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| Vintage mirror for sale in my online store, ForsythiaHill |
As with many things these days, it's complicated. I think many of us pay sales tax for any retail store purchase without thought. It's a little fee added to each receipt that we have no option of reducing or avoiding. It's just THERE. But we might notice this fee when buying products online. Sometimes it appears, other times it's missing (which is an extra bonus). The reason you often do not see a sales tax fee on your online purchase is because you live in a different state from where your item is located (technically, it's where the sellers business is registered that you are buying from).
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| One of a kind vintage dress in my shop, ForsythiaHill |
The real complication comes in when states - and even jurisdictions within states - are allowed to set their own sales tax rates and rules. To any small online seller, the tracking, collecting, and submitting sales tax fees is akin to getting a root canal. It's a total downer, brain buster, and all around pain in the A**. I can only imagine that Apps are being developed (or probably have been developed) to manage this headache / toothache.
In order for states to begin collecting sales tax on EVERY single sale regardless if you buy a product in a retail store or online, each state will have to pass a law to do so. The problem is that when states begin make individual laws to begin collecting tax for online sales (and they will in droves) they can craft any rule they please. Congress needs to act ASAP to restrict the crazydom that can develop from this ruling!
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| I'm need one of these after writing this blog! |
There are two states that have already begun collecting sales tax from anyone and everyone no matter if you reside in that state (Washington State and Pennsylvania). Fortunately for small sellers these states only require those that sell $10,000 in sales a year to their states have to collect and remit. So at least some guidelines exist as to how to draft these laws. Given that over 40 states and DC have their very own rates, one can imagine the laws will also vary.
So in a nutshell, if you buy online you will see sales tax added more and more as states adopt the permission to collect sales tax from not only buyers living in the state of product origin, but from just about any US buyer. I'm going to really have to think if an International sale can have a state sales tax added. Hum?
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| Small sellers need your business to stay in business! |
Currently the purchaser of the product (BUYER) pays the tax and the seller has to submit that collected tax to the proper state. I sell mainly on Etsy and so far they are collecting this tax - so far - for WA and PA (from the buyer) and submitting it to the states for the millions of sellers - THANKFULLY. If they did not, I would feel many sellers would leave their platform, so it is in their best interest to do this. The problem comes about if you have your own website and YOU have to collect this fee and distribute it to over 40 states. To a small seller the thought of calculating this is astronomically time consuming. I will note that South Dakota has proposed to limit the burden of collection to higher sellers -- more than $100,000 in sales annually.
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| Higher prices are not liked by online sellers or buyers! |
I do see the foreshadowing of higher fees charged to sellers by Amazon, Ebay, Etsy, and other online webstores. For them managing sales tax collection will be fairly route and simple but you can bet they will use this as an excuse to charge sellers higher fees. Amazon has the highest sellers fees and has been paying state taxes to over 40 states for years because they have warehouse locations in nearly every state. Etsy just raised their seller fee and is now also charging this fee on the shipping cost as well.
There doesn't appear to be any break for the small online seller at the moment or for the consumer. Buying online just got a little more expensive. As the cost of running an online store increases, sellers throw in the towel. Consumer choice suffers as the variety of items that can be purchased declines.
When will buying online be looked at as too costly and consumers dream about the good old days when you could just go to that thing once called a mall. The evolution of the shopping experience has yet to be mapped out.
~Rebecca
