: Do I have to charge each with its own system of rates
sales tax on orders placed and rules. A solution that
on my Web site? What if I satisfies them all may be a long
have international customers? time coming, indeed.
A: Online companies with a Online taxation has been a thorny
physical presence, or nexus, in a topic for years. Even before
state are required to collect and Amazon.com sold its first book or
report taxes on sales made to Priceline.com booked its first
customers living within that same flight, foreword-thinking tax
state. For example, if your collectors knew the Internet
online business is based in might someday generate millions
California, you must collect and of dollars in taxable goods and
report sales tax derived from services. The problem then--and
fellow Californians making now--is how the states would get
purchases on your site. their fair share of the pie.
Internet sales taxation has In 1998, Congress did what it
always been a hot topic for those usually does when faced with a
of us who make our living selling potentially explosive issue like
goods and services online. One of Internet tax collection--it
the more controversial points is decided to put off making a
that no one, including our own decision. Congress enacted a
government, has a clue how to three- year moratorium on the
implement a fair and logical collection of taxes to give an
Internet taxation process. appointed advisory board time to
come up with an acceptable
There are more than 7,500 state solution.
and local entities collecting
sales taxes in the United States, That moratorium ended last year,
and, thus far, no one has come up example, the sales tax collection
with an efficient way for online department is airing radio spots
businesses to easily collect and asking Alabamians to step up to
submit sales tax. --and toss dollars into--the
proverbial collection plate. The
Some states have been working to commercial kindly suggests that
simplify their sales tax if I have purchased anything from
structures to make it easier for an online retailer, I am
online merchants to charge and honor-bound to proclaim such
pay taxes, but a consensus is purchases and submit the
still a long way off. In order appropriate sales tax to the
for Congress to approve any collection department right away.
standard process, there will have They thank me in advance for my
to be a major simplification of cooperation.
individual state tax codes and a
consensus among the states. Now where did I put all those
Amazon.com receipts...
And nobody knows how long that
process could take, not even the The good news for online
states themselves. Many states retailers is, there's no evidence
are asking their citizens to take that people buy online to avoid
charge of the situation and paying taxes or save money, for
voluntarily pay sales tax for that matter. If saving a buck
purchases made online. It's sort were the motive, no one would
of a "good citizen honor system" willingly pay shipping charges.
that I doubt few actual good
citizens will willingly take part People shop online because it's
in. convenient to do so.
In my home state of Alabama, for The Internet offers the ability
to shop the worldwide market
while sitting in the comfort of Here's to your success!
your own home - a convenience
that most people are happily Tim Knox
willing to pay for.
About the Author:
Small Business Q&A is written by veteran entrepreneur and syndicated columnist, Tim Knox. Tim serves as the president and CEO of three successful technology companies and is the founder of DropshipWholesale.net, an online organization dedicated to the success of online and eBay entrepreneurs.
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