Retroactive Sales Tax Bill

in the U.S.

[Tonearm]

Does anyone know what's happening with the whole out-of-state sales tax issue in the U.S.? I'm a little worried about getting hit with a retroactive sales tax bill.

- Grant

[diamondgrl]

The US Congress may do foolish things every now and again, but one of them is not to apply a retroactive sales tax on small business owners who were not required to collect such a tax in the first place. It would be political suicide.

As for a prospective tax, that's another matter. And if for some reason you collected such a sales tax in the past but failed to pass it along, that's also another matter.

[lgn1]

Big difference between retroactive sales tax (not going to happen) and failure to remit (which is collecting on back sales taxes owing).

The big thing is NEXUS. If you don't have a presence in a particular state (the state can't require you to collect the sales tax).

The definition of NEXUS is complicated, and is differnt from state to state. For example in Florida, if you have a company drop ship for you from Florida, it is considered NEXUS and you are required to collect sales taxes from Florida residents. In other states, a physical presence is needed for NEXUS.

The states are working on a project to have a uniform sales tax, and require merchants to collect sales tax from all states on Internet sales. Getting the required 35 states to agree on anything is next to impossible, so this process is going very slowly and wont happen for another 2 years, and most likely never.

[Tonearm]

Ok, very glad to hear that about retroactive sales tax. I read an article that was linked from my Wells Fargo Business email newsletter and it freaked me out a bit. I've deleted the email so I can't find the article now.

- Grant