The whole state sales tax mess is a fiasco just waiting to happen. I work for an online retailer. For years state gov’ts have been threatening to tax ALL internet purchases. It would be a logistical and bookkeeping nightmare if we were to have to collect sales tax (at different rates for each state) from different states. And who would we pay that money to...would we have to send 50 checks to 50 states to meet the requirements. If the money is deposited in a “tax repository”...then who divides it up and decides how much each state gets.
We sell some of our products through Amazon but the sale is actually from us, we just pay Amazon a fee (akin to selling something on Ebay) so is Texas seeking to collect tax on the products that Amazon really isn’t “selling” in the truest sense of the word. For many companies they are more a broker, not an actual seller. Or does that mean that we have a physical presence in the states that Amazon has a physical presence? The definition of a “physical presence” is bound to get tricky in this day and age.
Some of the pressure on online internet retailers comes from traditional brick and mortar establishments. Well my company has a traditional brick and mortar showroom, but we have a website too. And for those retailers that are squawking that the internet offers unfair advantage, I say, get a website of your own and compete in ecommerce with the rest of us.
Just to make your day, Missouri has over 1800 taxing political subdivisions and special districts.
Talk about unworkable, jeez!
It’s not that much of a nightmare. Back in the pre-internet mail order days the rules were simple and followed by most companies: if they had a physical presence in the state they had to pay sales tax there for orders that stayed within the state, which meant they charged customers who lived in those states sales tax. If you remember old mail order forms they always had these lines in the math part of the form that said stuff like “residents of FL, AZ and OH add 5% sales tax”.
For whatever reason when internet retail started up everybody pretended that they weren’t mail order and didn’t have to follow the same rules as the Sears Catalog. The fact is they are mail order and have to follow the same rules, and since they could manage to pull it off in the pre-computer days I’m betting it won’t be that hard in the computer days. Really all you need to do is know what states you have a physical presence in, know their sales tax, and if the billing address of the orderer is in one of those states apply the sales tax. It’s like 1 SQL table and 1 query.
As for resellers, if Amazon is smart they have in the terms of service that the business has to handle their own legal stuff. But they need to follow the sames rules, if your business running through Amazon has a physical presence in a state and the orderer is also in that state you need to pay the sales tax. You don’t have to pass the bill on to the customer, but you still gotta pay.