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  1. #1
    Affiliate Manager Lionstail's Avatar
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    January 18th, 2005
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    I'm hearing all kinds of things about the state of charging sales tax on the internet and I'm wondering if anyone has a good grip on where things currently stand and where they are going.

    As I understand it now, those of us who are directly selling merchandise need to charge sales tax when the item is sent from state A to a customer in state A, but we do not need to charge when it is sent to a customer in state B.

    Now I'm hearing that there are sites getting sued by states for not providing sales tax, that federal laws may be changing in this regard, and that a number of sites have started charging sales tax in preparation for what may come.

    All this leaves me a bit confused. What if I act like those other sites and start charging sales tax in case the law changes and the law doesn't change, do I get to keep that money or does the fact that I listed it as a sales tax mean that it is owed to the state anyway?

    Could I charge a blanket 5% to all users regardless of the state they are in and then use this pot of money to pay off all taxes, or would I be doing something illegal by charging some users a tax above what their state requires?

    It occurred to me that one interesting way of resolving the conflict is to establish an account whereby I keep the sales tax money aside until/unless I need it, and if it turns out that I do not need to pay it to the states, make a charitable donation of the money in the account. I figure I can probably get away with this if I put it in the terms and conditions, but I'm really not sure.

    Thank you for your help, Dave

  2. #2
    ABW Ambassador FFoc's Avatar
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    Collecting tax for those states other than your own at this point is voluntary, until the feds change that.

    If you collect taxes and then do not forward them to the appropriate agency, you could face jail time. If you collect them, send them to the appropriate state.

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  3. #3
    Affiliate Manager Lionstail's Avatar
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    Thanks for the heads up FFoc, I definately would like to stay out of jail. I'll have to look more into what some of these other companies were doing. I definately had the impression that companies were collecting taxes now in case they become mandatory later. Either I have the story wrong or I have to figure out how what they're doing isn't illegal. All the best, Dave

  4. #4
    ABW Ambassador FFoc's Avatar
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    What those companies that are collecting are doing is forwarding the taxes on to the appropriate state. Like I said, it's a voluntary decision by those companies - and yes, it is just in case.

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