Who is responsible for online sales tax collection?
The conversation surrounding online sales tax collection between states has been a focus of discussion of late. As more and more brick and mortar business are struggling to keep their doors open, the question of opening a shop online and its benefits become more and more prominent. With less brick and mortar businesses and more online businesses the responsibility of sales tax collection and who is responsible, also comes into question. Currently, the law requires online retailers to collect the tax only in states where they have a physical presence. Which raises the question, what about businesses beyond state borders who sell within who sell locally?
This topic of interest raised many question for our CEO, Perry Roach.
“The question of eCommerce Sales Tax is clear. Why should you treat an internet purchase different from a Bricks and Mortar purchase? Why should the internet create a different view on the law the rules of your country?”
On Tuesday the discussion surrounding sales taxes on online purchases headed to the Supreme Court. They heard arguments whether to overturn the 1992 decision of the Quill Corporation vs. North Dakota and heard a new case focused on online purchases South Dakota vs. Wayfair.
What does this mean for retailers?
A reversal could mean that all online retailers must collect sales tax everywhere. A point that brick and mortar retailers insist will level the playing field between themselves and online competitors. And will help provide state and local governments with the tax they deserve. “Taxes are there for a reason. They pay for schools, police, other services. Countries services have, and standard of lifestyle have been built with the collection of taxes on Goods and Services. As more eCommerce takes over, Governments need to continue this revenue source, or they will have to reduce services or increase the intake of taxes elsewhere meaning tax hikes” says CEO Perry Roach. Many small retailers depend on online sales. If they must start complying with the complexities of collecting and remitting sales taxes nationwide, many could be forced to abandon that part of their business.
In a recent Washington Examiner opinion piece, Lyle Gore had this to say “For a small operation like ours, a reversal by the Court would mean we would somehow be stuck collecting taxes at different rates and under vastly different rules for 45 states and thousands of localities. We would have to keep track of the exact channel by which our sales are made — by phone, email, or some other means — and that would determine the sale’s tax treatment. We would also have to untangle the sales we make to resellers in other states versus direct sales to end customers.”
How Netsweeper will help:
We at Netsweeper agree that internet tax laws should not fall to the responsibility of the retailer. We believe we have the solution. We have developed a product that, using our technology takes the burden of remittance out of your hands and allows the tax to be collected at the government level. This allows retailers to continue with their day to day business while still utilizing online sales channels.
Internet tax laws should not fall to the responsibility of the retailer. A government body needs to be given the tools to manage sales tax effectively. “Taxes are there for a reason. They pay for schools, law enforcement, transit, and many other services we as a society rely on daily. Countries services and their standard of lifestyle have been built with the collection of taxes on Goods and Services. As more eCommerce takes over, Governments need to continue this revenue source, or they will have to reduce services or increase the intake of taxes elsewhere meaning tax hikes.” says CEO, Perry Roach.
The Retail and Service business must move to a level playing field.
How do you feel about online sales tax collection and what do you think the answer is for collecting sales tax online?