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Sales tax on the internet

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  • YellowSubmarine
    2015-02-13 01:28:18 AM
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    One of the glorious things I think about buying stuff online is that you get to avoid sales taxes. But I'm hearing lately from random places that they are in the works of doing away with this 'loophole'. Is that true? How would it even work if they did start charging?

    Would it go off of the bank acct or credit/debit you use to purchase stuff with, to determine the state that gets the tax? Wouldn't that be silly and unfair for travelling folks? Say I live in NC, but travel to NY for business, and buy a few things from Amazon from my hotel room. Should NC or NY actually get that tax money? Or would it go off of where your comp is located? If so, I could see that drawing even more people angry over data compiling, with GPS tagged locations in all of our devices? What will give here?
  • JaredS
    2015-02-13 10:42:03 AM
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    This is a complicated issue. I know certain states are trying to figure this out, but there's no concrete formula just yet. Your hypothetical situation is a great example. How exactly do two states determine who gets the money? That's a really tough question that I, and many other people, don't have a good answer for.
  • J.K.Logic
    2015-02-15 06:36:47 AM
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    Found this resource, that breaks down all 50 states specific laws regarding sales tax online: Internet Sales Tax: A 50-State Guide to State Laws

    Seems like if the business selling the product online (depending on the state), if it has a psychical presence/location, then you get charged sells tax. Here's an exert:

    The current default rule throughout the United States is that you must collect sales tax on Internet sales to customers in those states where your business has a “physical presence.” The physical-presence rule is based on a 1992 United States Supreme Court decision, Quill Corp. v. North Dakota, that addressed the obligations of mail-order businesses to collect sales tax on out-of-state sales; the decision has been extended to include online retailers. Generally speaking, a physical presence means such things as:

    having a warehouse in the state

    having a store in the state

    having an office in the state, or

    having a sales representative in the state.


    Looks like they are still in the works of working through the finer details nationwide, and its really not clear at all if they are close to a national answer. Seems like its a state by state solution. As this is not quite complete enough an answer, please share if you find a better one.
  • JaredS
    2015-02-16 05:53:07 PM
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    J.K.Logic Wrote: Looks like they are still in the works of working through the finer details nationwide, and its really not clear at all if they are close to a national answer. Seems like its a state by state solution. As this is not quite complete enough an answer, please share if you find a better one.
    The only problem is certain states don't have a sales tax. It would be very difficult to come up with a fifty state solution when every state has different rates or no rate at all. I think this is something that will have to be solved at the state level and then states will have to work out an agreement with the various companies.
  • BlackDawg
    2016-07-22 04:36:12 PM
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    My question is this, consider someone purchasing an item for a friend that lives in a different state. If the retailer has a physical location in both the state of the person that is making the purchase and the state the person that is receiving the item, which state gets the sales tax? The purchaser's state or the receiver's state? Which tax rate is used to figure sales tax for?
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