Nexus no longer matters

[JimErn]

Well it happened, the 1992 supreme court decision in Quill was over turned today.  You no longer have to have nexus (physical presence) in a state to be required to collect that state sales tax on sales you make online.

I think it will take a year or so for states to get on the band wagon, but as it stands right now you have the responsibility to obtain a sales tax permit for each and every state your customer resides in.  And of course file sales tax reports, including no sales tax due reports, and remit sales tax collected to each state per their schedule.  Oh by the way, there are over 12,000 tax jurisdictions in the US.

However, Amazon is now collecting and remitting sales tax for Washington and Pennsylvania.  Sounds good right, ahh not in WA anyway.  WA requires that you track amazon sales and sales tax collected and report it, then you take a credit for the amount Amazon is supposed to remit, and pay your sales tax.  If you use quickbooks, this can be done in desktop (PITA by the way) but it can not be done in QBO.  

 

[OCtoolguy]

I'll stick to selling right near me and collect no tax. I'll put a "donation" price on it.

 

[kmmcrafts]

They've been trying to enforce this for several years now.. and i think any online business should have figured it's coming sooner or later... I seen this ahead of time and made the decision to sell on a venue such as etsy amazon ebay etc.. because keeping track of this stuff will make it too interesting to do on my own.. I have an accountant that takes care of my tax issues.. 

I have a feeling this is going to wipe out a lot of small time business's due to the complexity of what / how this will all be done.. I know there are lot's of [people that shop online because they can get items cheaper sometimes because they avoid sales tax... what many of those that do this don't probably know is... they are actually supposed to pay the state tax on those online purchases under the "Use Tax" law.. My neighbor ( cousin I grew up with ) is an accountant working for the state and her job is to audit taxes.. specifically she is the one people hate to see LOL.. but the state loves her, 

The next thing coming might just be about those who run a online business without a tax licence.. not sure about other states.. but here.. you're not supposed to be selling online without a sales tax licence and ID numbers.. I personally know a lot of people selling as what the state and IRS would consider a business used things they pick up at auctions and garage sales and the list it on eBay.. some make decent money doing it.. even  few people I know selling like this on etsy... I fear for those who have been doing this.. because eBay etsy and other places are required to be keeping track of this.. and for etsy.. all my records are there for me to view.. I can download sales from way back to 2010 when I first opened up shop and played around as a hobbyist just seeing if something would sell.. 

To sell on Amazon handmade section I couldn't sell until my tax info was in their system.. that is not needed on etsy and eBay.. so many people seem to think they can just sell there without being legal to collect and remit sales tax... those that think that... could be up for an audit one day... legally I've heard they are only allowed to go back 7 years.. but my state doesn't seem to care about that if money is owed to them... but they don't seem to worry at all about if they owe anyone money LOL

All this said.. this is why I always suggest even as a hobby seller.. Take care of the legal stuff before selling.. want to just test the waters to see if something will sell... best to do that as cash in person selling such as a craft fair at a local church..

At the end of the day.. this is done because of those that bought online to avoid paying that "Use Tax" that was their responsibility to do but very easy to avoid doing... now online sellers and accountants can thank them from the bottom of their hearts 

   

[Dan]

The KY tax man shows up at all the craft shows to collect your information. If you don't file they can track you down. I have seen people show up two hours late to avoid the tax man. I have no problem paying my fair share but they sure put the stick eye on you if you start asking them questions. I would rather pay the tax man at the end of each show than at the end of the year (or quarterly). I'll probably close my Etsy store when they start enforcing tax collection. If the federal and government wants me to collect taxes for them I think I'll send them a bill for me doing their job. 

[kmmcrafts]

I'm thinking most small sellers will be exempt.. and I'm thinking that the selling venues are the ones they are after.. I read or heard somewhere that unless you have 2000 orders and $150,000 in sales you'll be exempt.. whatever the case.. I'm hoping my accountant knows what to do.. because I know very little about it.. I'll keep selling and giving my accountant work.. unless it comes to a point where it cost me more money to sell my stuff than I make..

[JimErn]

As I understand it, the minimum sales required for out of state sellers is going to be a state by state issue - if it exists at all.

I see different numbers quoted, but with 20 billion plus up for grabs, I see states, especially cash strapped states, going after this pot of gold.

Amazon now collects sales tax for the states it has a nexus in, and now that they are also remitting sales tax collected in WA & PA, I see that growing to other states.  With this decision, Amazon will start including sales tax for all states.  And if Amazon does not pay it, then you will have to cause you know Amazon is going to report taxable sales to the state and of course part of your deposit will be sales tax collected.

The issue for your accountant is going to be the state requirement for reporting those sales, a conversation better started now than later I think.

[kmmcrafts]

Etsy also recently started collecting tax on WA & PA.. just as Amazon has.. not sure what eBay is doing..

[MTCowpoke22]

That's it. I'm staying in Montana, where we have no sales tax. It all sounds too damned complicated to mess with. You all are welcome to come join me. Since I assume most of us are paid in cash (under the table), the income tax shouldn't be much of an issue.