At 9:06 PM -0400 8/13/08, [EMAIL PROTECTED] wrote:
I'm no tax accountant either, but it seems to me that the location of your
dropshipper is irrelevant. He is not the one selling the product to your
customer. He is selling it to you. And you don't have to pay sales tax
to him because you should have a state resale certificate, making you
exempt from having to pay sales taxes. And, IMO, the location of your web
server is meaningless. I've never heard of that being an issue.
So, the only transaction that could possibly be taxable is between you (in
Michigan) and the end customer (in California). Unless Michigan law
requires you to collect sales tax on something sold to a person in
California, and I doubt that is true, no sales tax gets collected at all
here.
I was just pointing out that Internet business has more State
involvement than typical sales.
While you may say the location of the server is not an issue, I would
bet that you would get an argument from MO's state tax revenue
service if you told them they had no taxable part in the transaction
I described.
And as far as the location of the drop-shipper, what if I was not in
this country while making the sale, do you think that OH's state tax
revenue service would find the drop-shipper exempt from collecting
taxes by a company selling something in their state?
Currently, there are very few laws (that I am aware) that requires
you to collect taxes on Internet sales, but every State in the union
is scrambling to figure out how they can lay their greedy little
hands on Internet sales.
And lastly, while Michigan doesn't have the specifics in-place,
Michigan still requires you to collect whatever they finally deem
required ex post facto.
While this doesn't seem reasonable, I've seen this happen before. I
remember the Feds ('80's) requiring us to pay taxes that they had not
figured out the formula for nor even created the paperwork. You
actually had to guess how much you owed and make payment. AND if your
payment was off by more than 10 percent, there would be penalties.
That's a true story!
Now, does any of that make you feel better about Internet taxation?
Just a word of concern from someone who has been down this road before.
Cheers,
tedd
- previously said
At 7:14 PM -0400 8/13/08, (Margaret) Michele Waldman wrote:
Here's another question.
Is an ebusinesses supposed to file taxes and licenses in every state they
are doing business?
I'm not a tax man nor an attorney, but the problem is much more
complicated than anyone here has stated.
Clearly, if you're doing business in State X and a customer who lives
in State X buys something, then you are required to collect and pay
State X's sales tax. That's pretty simple. But the net complicates
things a lot.
But here is a typical problem that my wife and I face everyday, she
is a jeweler located in Lansing, Michigan (http://earthstones.com).
One of our customers in California contacted us for a piece of
jewelry. We show them a picture of the item via our web site which is
located on a server in Springfield MO. The customer likes it and
wants to purchase the piece and pays us via PayPal (a global
company). The manufactor of the jewelry is located in Columbus Ohio
and per our instructions and payment, they drop-ship directly to the
customer in California. Now, who owes what State taxes?
Remember, there are four States involved (not counting PayPal) -- and
I am positive not one of them will say "No thanks" to the possibility
of cashing-in IF they can.
When we have congressmen like Ted Stevens who was opposed to an
amendment regarding network neutrality and called the Internet a
"series of tubes", we are far from resolving the State tax problem.
As Will Rogers once said "Be thankful we are not getting all the
government we are paying for."
Cheers,
tedd
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