Where We Live: Internet Sales Tax

More consumers shop online but don't pay the sales tax on their purchases.

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Kevin Sullivan
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Richard Pomp
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Where We Live: Internet Sales Tax
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Where We Live: Internet Sales Tax

In the week after Thanksgiving, U.S. consumers spent nearly $6 billion online. Those numbers come from research firm ComScore, which says online sales are already up 15% from last year.

The benefits of internet shopping can include free shipping, no crowds and seemingly...no sales tax.

Across the country, states miss out on more than $7 billion from online sales.

Connecticut is among the states trying to figure out how to rake in this revenue.

Today, online sales and taxes - Connecticut’s so-called Amazon tax is an attempt to get at that revenue stream. But Department of Revenue Services Commissioner Kevin Sullivan says the state should forget about $9.4 million in revenue from Internet taxes and get ready for a legal fight.

Will you report your online purchases to the government for taxes? Do you work for a company that has been affected by online sales or by the Amazon tax?  


  

Comments

After reading all this I

After reading all this I wonder if I should know a good investment fraud attorney. All these laws and internet sales taxes are too much for an old average guy like me and I'm afraid I'll mess it up unintended. Things seemed easier back then where there was no internet. But life means evolution and we have to deal with it

So far nothing like this

So far nothing like this happened but I wasn't a heavy online shopper. I only used the online classifieds and they weren't all in this state, perhaps that would explain it.

Currently you are not

Currently you are not responsible to calculate, collect and remit sales tax in states where you do not have a physical presence/ nexus. If your business is located in Massachusettes and you have not engaged in physical business practices anywhere outside MA borders, your current obligation is to process sales tax for MA (Ask your lawyer for your specific circumstance).

Under the proposed legislation retailers will be asked to calculate. collect and remit sales tax for any state has simplified/STreamlined there tax rates, definitions and remittance procedures. My businesses online component has enabled a FREE automated tax processing service provided by a Certified Service Provider. Since doing so I no no longer pay to frustrate my accountant and bookkeeper. Processing my taxes in NY as well as for my customers in MA is simple. Since I have been physically doing business in MA previously I am required to collect and remit MA sales tax.

Currently, check the laws and consult with your attorney and accountants, under the current situation you do not maintain responsibility to collect and remit CT sales tax for your CT customers unless you have been doing so or have established a physical nexus in CT by conducting business there in the past.

Under the proposed Federal legislation all states, including MA and CT, will have to simplify their tax rates, definitions and returns in order to compel out of state online retailers to collect. As I pointed out the good news for small business will be sales tax collection will be an automated process. Currently 25 states have Streamlined their tax rates, definitions and filing procedures. All 25 states have one simple return and be filed automatically when utilizing a Streamlined Certified Service Provider (CSP). The CSP I utilize is FREE and as mentioned saves my business from unnecessary administrative burdens.

The proposed legislation will

The proposed legislation will enable states to collect sales tax due on purchases made by their residents. In Other other words if you live in CT and purchase online from Amazon they will collect and remit sales tax due just as the hardware store does in your town. Your sales tax on online purchases is determined by the destination of goods purchased. As a CT resident you ill pay CT sales tax, and as a NY resident you will be responsible for NY sales tax.

Listener email from Sally

The sales tax is already a regressive tax, since low income families typically have to spend a higher percentage of their income for the things that they need.

Are online shoppers disproportionately affluent, because they are heavy computer users? If so, it would seem that in effect the current state of affairs makes sale tax even more regressive, since it allows rich people to avoid sales tax when lower income people have less opportunity to do so.

This seems like another way that the current system might be unfair.

Listener email from Carter

As a buyer of a friend's vehicle, what tax will I be looking at when buying it from him.

He had an old car that he bought without a title (bad move) and do he never was able to register/use the car. So It sat, useless in his driveway or a while. He offered to give the car to me of I wanted to deal with all of the red tap and jump through all of the DMV's hoops. Needless to say once he saw I was really pushing to get this taken care of to get the title and restore the ability to use the car, he asked that if I did get the title, could I pay him 500 for the car. I agreed. I have finally after 4 months of difficulty with the DMV been as to get the title. He is tryin to now increase the price saying that he's going to have to pay a tax. I believe this is just a way for him to squeeze more money out of me, because I dont think that he will have to deal with any tax; won't I be the one paying this tax? And what can I do to protect our original verbal agreement about this car?

Listener email from Peter

Why not ask the Amazon + the Ebays for advice + assistance.

They surely comply with consumption taxes globally - why not here in the country which gave them their start ?

Listener email from Bill

This would be great for large businesses who can just appoint someone to take care of collecting the tax for every state. I'm am one person business that brings over $100,000 dollars into the state. It would be difficult for me to collect taxes for all states and send out 50 checks.

Small online business is under attack as we speak by big business trying to grab market share and shut small business out of the internet by massive ad spending.

This would help big business greatly. Most government in already bought by big business. This is just one more example.

Listener email from Christine:

Since I would pay sales tax in New York for an item I purchase there, why would I pay sales tax in CT for an item purchased on Amazon?

Listener email from Peter

My brothers and I own a small retail shop in Massachusetts and we want to sell items online. We are incorporated in Massachusetts so I assume we need to collect Massachusetts state sales tax. What are my responsibilities if the buyer is located in Connecticut?