Sales Tax Blog
Uniform Sales and Use Tax Exemption Certificates
Sales and use tax exemptions can be a complex issue for ecommerce retailers to understand, but it’s critical that they do. Without proper documentation, exemptions can fall apart and retailers can then find themselves in the midst of a costly audit. The problem is that all states have different laws and codes defining when and where these exemptions apply. Retailers may think that there is "one certificate to rule them all" but, in fact, the subtleties of state-to-state legislation and guidelines can make those certificates invalid or lead to incomplete filing of exemption certificates. Centralization documentation for all states does… Read More
How the Remote Transactions Parity Act Would Affect Ecommerce Retailers
This June, a new bill has been introduced to Congress called the Remote Transaction Parity Act (RTPA) by Rep. Jason Chaffetz, a Representative out of Utah. If passed, this bill, H.R. 2775, will make it easier for states, cities and districts to collect sales and use tax on remote purchases. Chaffetz claims that this bill will “promote states’ rights,” since it would take effect in every state. Chaffetz has gotten strong support from the National Retail Federation, the world’s largest retail trade association for this bill, which has been brought to the table with bipartisan support. It is similar to… Read More
Are Software, SaaS, and Cloud Computing Services Taxable?
Ecommerce shops that sell software may run into complex rules regarding sales and use tax. It’s tempting to believe that “intangible” software, such as downloads and streams, are not subject to sales tax, but that is not always correct. As services available via cloud computing grow, states are looking to recoup lost sales tax revenue created by these intangible products. So, when is software taxable? There are three options for selling software and they each have distinct rules for when sales tax need to be collected. Option 1: Tangible software. The customer buys a tangible software product, such as a… Read More
9 Ways That Declining Gas Taxes Cost Us Money
As summer approaches, many of us are looking to the horizon, ready for vacation. But if you’ve been on a road trip recently, you may have had to endure some less-than-perfect driving conditions. Our roads and highways are one of the infrastructure items that are paid for with taxes. But declining revenues mean that states are struggling to pay for roads, both new ones and repairs to existing roads. From New Jersey to New Orleans, a battle is raging over how to pay for construction and road projects. The struggle to find revenue has been going on for years, but… Read More
What You Need to Know about Sales Tax and Drop Shipping
Drop shipping is a great way for e-commerce businesses that have limited or untested inventory to expand their customer offerings. By retailing products that are carried and housed by a third party distributor, such as a manufacturer, wholesaler, or fulfillment house, retailers can use drop shipping as away to grow their customer base, bring in more income and test out new inventory. However, drop shipping can have an adverse affect on sales and use taxes and thus, negatively impact the return on investment. How Drop Shipping Complicates Sales and Use Tax Because a third party is now involved, sales and… Read More
Record Keeping for Sales Tax Purposes
The biggest sales tax challenge for retailers is often knowing how much tax to charge for any given order. A not-distant second challenge is figuring out what you owe when it comes time to file your sales tax return. On the surface, this seems fairly straightforward. Collect the sales tax on each order, add it up, and send in the sum. In reality, it can be more difficult to determine the total sales tax due to a state over a given period of time. Why is that? Changes to Orders and Cancellations First of all, often an order gets changed… Read More
Could the Supreme Court Take Internet Sales Tax Into Their Own Hands?
The debate over online sales tax is a heated one, with legislators and lobbyists split as to which side of the issue they agree with. Retailers have sat in limbo – some anxiously waiting, some supporting the tax, others doing their own grass-roots lobbying against the idea. But another approach may be on the horizon. In a groundbreaking statement, Supreme Court Justice Anthony Kennedy has called for supporters of an internet sales tax to bring a case before the SCOTUS that would allow the court to reexamine the 1992 Quill Corp. v. North Dakota decision. This came about during the… 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
A New Internet Sales Tax Alternative – the Online Sales Simplification Act
After years of discussions, back-and-forth, pros and cons, supporters and naysayers, it looks like the Marketplace Fairness Act might be dead. But the government hasn’t given up on the idea of taxing internet sales across state lines. In fact, so many businesses are in favor of Marketplace Fairness that in some shape or form, online sales tax is still very likely to happen. And the latest iteration of that is a discussion draft called the Online Sales Simplification Act. If you’re familiar with the Marketplace Fairness Act, then the name behind this bill will be familiar. It’s spearheaded by House… Read More- « Newer Posts
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