Tax law

[RyanSmith]

If I'm running a site that sells products out of Loveland, Colorado USA how do I have to charge taxes. Do I just have to charge tax for people that live in Colorado, or do I charge tax for all orders, or how does this work? Does anyone know how this works?

 

Thanks

[Guest]

If I'm running a site that sells products out of Loveland, Colorado USA how do I have to charge taxes.  Do I just have to charge tax for people that live in Colorado, or do I charge tax for all orders, or how does this work?  Does anyone know how this works?

 

Thanks

<{POST_SNAPBACK}>

 

You charge sales tax on the items sold to people living in Colorado based on your state's sales tax laws.

 

People outside of your state are required to claim their purchases on their yearly income tax return and pay use taxes on them.

[gert cuykens]

so let me get this straight ? you have to pay taxes for buying and using something as a customar :huh: with money you already payed anual taxes on in the first place ? Is it just me or does anybody els find this :angry:

[dakatone]

I am not sure that sounds totally correct, but then I am no tax lawyer myself.

 

I would definitely invest some time into reading the *GASP* tax code. The Internal Revenue Code (26 USC) is available here:

 

http://www.fourmilab.ch/ustax/www/contents.html

 

It is accurate and up to date, used thoroughly by the Northern Ohio University's Tax Law divisions.

 

I did a quick search and of course no solutions to Online purchases. I do not believe purchases must be claimed on your return unless they are considered luxury purchases of a predetermined amount. Automobiles fall into this classification that sell for over $25,000 (only an example).

 

I know that for me personally with a Limited Liability Company selling on the Web, I am required to pay taxes on goods sold to Georgia residents (that is where my business operates from). To make this easy for everyone, I am registered to charge taxes at the published state rate (7%), thereby creating an itemized report of the items sold to Georgians. This is compared with the orders report, singling out dollar amount and state listings. Too bad I have to pay taxes on those sales in Georgia, but at least it is relatively easy.

 

Now, if it is true that in some states (California for exapmple) the buyer might be required to list the items they purchased from me, my Terms of Use (legally underwritten) formally state that is their responsibility. A second point if it is true, how many people are unaware of it. :-"

 

If you plan on being in business for the long haul, and plan on doing quite well, spend the dough to run it by a tax lawyer. Compared to what you potentially will make from sales and what you could lose to the IRS, it is worth it.

 

Good luck

 

Ruhl

[Naegle]

This topic is a huge headache for our company.

 

My understanding is you are required to collect sales tax for any state in which you have a physical presence . i.e. - headquarters, warehouses, trucking lines, etc. You can contact each state for specifics, and there are grey areas, so it?s worth the research.

 

Useful links:

NJ taxation

Ecommerce must collect sales tax...

Who pays sales tax on the web...'

Various sales tax rates

 

For example, our company rented machinery to manufacturers for years. The rate was around $50 a month for a machine, which was comfortable revenue; HOWEVER for every state that we had a machine in operation, the state sales tax board viewed that as a physical presence. So, we had to register for sales tax in each state that applied ($$$) then collect sales tax ($$$) and spend extra time and effort process paper work ($$$) and other headaches that followed. To make a long story short, the rental business ceased to be profitable, and we have since terminated those contracts with a few exceptions.

 

Legal issues can make or break your business. Ignorance is not an excuse either. I?d recommend doing your research unless you like government agencies becoming hostile with you.

 

FYI- If a company uses your product a manufactured product or in the manufacturing process, they are sales tax exempt. This applies to farms as well. You will need to file their tax Id if (or should I say when) you ever get audited.

 

Hmmmm. Sounds like a contribution would be nice. Anyone know of a tax exemption contribution? :thumbsup:

[greykher]

It's a State level thing, not governed by the IRS. Most States, Illinois where I live included, you are required to file and pay sales/use tax on mail order and online purchases for which you did not pay sales tax at the time of purchse. from http://www.revenue.state.il.us/Businesses/sales/rot.htm :

If the seller (typically an out-of-state business, such as a catalog company or a retailer making sales on the Internet) does not charge Illinois Sales Tax, the purchaser must pay the tax directly to the department.