On-line Web Store Sales Tax Questions

[ee222]

I have a movie DVD on-line store and I live here in California . When I selling some DVDs on line, do I need to add the sales tax to the sales statement? Because some people don't like the sales tax that add to their on-line buying which comparing to some on-line stores in other states( New York , Boston , or TX...etc.).

If I don't collect the sales tax on the sales statement, is it legal to do that? If I can selling DVDs without sales tax, can I just pay back all the sales tax by myself when I fill out the tax return form to the IRS later. Could someone please give me some suggestions? And what is the best way to take care of the on-line sales tax? Thank you.

[Dubbya]

If you're collecting tax, you have to mark it on any, statement, invoice or receipt.

As a rule, you'll be required to collect tax for purchases delivered to addresses within your home state, however out of state deliveries may or may not have the same requirements.

Do a Google search using the term "Amazon.com New York Taxes" to find out what can go wrong if you're not compliant with out-of-state tax laws.

Check with your competitors and run through a few test purchases to see what they're doing. Just keep changing the address without completing the checkout process.

Additionally, contact an Accountant or eCommerce expert in California. They'll have some helpful advice.

This might help:
Online Sales Taxes

Here's a great Article as well:
Sales Tax Collections for Online Sales

Good Luck

[TechEvangelist]

As a general rule, you have to charge sales tax in any state where you have a nexus, which basically means a physical presence. If you do not have a nexus, you do not have to charge tax. This went all the way to the Supreme Court with Quill vs. North Dakota in 1992.

In many states residents are supposed to voluntarily pay sales tax for items that they purchase online and are not charged sales tax.

The New York situation with Amazon is interesting because the State of New York changed the definition of nexus. They are claiming that all of the affiliate marketers residing in New York form a nexus, even though they are not Amazon employees and it does not appear that Amazon has any physical presence in New York. Technically, an affiliate marketer is an independent agent.

I think Amazon will win this one, but if they don't you will see a huge flurry of states try to grab tax dollars in a similar fashion.

[cw1865]

Originally Posted by Dubbya

If you're collecting tax, you have to mark it on any, statement, invoice or receipt.

As a rule, you'll be required to collect tax for purchases delivered to addresses within your home state, however out of state deliveries may or may not have the same requirements.

Do a Google search using the term "Amazon.com New York Taxes" to find out what can go wrong if you're not compliant with out-of-state tax laws.

Check with your competitors and run through a few test purchases to see what they're doing. Just keep changing the address without completing the checkout process.

Additionally, contact an Accountant or eCommerce expert in California. They'll have some helpful advice.

This might help:
Online Sales Taxes

Here's a great Article as well:
Sales Tax Collections for Online Sales

Good Luck

Yes, without question the most common practice is to state a pre-tax amount followed by a sales tax calculation coming to a total. California's rule may be different, my experience with NY and NJ has is that you could write up quotes/field work orders/invoices with 't.i' 'tax included' 'price includes all sales taxes' - etc. which was particularly helpful in NYC because it was difficult to calculate 8.625% in your head. In this case you're backing down the tax.

At the end of the day, consumers don't get to deduct sales tax and businesses making non-exempt purchases can deduct the bottom line cost (including the sales tax), so really the itemization on the invoice for governmental purposes is slim. You're PROBABLY ok with a disclaimer at the bottom of the invoice which will state something to the effect 'all orders shipped to California include all applicable sales taxes' and frankly even if it isn't, I really don't see it being enforced unless you're not paying the tax.