Whether you are a consumer who makes purchases on the Internet or a seller of goods whose customers find you on the Internet, you need to know how Amazon.com, the 500-pound gorilla, is reacting to the pressure of various states to collect sales taxes on its sales.
States have been challenging Amazon’s position that since it does not have any physical presence in their states, Amazon need not collect sales tax from its customers. The retailers in the states where Amazon does not collect sales tax argue that it places them at a competitive disadvantage since they are required to collect the sales tax on taxable purchases made at their stores. If the consumer deliberately or inadvertently fails to pay the use tax (a tax required to be paid if no sales tax is paid by the ultimate consumer), the state loses tax revenues and its retailers are losing sales.
Amazon has agreed to begin collecting sales tax in North Carolina on Feb. 1. This will make the 20th state in which the online retailer collects sales tax. Since there are five states that do not have a sales tax (AK, DE, MT, NH, OR), Amazon has yet to agree to collect sales in most states.
Efforts to collect sales taxes from Internet retailers have increased in recent years as online shopping has surged and states have become increasingly desperate for tax revenue.
The U.S. Senate last year passed the Marketplace Fairness Act which would require states to simplify their sales tax laws in exchange for being able to tax Internet companies with more than $1 million in sales annually. The bill has yet to pass the House.
With both the states and the federal government moving towards taxing Internet purchases, the consumer will likely find the cost of their purchases increasing not only by the sales tax that will be paid with such purchases, but also the compliance cost for these companies to comply with sales tax filings and remittances.
Note: If you are a business and are concerned about your sales tax filing and remittance requirements and need guidance regarding sales tax preparation and tax planning strategies, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation. You can also schedule a consultation at Click Here.
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