charge sales tax, for example, if you have an affiliate program for your product. Speak with your accountant and find out exactly whether you should be charging sales tax. If so, you can be liable for that state’s tax, even if you don’t collect it from your customers.
  2. Clearly post sales tax policies. Some states require sales tax from online vendors, some don’t and some have had recent changes in what their laws. On Tuesday, December 3rd, 2013, the Supreme Court said it wouldn’t rule on state tax laws for online sales. That means each state will be allowed to make the decision for itself. How can you help customers? The legal website Nolo.com has a handy reference covering the internet sales tax laws for each state. Provide a link to Nolo’s list for your customers. In addition, you should invest some time in getting familiar with the sales tax laws across the country so you can better answer your customer’s questions.
  3. Offer customers free or discounted shipping. As a consumer, I know that if I can’t avoid sales tax, I am thrilled if I can get free shipping. Many customers feel that one makes up for the other. If you can’t eliminate shipping fees, offer free shipping over a certain cart amount. That will have the added advantage of encouraging shoppers to buy more. Or, you can offer free shipping for a lower cart total for the duration of the holiday.
  4. Make sure your shopping cart software configures sales tax early on. Yes, your customer will have to be registered first, or have at least submitted their state, but knowing the total cost as early as possible is a great relief for many customers. Of course, this applies to shipping fees and discounts, promotions or coupons. The more accurate a shopper can gage his total cost, the more likely he is to spend more and return to your store in the future.

This holiday season is the right time to make sure that your website is compliant with sales tax laws as they exist right now, and to ease the burden on your customers so they can shop happily.