Collecting out of State taxes

[FmGrowit]

Collecting Sales Tax for Out-of-State Sales

Dr. Ralph F. Wilson, Wilson Internet, Rocklin, CA - Sep 20, 2006

"I am with a community college and am starting an e-commerce venture. Our college's business manager believes that we should be charging out-of-state buyers their state sales tax. This doesn't seem to be common practice, but he says it is a grey area and some state could come after us demanding payment. What do you think?" -- Ron Faulkner

On legal matters, of course, you should consult an attorney; the following does not constitute legal advice. The short answer to your question is that the US Supreme Court ruled in Quill Corp. v. North Dakota (1992) that mail order businesses don't need to collect sales taxes except in states where they have a physical presence. A company is required to collect sales tax only for its own state (unless the organization has a site, office, or store in another state also).
However, Streamlined Sales Tax (SST) legislation is gradually being adopted by specific states (www.streamlinedsalestax.org). When this is in place, Congress will probably require companies over a certain revenue threshold to collect other states' sales taxes.
To implement this, cooperating states are working to simplify their tax rules for online sales to make tax collection more feasible. Probably smaller businesses and organizations will be exempted because of the hardship and expense involved. Larger retailers will need to use software, such as Taxware and Alalara AvaTax, that calculates sales tax according to ZIP code for the state to which goods are shipped. A few large retailers are collecting sales tax now in multiple states in exchange for a guarantee of future immunity in case a state would ever file a suit against them for sales taxes due. But no state is likely to go after a small organization -- especially one that doesn't have a physical presence in multiple states -- since the costs of a suit would greatly outweigh any potential gain.

This law will likely be repealed (I don't think it's even a law, but it is a ruling of the Federal Supreme Court). The feds will most likely make it a law since State and Federal law makers are all kin.

[FONT=Times New Roman, Times, serif]Out-of-State Sales Tax Collection Obligations
Is Physical Presence Still the Standard? [/FONT]​

By Jennifer M. Boll​

AUGUST 2008

[FONT=Times New Roman, Times, serif]Certain types of indirect presence in a state, alone, will not trigger a sales tax collection obligation. A business owner can be comfortable that the mere selling of products over a website or by a catalog and shipping them to a state (by the U.S. Postal Service or common carrier) will generally not trigger a sales tax collection obligation because such activity does not constitute a physical presence. The U.S. Supreme Court confirmed that such activities do not create nexus in 1992 in Quill Corp. v. North Dakota (504 U.S. 298). Any other contact with a state, however, should be carefully reviewed because it might obligate a business to collect sales taxes.[/FONT]

April 2011 California Use (sales) Tax law

http://docs.google.com/viewer?a=v&q...P8rjPh&sig=AHIEtbSclPa2tebtZuI7k83hXXCQF4sTJw


This CLEARLY put the burden of payment on the resident of the state....NOT the vendor.

 

[BarG]

If you look at the top 500 web sites in the united states according to Alexa, A web information company, amazon and ebay are among the top ten. Your talking millions of shoppers. If or when they try to start charging out of state tax on internet and catalog sales in this economy I'm sure there will be a major uproar among the general public, not to mention a hell of a lot of buisness owners who rely on internet sales. I don't think all states would follow suit. If you have to pay sales tax on top of shipping there really is no savings no matter how much you search for the best deal. I buy out of state for that very reason and have been for over 20 years through catalogs and now the internet. To bad the ceo of ebay didn't get elected for Cal. governor.