# Do I have to collect on sales tax on web site sales?



## Bammer (Jun 4, 2008)

Is it necessary for me to collect sales tax for my internet sales of t-shirts? 

I don't want the tax man to stick their grubby little hands deeper down my pockets than they should have too. 

I carry a few mouse traps in my pockets just in case. 

Thanks for your help...


----------



## badalou (Mar 19, 2006)

Bammer said:


> Is it necessary for me to collect sales tax for my internet sales of t-shirts?
> 
> I don't want the tax man to stick their grubby little hands deeper down my pockets than they should have too.
> 
> ...


Only if orders are within your state. I sell all over the world and collect tax only if I sell in california where I am located.


----------



## peteVA (Nov 11, 2007)

Simple enough. Sales Delivered Within Texas, regardless of where they originate, are taxable. Unless to a wholesale account with the proper documents. 

So, if I order something from here in VA, but want it sent to my brother-in-law in Texas, you would charge me tax.

If he is in TX and wants to send one to me, he does not pay tax.

If you have an online shopping cart type site the software should handle this automatically, since it will key on the "ship to" state.
.


----------



## Sheepsalt (Sep 12, 2007)

Do you have a business license / re-sale certificate in your state? Your state should offer classes, counseling, or on-line resources to help you understand exactly what is and what is not taxable with regard to sales tax. Every state is a little different, so I highly encourage you to attend whatever they offer.

That said, here in Arizona sales tax must be paid on items sold to end users within the state. The only in-state buyers who are not required to pay sales tax are 1.) those who have a re-sale license and purchase the goods for resale, and, 2.) Native Americans who take delivery of the goods on their registered reservation. Non-profits still pay sales tax on items they purchase for use, even though they often try to convince you otherwise. The state will make you pay the sales tax whether you charged them or not. Out of state buyers do not pay AZ sales tax as long as the goods are shipped to their address out of state. It is then their responsibility to turn in a use-tax form and pay the tax in their own state. Out of state buyers who purchase and pick their goods up inside Arizona must pay the AZ sales tax.


----------



## peteVA (Nov 11, 2007)

That is how all states are. The exemptions vary from state to state, but the overall, day to day operation is the same. In VA, farmers and commercial fisherman are exempt when buying work related items, as are "airlines", a bit of lobbying by American Airlines, who has their headquarters here. Few others as well.

Most don't apply to day to day retailers. In fact, try getting an exemption at Wal*Mart, even if you are qualified. They won't take the time to mess with you.
.


----------



## shirt10 (Mar 1, 2008)

Great informative thread.

Question to add to it with made up numbers.
I live in OH (state sales tax of 5% and my county tax of 1.5%) and say I sell to someone in OH. Do I charge them the cumulative 6.5% sales tax, regardless of which county they live in?

--Ben--


----------



## peteVA (Nov 11, 2007)

Ohio has what are undoubtedly the most restrictive laws in the country. Unless there has been some relief, they want you to collect sales tax by the address, including any special "sewer improvement" or other taxes for that exact building. 

You need to check with your state's sales tax office for specifics.
.


----------



## mike95910 (Jun 12, 2008)

what now? i just took a peek at this thread and now i am all confused. So if i run a site in florida and sell to people in florida i pay tax on those sales, however when i sell to people lets say in texas, those items do not get taxed??? that doesnt sound correct. shouldnt all items sold have some sort of tax on them regardless of which state its in? Or does the tax just come later through you paying off your income tax?? whats going on ahhhh.


----------



## cosmicjim (Sep 10, 2007)

The reason a retailer that ships to someone in another state doesn't collect taxes is because the buyer is actually responsible for paying the taxes for it in their own state.

Technically, all the junk we've been buying off the internet and not paying taxes on, we are supposed to be reporting it to our home state. The state doesn't pursue it because it's too much of a hassle.


----------



## itsmar (Oct 10, 2007)

I'm from Ohio and sales tax is based upon which county in which you make your sales. I live in Montgomery County and almost all of my sales are in Montgomery County, which has a 7% sales tax. Sometimes I do sales outside of the county and the sales tax is then charged based upon that county's sales tax rate. The State of Ohio automatically sends me out an updated sales tax list by county at least once a year, and periodic updates as needed, so it's easy to keep up with the applicable rate.


----------



## greyhorsewoman (Jul 19, 2007)

'Use Tax' is what each individual is supposed to pay on items purchased out of state for which they do not pay sales tax on in that state.

This is mostly unenforceable on an individual basis, but watch out all of you who have a sales tax license. Your state KNOWS you purchase SOMETHING out of state and they have you on file.

In PA, two years ago, I got a nice letter that said 'we've noticed you haven't included any use tax with any of your filings' ~~ if you include a break down of all applicable purchases going back (to when I first got my license) and pay any sale tax due by (some date), we will forgive and interest and penalties. (They can ask to audit your records.)

