Sales Tax ????

[hopm]

I ordered a piece of equipment online yesterday. It is being shipped out of Oklahoma. Paid online, was told 3 day delivery by USP. I got an email from the company asking for my tax ID # or they would bill me state sales tax. Is this new? I don't think I have ever paid sales tax on anything I have ordered through the internet. Let me know your thoughts because I know forum members will be in the know. Thanks in advance for your help!!

[DWyatt]

I thought it worked that if there was a storefront location in your state that you got charged sales tax even if you were buying online. No store front in the state would mean no sales tax, but I could be completely wrong, just my thoughts.

[POSTON WIDEHEAD]

I bought my new mill out of state. 
Had to give them my Fed number.
I did....no tax.

[Southside logger]

SCOTUS just came down with a decision a couple weeks ago that internet orders are subject to sales tax. I can't imagine the headache it will cause for small sellers. 

[maple flats]

That's correct, the Supreme Court ruled that sales tax must be charged no matter where you buy it or where it is shipped. I'm just glad food (my maple syrup) is not taxable, it would be a big headache to keep the tax rates up to date on the program that is running my website. Rates can be different even within a zip code, especially when one zip code crosses a county line. The tax is based on the destination not the shipper.

[Southside logger]

Food is taxable here, it has it's own rate. Not sure how that plays into it. 

[petefrom bearswamp]

I read somewhere that this only affects a few states so far
Just bought 4 tires on line, no sales tax

[sprucebunny]

A few states have NO sales tax. If the internet is going to charge me sales tax then I will be making a much greater effort not to buy online !
Like the shipping charges weren't enough !

[Bruno of NH]

In the Tax free State of NH
I will never pay another state's sales tax.
And I won't collect one for another state.

[WV Sawmiller]

   As I read some about the SCOTUS case the ruling was the states had the right to require the internet sales company to collect and turn in the applicable sales tax to the state where the item is shipped. Apparently the states had always the right to require the buyer to pay the tax but they really had no way to verify when such a purchase was made. I knew that if they had a store/facility in the state they had to collect and turn in the sales tax. I am not sure how many states have laws on the books requiring internet sales companies to collect sales tax on their behalf.

    I have to pay sales tax here in WV on services and sales. I first thought before I got my mill I was only going to have to collect on sales then as I set up my business I found our state laws require sales tax on services, such as sawing, too. 

[LaneC]

yep, I bought a dang inner tube for a bike tire the other day (sales tax now).  From now on, I guarantee you, you will be paying another tax. I am not sure how this intermingles with the USPS, but things are going to get better for them in the future I think. I bet next year the usps is not going to be in the red. Some may think I am crazy, and this has nothing to do with the usps (United States Postal Service) but since the thing with the biggest online retailer in the world, I have even noticed the carriers are sometimes delivering even on Sundays.

[Kindlinmaker]

I’m not a lawyer nor an accountant but I have had a great deal of experience working with both of these professions for major corporations. If your state has a sales tax, it is probably a sales and use tax. The “use”part of the tax transfers the payment burden to the end user when a retailer is not in a jurisdiction that requires the retailer to collect the tax. Which means, the consumer is suppose to declare the purchase and pay tax when the retailer does not collect it as in shipping from another state.  As an example, think of the state requiring you to pay sales tax for a car purchased privately before you can register it.   States do not normally go after consumers except in extreme cases and the out-of-state retailer was not required to collect if they did not have a legal presence (not necessarily a store front) in the state to which they were delivering AND delivery was made by a third party. The new rules allow the states to collect the tax without regard for the physical presence requirement.  Details are still being worked out. Some major retailers have traditionally collected and paid the tax because collection has always been a worrisome gray area. There is nothing worse than having someone from the government come knocking on the door saying you owe the state this much tax you should have collected plus this much interest plus this much penalty......no negotiation and virtually no appeal option. Whether you actually collected the tax from the consumer is of no consequence; you owe it to them. I have been in some of these meetings working for major corporations - not fun. I’ve also read of construction guys going to jail for playing games of buying equipment in non-taxed states and bringing it into a taxed state; they throw some fraud charges on top of the others already mentioned.  You haven’t lived until you have crossed the sales tax folks - meaner cousins of IRS collectors. 

