This Is Going To Change Selling On The Internet FOREVER
I had my income taxes done the other day. It is not a fun time.
My tax lady asked me a question that made my blood run cold.
She asked if I was prepared for the state sales tax from online purchases.
I had heard of other states doing this and hadn’t given it a thought since I wasn’t aware of the state I live in doing this also.
You have probably heard the horror stories of the Amazon affiliates that were dropped when their states started to collect a sales tax on Internet purchases right?
Well doing some research I am finding that many states are preparing to do the same thing. Each state has the law on their side to collect sales taxes from EACH AND EVERY item a person purchases. They are now gearin gup to actively collect from the people who have skated out of this by purchasing items online.
Many of the larger retailers have started awhile ago to do this. There are many that have not.
What does this mean to you, someone who sells stuff online?
Let me paint a picture for you. Say you sell something to Joe Smith. He lives in Anywhere, Somestate USA. the state sales tax is, say, 6%. If the program you are the affiliate for doesn’t collect sales tax, you are REQUIRED to on his purchase. You are also REQUIRED to file a report AND send a check.
This means you have to have a “business license” for that state to be registered to file and pay the sales taxes to that state. The fines and late fees are substantial.
Being a ‘brick and mortar’ business on Main St in Anywhere, Somestate USA – you had to do this in order to even begin to sell stuff. The registers and your accounting systems had to already be set up to do this.
So selling online, you have to, in reality, do this for each and every state in the USA.
This also means YOU are solely responsible to collect sales tax for each item sold, keep records, file the reports, and pay the amount due from all your sales to the appropriate state.
Crazy, huh?
Well this doesn’t just effect people in the USA. All marketers selling things online to people in the USA will need to do the same thing.
Larger businesses that sell things online will make arrangements to do this and comply with the law. Otherwise they will lose money from not selling in that state.
Smaller businesses, well that is the question. Will they require you, the affiliate, to do all the heavy lifting? Will they just stop doing business in certain states as they start to actively pursue this?
What my state is doing now is what a lot of states are doing; they have a “honor system” where each individual is responsible to report their online purchases and send in the sales tax from them. the problem is most people have no idea they are supposed to do this.
Let me paint another picture, you get a letter from the state saying you owe $1,115.00 in state sales taxes from your online purchases that is due and payable. They got sales record for everyone in the state from, say, Amazon.com, Overstock.com, Buy.com, and other strictly online retailers.
This information will be from your FIRST purchase at these online retailers, so they could be YEARS old.
What if you “BS, I’m not paying!”. Well the state doesn’t mess around. They can put liens on property, arrest you, and all the other things that go along with this.
There was a story about people who bought cigarettes from Indian reservations (there was no tax IF you lived on the reservation and used the items on the reservation); but, these people didn’t live on the reservations. they were hit up for thousands of dollars in state sales taxes.
Ignorance of the law is no excuse. The fines and late fees pile up pretty fast for failure to report and pay. with the problems a lot of states are in, they are desperate for funds.
There may be other countries that have similar laws that are not being enforced too.
SCARY!!
Don’t think they will find you since you are a “little guy”? Read my last post and think again. They may have all the information right now and are just slowly instigating things.
Anyway you look at it, it is going to be a mess for awhile until a better method is instituted. It will not release you from the law until then though.
In my own case, there are few of my programs that I am not “selling” a product or service. All of them are liable to be on the list of things they will start collecting the sales tax for soon.
Something to think about. Do your own research in your area. Find out what is a “sales taxable item” in your area. If you are selling these things online, you may get a letter at some point. There are too many places this information is online. If you sell through PayPal, they are already sending 1099s for your online sales. It would not be too hard for the state to get this information and use that figure to collect the sales taxes.
Just when you thought it couldn’t get any worse right?
Now, just because you work “online” doesn’t mean you don’t have to follow all the laws that “Joe Somebody” has with his business on Main St.
