Taxes and more paperwork, but it will save you some money!

Online retail is undergoing a big
shakeup, the day that online retailers have been dreading but also expecting
has finally arrived. That’s right sales taxes are becoming an unavoidable
reality. The last nail in the tax-free shopping coffin came last June when the
supreme court weighed in on the Wayfair v. South Dakota case and determined
that the old standard of having a physical presence within a state was outdated
and instead choose to focus on the connection to the state or nexus how much
business, the number of orders and dollar sales transacted with a particular
state. As any online retailer will tell you, not having a physical presence in
a particular state is by no means a barrier, and states have finally woken up
to the fact that they are missing out on millions of dollars of lost revenue in
the form of sales taxes not collected on these sales.

Now the good news for
independent retailers is that most states are setting the bar fairly high
before you are required to collect sales tax. The threshold determined in the
Wayfair v. South Dakota case is $100,000 or more in sales or 200 or more
transactions to the state. Most states are adopting this same threshold, but some
are setting the bar higher or lower in terms of dollar sales and transactions.
It’s highly likely that most if not all states will eventually come into
lockstep with the current $100,000 in sales dollars or 200 transactions or more
threshold, but until then it’s important to understand your potential exposure
in any given state. Your first step should be to check your sales by state for
the previous year and then determine where your sales are going and how many,
and how much you are shipping to a particular state. Sellers operating on sites
like Amazon and eBay it’s a bit more complicated especially if you throw
fulfillment by Amazon into the mix. It does appear highly likely that these
sites will begin to collect sales tax on the seller’s behalf, but again this
has not happened yet so as a seller on these platforms it is your
responsibility to monitor and remit these taxes where applicable. This may seem
a bit scary to some sellers but again the threshold has been set quite high in
most states if you have not yet hit $100,000 in annual sales then there is very
little need to be concerned but if your close or over in one or more states do
yourself a favor and consult an accountant familiar with the new regulations on
internet commerce.

What this means to our customers is
that in order to avoid paying sales tax you will now be required to fill out
some basic paperwork. The form is called the Uniform Sales & Use Tax
Exemption Certificate. Most states have exceptions for buyers who intend to
resell tangible purchases like liquidated merchandise. Yes, it does require you
to fill out some more paperwork, and I know no one likes paperwork but the good
news is it’s simple, and it saves you money. Fill out the form and avoid those
added costs to your bottom line.

Sales tax will not stop online
retail in fact it’s legitimizing it, consider this just a small bump in the road
that will soon be forgotten.

Below you will find a copy of The
Uniform Sales & Use Tax Exemption Certificate with instructions on how to
complete the form.

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