US Standardized Sales Tax

Difficult or necessary?

[bwnbwn]

Sales tax to internet orders isn't far off. How will you cope with the laws coming. From the read it looks like they are pushing for an universal internet tax to simplify the ecommerce site on setting up the cart.

[foxnews.com...]

[edited by: bwnbwn at 8:15 pm (utc) on April 17, 2009]

[bakedjake]

While no one wants to pay tax, from a merchant perspective, unified regulations about tax and nexus would be a great step forward from the mess that currently exists.

[bwnbwn]

My first thought here is that each and every ecommerce site will have to be verified somehow.
How will this be done?
Will this stem the tide of shady sites popping up?
Who will govern this massive undertaking and are just those living in the US under the law and the out of country ecommerce sites that sell within the US gonna have to comply?

[bakedjake]

It's par for the course up here in Canada. You have to register for provincial or harmonized sales tax, collect it, and remit it monthly.

The sales tax mess in the States is terrible at the moment. In Massachusetts for example, if your trucks drive on the roads more than some low amount (I think it's 6 or 10 times a year), you have nexus, and are legally obliged to remit taxes. There was also big case in MA not long ago that ruled that a credit card company had nexus because of the scale of their direct marketing efforts via the mail.

Sales tax penalties are harsh and liability flows up to directors and officers. They can pierce the corporate veil to collect back taxes.

Again, no one wants to pay tax, but standardizing it is a HUGE step forward for merchants. While the initial implementation will likely cost money, the amount businesses pay in legal costs for tax opinions will go way down in the future as there will be clear regulations.

There are so many e-commerce sites now with sales (or excise) tax liabilities that they don't know about. You would be stunned at what little you have to do to create nexus.

[Rugles]

It's par for the course up here in Canada.

This could really give us Canadian merchants selling into the US an advantage. If you are shipping into the States from Canada, everything falls under Nafta so it would violate the agreement if they try and tax those imports.

[bakedjake]

If you are shipping into the States from Canada, everything falls under Nafta so it would violate the agreement if they try and tax those imports.

NAFTA only speaks to import duty, not sales tax. Canadian merchants that ship directly to certain states in the US may owe some sales tax and don't know it.

But, you're right in that this is good for Canadian merchants. Right now Canadian merchants that sell into the US have a minefield to deal with.

It's even more complicated if you're using a third party warehouse in the US for distribution and fulfillment which is common for expedited shipping times, dual ordering in USD and CAD to avoid exchange rate issues, and not saddling your customers with customs brokers difficulties.

If it's not standardized soon, the States are going to go nuts with it and it will be absolutely impossible to navigate.

[RockSolidWes]

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System: The following message was spliced on to this thread from: http://www.webmasterworld.com/ecommerce/3896252.htm [webmasterworld.com] by bakedjake - 4:14 pm on April 20, 2009 (edt -4)

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The new bill would rewrite the ground rules for mail order and Internet sales by eliminating what its supporters view as a “loophole” that, in many cases, allows Americans to shop over the Internet without paying sales taxes.

[tech.yahoo.com...]

[edited by: buckworks at 8:05 pm (utc) on April 20, 2009]
[edit reason] Linked to more authoritative reference [/edit]