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Internet Sales Tax Legislation: a Plain English Guide (Whitepaper)

author photo of Sylvia F. Dion

SalesTaxSupport.com releases new whitepaper, Internet Sales Tax Legislation: What It Means to Small-Medium E-Commerce (A Plain English Guide), written by Sylvia F. Dion, CPA. To download the whitepaper, or read more about it, see the following post:

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Internet sales tax on e-Commerce transactions? It’s an issue that many e-Commerce businesses haven't had to worry about - at least not in states where they lacked a substantial physical presence. But things could be changing!

If you’ve been following my contributions to SalesTaxSupport's Sales Tax Issues, Insights and Ideas BLOG, there’s a good chance you’ve read my prior posts on the three federal bills that could require all but the smallest of internet sellers to begin collecting sales tax in many states - the Main Street Fairness Act (S. 1452, H.R. 2701), the Marketplace Equity Act (H.R.3179) and the Marketplace Fairness Act (S. 1832). In my prior posts, I covered the three proposals in great detail primarily focusing on the specific requirements that states would need to meet in order to require out-of-state sellers to collect sales tax on sales to in-state customers.

Today, I’m back to reporting on the three federal internet sales tax proposals in a newly released SalesTaxSupport.com whitepaper. You can download a .pdf of the whitepaper by clicking on the title here: Internet Sales Tax Legislation: What It Means to Small-Medium E-Commerce (A Plain English Guide)

As the name implies, the whitepaper is a primer for the small-medium e-Commerce business owner and focuses on those features of the three proposals that a small-medium e-Commerce business owner would be the most concerned with - such as how an exempt "small-seller" is defined under each proposal. The paper opens with an explanation of internet taxation from both a buyer's and a seller's perspective - and addresses that common internet sales tax myth about "internet sales being tax free" - a myth too many people still believe. The paper also explains why internet sellers aren’t in fact required to collect sales tax in many states and explains the importance of the Quill decision. While comparing the three bills, the whitepaper also provides an overview of the Streamlined Sales and Use Tax Agreement (SSUTA) and explains how certain states - those that are full members of the SSUTA - would have immediate authority to require out-of-state sellers to collect their sales tax under two of the proposals. And although the whitepaper is comprehensive, this isn't just another whitepaper filled with legalese and bunch of tax rules - it's a plain English version, a succinct explanation of internet sales taxation and an overview of the three federal proposals (with confusingly similar names).

By the way, you can also access the whitepaper directly from the Sales Tax Articles section of the SalesTaxSupport.com site; here you'll find a synopsis and link to the whitepaper. If you're on SalesTaxSupport.com's distribution list, you may have also seen the PRWeb Press Release which describes and also links to the whitepaper.

I hope you’ll find the whitepaper communicates this confusing topic in an easy to understand fashion and that it contains relevant and useful information. If you're an educator, e-Commerce business, service provider or simply interested in sharing or quoting from the whitepaper, we've allowed readers to be able to share or quote with appropriate permissions and/or attributions. (See the Table of Contents page for permission to reprint and attribution requirements for quoting from the whitepaper.)

And if you’re interested in leaving a question or comment about the whitepaper, please feel free to do so below - I'd love to hear your feedback!

Finally, as this is a top state tax development, I’ll continue to follow and report on developments on the three bills. If you’d like to stay on top of this discussion simply open this RSS Updates link and click the “Subscribe to this feed” link which will be near the top of the page which opens. As soon as any updates to this issue are posted in the Internet Sales Tax /E-Commerce section of the SalesTaxSupport.com blog – we’ll send them right to your desktop!

About the Author: Sylvia F. Dion, MPA, CPA, is the Founder and Managing Partner of SALT Consulting firm, PrietoDion Consulting Partners LLC. Sylvia has been covering Internet Sales Tax developments for SalesTaxSupport’s Issues blog since 2011. Sylvia is also the “U.S. Sales Tax for Foreign Sellers” contributor for SalesTaxSupport’s Industry blog and the “Massachusetts Sales Tax” contributor for SalesTaxSupport’s State blog. You can follow Sylvia on twitter and on Google+ and can contact Sylvia via e-mail at sylviadion@prietodiontax.com or at 978-846-1641.

Comments or questions may be submitted by using the on-page "Comment" feature, subject to disclaimer at bottom of page. Other contact options (and Consultation Requests) are also available on Sylvia's associated Firm Profile page.

Other recent “Internet Tax / E-Commerce” posts by Sylvia F. Dion, CPA:

NOTE: All blog content, comments, and participation subject to disclaimer at bottom of page.

Comments

4 Responses to Internet Sales Tax Legislation: a Plain English Guide (Whitepaper)

  • Posted by Lee on January 7, 2014 2:13am:

    I have a client that has warehouses in the US and Mexico and they ask...If a customer in the US buys a product for a person/relative in Mexico, that ships from the Mexico warehouse to the person/relative in Mexico does he pay sales tax too the US or Mexico?

  • Posted by jason on July 10, 2012 2:04pm:

    So if I am solely an e-commerce company with an office in Ohio doing < $1m in gross sales a year, does that make me exempt from collecting sales tax? From the sound of your whitepaper, it does...

    • Posted by Author photo of Sylvia F. DionSylvia F. Dion on July 10, 2012 11:37pm:

      Jason, Thanks for your comment and for taking the time to read the whitepaper. Now, to answer your question; unfortunately, it's not that cut and dry. First, the paper focuses on the three federal proposals - bills that are being considered by the United States Congress. In very simple terms, two of those proposals have a small seller exemption that would apply to companies that have less then $500,000 in annual sales - the Main Street Fairness Act and the Marketplace Fairness Act. The other U.S. proposal, the Marketplace Equity Act, has a small seller exemption that would apply for companies with less than one million in annual sales. But as I just mentioned, it's not that cut and dry. You see, first one of these proposals would need to pass for any of these small seller exemptions to apply. Second, each individual state would need to comply with the requirements of whichever of the U.S. proposals passes for the small seller exemption to apply to sellers who sell into THAT specific state. Here's another glitch, a state may have its own state law in place already (or enact it's own state law) which doesn't exempt any seller from collecting sales tax if the seller has nexus to the state (and nexus can be triggered very easily in some states) or which has a very low small seller threshold. In other words, just because one of the three federal proposals passes - states can still enact their own laws as they are not required to implement whatever simplification or procedures the federal law suggests. So, unfortunately, you can not assume that if you have less than $1 Million in gross sales a year that you would be exempt from collecting sales tax in every state that you sell into. I hope this all makes sense. Thanks again for the comment.

  • Posted by eli on May 29, 2012 7:03am:

    I would like to know which states charge tax for e-commerce, and whether the tax is before or after the discount is applied. And, is tax charged on shipping in all states?
    Thanks
    Eli

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