The political battles around sales taxes and the Internet have raged on for years. The solutions that seem the most fair to the states are the least fair to online retailers. Debates have been coming to a close, however, as we are now in the final steps of passing an Internet Sales Tax Bill that is not without problems. This has not passed yet and is not signed into law. It probably will be, so let's go ahead and talk about what this means.
Businesses will be expected to collect sales tax on purchases based on the location of the buyer. That will most likely require businesses to apply for and file sales tax reports for every state. Each state has their own tax laws and many municipalities also have their own taxes as well. This could mean several hundred different tax rates if municipal sales taxes must be collected. State sales tax may apply to different items in different states as well. I'm uncertain about those variances, but I expect there to be issues for certain products in certain states. This is the most complex way possible to implement sales taxes and this is the way it's written in the legislation moving through congress right now.
The good news is that congress decided to exempt small businesses based on annual sales of $1M or less. This is also under debate as the IRS defines small business by much larger revenue numbers. In addition, the bulk of all online sales tax revenues would come from the top 500 websites however the $1M limit will force many small businesses to deal with this administrative nightmare.
I predict some type of tax table registry service will exist and be available to businesses at a small fee. This will be attached to your shopping cart and sales taxes will be calculated live based on these subscription databases. This technology is not readily available now but certainly will be soon enough.
If your business does more than $1M in sales, it is advisable to pay attention to this legislation and contact us regarding the technology changes required to support these new laws. The consultation is free.
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About Our Show Advisor: Jerry Hobby is the CEO and techno-guru of Anything Internet. He is always looking for new and better ways to help people get more results from their websites. Visit www.AnythingInternet.com or call 800-686-5986 to schedule your free consultation. Anything Internet - Turning web sites into web businesses.