I'm sure PA scored a nice little $$$ for that letter and got all sales tax license holders to include at least SOMETHING for use tax from then on. (Worked for me.) 

I'm was pleased though, that for the most part, I do pay most of my sales taxes and I buy a lot of my equipment & supplies in state.


----------



## peteVA (Nov 11, 2007)

mike95910 said:


> So if i run a site in florida and sell to people in florida i pay tax on those sales


If you do it correctly, YOU do not pay the sakes tax, your Florida custmers do. You should charge sales tax on all sales delivered within Florida, unless they are to a proven tax exemption certificate holder.

What happens elsewhere is no concern of yours. It's that simple. If someone in TX wants to beat the tax, that is between them and the state of Texas. Not your problem.
.


----------



## ashamutt (Feb 22, 2008)

greyhorsewoman said:


> 'Use Tax' is what each individual is supposed to pay on items purchased out of state for which they do not pay sales tax on in that state.
> 
> This is mostly unenforceable on an individual basis, but watch out all of you who have a sales tax license. Your state KNOWS you purchase SOMETHING out of state and they have you on file.
> 
> ...


 
How do "they " know if you purchase somethng on line....???


----------



## cosmicjim (Sep 10, 2007)

They don't, unless a real IRS audit is done. They know you buy stuff, but have no idea how much or what. His letter was just a scare tactic to get him to pay something. Though, maybe they could have really gotten him audited by the IRS.


----------



## greyhorsewoman (Jul 19, 2007)

They don't _KNOW_. It is 'unreasonable' that a business would NEVER have purchased equipment or supplies out of state and not paid sales tax at some time or another. Many times we buy that way because we are 'saving' sales tax! 

Basically, the vendor is only required to collect tax in the state he is operating in. The customer is supposed to pay sales tax in their state, if the item is taxed in their state. Obviously, it is extremely difficult to control. For a long time, states just ignored it, but states are hard up for $$$ and KNOW they are losing sales tax money to internet sales. 

So, now I check to see what I've purchased, because it's better to pay the little bit of sales tax then to have them audit me because I stand out like a sore thumb.

This letter was sent to ALL holders of PA sales tax licenses that had not filed any use tax since they had been issued a sales tax license. Up until then, I'd pretty much ignored the 'use tax' line of my sales tax report. Just an FYI. Do what you want.


----------



## peteVA (Nov 11, 2007)

cosmicjim said:


> They don't, unless a real IRS audit is done. They know you buy stuff, but have no idea how much or what. His letter was just a scare tactic to get him to pay something. Though, maybe they could have really gotten him audited by the IRS.


The IRS could not care less about you paying any state or local taxes. Their only concern is that you pay your Federal Income Taxes and make timely deposits of withholdings and other federal taxes you may have to collect.

Sales / use taxes are strictly state and local and the IRS is not involved with them at all.
.


----------



## peteVA (Nov 11, 2007)

greyhorsewoman said:


> They don't _KNOW_. It is 'unreasonable' that a business would NEVER have purchased equipment or supplies out of state and not paid sales tax at some time or another. Many times we buy that way because we are 'saving' sales tax!
> 
> Basically, the vendor is only required to collect tax in the state he is operating in. The customer is supposed to pay sales tax in their state, if the item is taxed in their state. Obviously, it is extremely difficult to control. For a long time, states just ignored it, but states are hard up for $$$ and KNOW they are losing sales tax money to Internet sales.
> 
> ...


Use taxes also apply to individuals. You are supposed to voluntarily pay use taxes on any phone / mail / Internet purchases made as an individual or family, as well as for a business. 

This is probably the "most broken" law there is in most states.

Also, use tax refers to removing inventory from stock for use in your business. If you took tee shirts from stock and gave them away as promotional items, you would still be liable for the use tax on the cost of the shirts, since they are being used as advertising.

A clearer example would be an office supply store which used their own products in their office. Every pen and legal pad they took off the shelf for their own use would be subject to the tax.
.


----------



## Bammer (Jun 4, 2008)

I hate taxes... vote Republican...


----------



## Garage Cotton (Oct 4, 2010)

I actually called my state's tax office today to ask this very question. Our business is registered in Ohio and the guidance I received is that we only have to collect sales tax for sales that are shipped within the state of Ohio. Additionally, we only have to charge the sales tax rate for the county we are registered in; it is up to the customer to pay the difference (if any) between the sales tax we charge and the sales tax in the county they live in.

I asked for guidance and that is what they told me, so I'm going with it because it's pretty simple!

Aren't taxes fun?!


----------



## WikiThreads (Apr 2, 2011)

Rules may be changing in this area. The state of Texas recently filed suit against Amazon.com for all the Texas sales taxes not collected (since they have a Texas physical presence). So starting July 1, Amazon started charging Texas state sales tax for Texas delivered orders. As sales-tax break disappears, Amazon.com plans new move: same-day delivery - National Technology | Examiner.com


----------



## JordanLara (Jun 13, 2012)

does this all still apply in 2012-2013


----------