[chubby]

Giving the seller your tax ID number allows them to prove that it did indeed leave the state/ country and that’s why they didn’t charge tax. Otherwise the seller can be on the hook to refund the taxes if they ever get audited. 

[Kindlinmaker]

It also transfers any tax liability to you. Any questions, you supplied the number and assumed responsibility. 

[mike_belben]

While we are on the subject, never ever fail to list 1099s you are given.  Say you sell logs to a mill that mails you a 1099 at end of year to declare the income.  They also mail the fed that same one.  A 1099 in your name that you dont list on your return is basically auto audit. 

[Cedarman]

In Indiana the use tax can get complicated.  If I buy a part for one of my skid steers and do not pay sales tax, I am required to pay it with the sales tax I charge my in state customers that are not exempt.  The complicated part is that I pay only 20% of the sales tax.  The skid steer is exempt for certain uses, but not others.  For example, if I unload a load truck it is not exempt use.  When I move those logs to the sawmill it is non exempt use.  If I cut a piece off of the log or change it with a chain saw, any time after that it becomes exempt use.  I can move bundles of lumber all around the mill yard,  exempt use.  when I put a bundle on a customers truck it is non exempt use.  The 20% came about when I was audited.  She said come up with a number that satisfies both of us.  Have fun with sales tax, folks. :D:D

[WV Sawmiller]

Giving the seller your tax ID number allows them to prove that it did indeed leave the state/ country and that’s why they didn’t charge tax. Otherwise the seller can be on the hook to refund the taxes if they ever get audited.

   In WV I have to get not just his number but a from signed by the customer listing his tax exempt number verifying he has a tax exemption and the sale or service qualifies. Example: If I go saw a farmers logs into lumber to build a new barn to use as part of his farming business it is exempt. If he is going to use the lumber to build a vacation cabin it is not. I don't know, or care, so the onus is on him to verify and prove to the tax man if/when the time comes.

[Ron Wenrich]

Looks like the small businessman will be going through virtual storefronts like Amazon and Ebay.  They'll collect the payments and taxes, and the business will pay a service fee.  

[Tom the Sawyer]

When I started my business I got some bad advice, that as a service business, I didn't need to charge sales tax.  A couple of years later I was in a small business course at the local junior college and we had a session with someone from the Revenue Dept.  They determined (and I subsequently got a letter to that fact) that sawmill services are subject to sales tax.  To get square with KDOR, I had to go back and calculate the sales tax I should have collected, and pay that out of my pocket.  Fortunately, my first two years weren't that busy.

In Kansas, they differentiate between "real property" and "tangible personal property", and several others.  Services on real property are not taxable so, if I come in and trim your trees (real property) or cut them down - not taxable.  Once the trees are cut down, they become tangible personal property - services on them are taxable.  Logging - not taxable; milling logs, or cutting firewood - taxable.  Mowing grass - not taxable; raking grass - taxable.  See.... simple.

[Stuart Caruk]

Washington State changed the rule requiring a presence in the State to collect sales tax. Now, they are generating huge amounts of revenue by going to businesses that sold items into Washington State and failed to collect sales tax. And they are very aggressive. How they work it is that they do routine audits of businesses in WA state. When they audit you they require copies of your bank accounts and your tax accounting software to prove that you are not under reporting sales. They look at what you have paid for goods and materials, particularilly those from out of state. It doesn't matter if tax was collected or not. Those businesses will get audited and assesed a tax penalty. I know at least 3 businesses that have been dinged well over a quarter million $$$ because they failed to collect the tax.

They also changed the rules for out of state sales. It used to be that all I had to do was keep a copy of the drivers license proving an out of state sale. Last time I was audited I needed a copy of the shipping method, UPS or USPS to prove the sale was shipped out of state. For Items that I delivered, or service work that I did out of state I was supposed to have a signed contract, noting my time onsite. The changes in rules had a few items I couldn't document. After wasting 8 months trying to prove the tax exempt sales I ended up paying almost $14k and went on with life. I guarantee I won't make the same mistake in the future. 

I suspect all states will follow a similar tactic in their quest to collect even more taxes. FWIW, you're way better off to have a line item audit by the IRS than to have to deal with the State. At least with the IRS, you can go to tax court where you will win if you can prove your case. With the State, you have no recourse. Pay up, or you will be out of business. They seem to make up stuff just to ensure you can't follow the rules.