Navigating The Internet Sales Tax Laws

QUESTION:
I have been contacted by my local city government to say that my business is scheduled to be audited to determine if I owe any sales tax from items purchased on the Internet. Can they really make me pay this tax? I thought you could buy things online tax free? -- Katie R.

ANSWER:
I hate to burst your internet bubble, Katie, but they are within their rights to audit your business and demand payment of sales tax on items purchased on the Web.

Internet sales taxation has been a topic of contention even before Amazon sold its first book and Priceline booked its first flight.

One of the more controversial points is that no one, including our own government, seems to have a clue how to implement a fair and logical Internet taxation process.

With over 7,500 different local, county and state taxation systems in the United States, you can understand the controversy. In 1998, Congress did what it usually does when faced with a potentially explosive issue like Internet tax collection -- it decided to put off making a decision. Congress enacted a three-year moratorium on the collection of taxes to give an appointed advisory board time to come up with an acceptable solution.

That moratorium ended last year and opened the door for municipalities to begin collecting sales tax on their own.

Here in Alabama the sales tax collection department is airing radio spots asking Alabamians to step up to - and toss dollars into - the proverbial collection plate. The commercial kindly suggests that if I have purchased anything from an online retailer, I am honor-bound to proclaim such purchases and submit the appropriate sales tax to the collection department right away. They thank me in advance for my cooperation.

So, Katie, when the auditor shows up at your door the best thing you can do is smile politely and be totally forthcoming. The sales tax that you pay is a small price for the convenience of shopping online.

Now where did I put all those Amazon.com receipts?

Small Business Q&A is written by veteran entrepreneur and syndicated columnist, Tim Knox. Tim's latest books include "Small Business Success Secrets" and "The 30 Day Blueprint For Success!" Related Links: http://www.smallbusinessqa.com http://www.dropshipwholesale.net

In The News:

China’s rich rush to shelter $1 trillion from new taxes  Economic TimesWealthy Chinese are rushing to shelter assets and income in overseas trusts before new tax rules go into effect next month.
Hospitals get tax notices for implants  Economic TimesIf GST is applied on medicines and implants used on patients instead of a composite tax rate, then this may result in a huge impact and hospitals will have to ...
Confused about tax return changes? Here's how to find your new bracket  CNBCThe IRS has updated its individual income tax brackets for the new year. The agency has also tweaked its standard deduction and done away with a $695 ...
5 steps you can take before year’s end to avoid an unpleasant tax surprise next year  MarketWatchSome things shouldn't wait — planning for Tax Day is one of them.
What Is Taxable Income?  U.S. News & World ReportGet organized and understand what types of earned and unearned income can be taxed before the start of the tax-filing season.
The case for raising the alcohol tax  Vox.comA higher alcohol tax would save lives, prevent crime, and mostly affect excessive drinkers.
GST Council may look to rationalise 28% slab; taxes on cement may be cut  Moneycontrol.comThe council, chaired by Finance Minister Arun Jaitley and comprising his state counterparts, has pruned the 28 per cent slab by cutting tax rates on 191 goods ...
EDMC proposes two new taxes, education cess in 2019-20 budget  Times of IndiaNew Delhi, Dec 10 () Cash-strapped East Delhi Municipal Corporation (EDMC) on Monday proposed two new taxes and an education cess in its budget for ...
Airtel Niger faces shutdown over non-payment of taxes  Business TodayThe General Tax Directorate of Niger ordered the closure of the offices of Airtel Niger, seeking tax amounts that have been disputed by Airtel.
Best ELSS fund to save taxes this financial year  Economic TimesIf you have any mutual fund queries, message on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.
Income Tax Return (ITR) filing: This State Bank of India scheme helps you save on taxes; gives 7.35 pct int...  Zee BusinessIncome Tax Return (ITR) filing: The State Bank of India also offers an investment tool that allows you to claim an exemption in tax. The investment attracts an ...
Shakira charged with tax evasion in Spain  The GuardianSpanish prosecutors have charged the Colombian singer and philanthropist Shakira with tax evasion, alleging she avoided €14.5m (£13m) in taxes by claiming ...
Know These 6 Federal Tax Changes to Avoid a Surprise in 2019  U.S. News & World ReportTaxpayers should review their withholdings to ensure they don't owe a big tax bill in 2019, experts say.
California’s New Tax on Texting  Wall Street JournalCalifornia brings to mind the Beatles' famous song “Taxman.” The state already has the highest income-tax rate in the country on top of punishing sales and gas ...
This falling market offers an opportunity to cut your taxes in retirement  CNBCThere might be a silver lining in this fall's recent market tumult: Now could be a good time to convert some of your retirement savings to a Roth IRA. We explain ...
EDMC proposes 2 new taxes and an education cess in its 2019-20 budget  Business TodayEDMC Commissioner Puneet Kumar Goel made the announcement of new taxes while presenting the budget at the civic agency's Patparganj headquarters.
Climate change: Protecting the poor from green taxes  BBC NewsAs President Macron caved into the yellow vest fuel tax protests, President Trump was triumphant. The French humiliation showed people rejected the sort of ...
Fulton prevails on tax case, a win for property owners  Atlanta Journal ConstitutionFulton County property owners will not be billed a second time for 2017 property taxes, after a judge ruled the county was within its rights last year when it froze ...
Make these 2 tax moves in time to cut your tax bill  Yahoo NewsSaving for retirement is a good idea, of course, but if you time things right and do your homework, some of your nest egg could also do double duty as a tax ...
Investing solely to avoid taxes is a bad, wasteful strategy: View  Economic TimesWhile many opt for creative accounting of expenses and tax deductibles, these practices also needlessly complicate matters for inheritors.
Tax on your gold and real estate investments  LivemintHere is a look at the taxes that apply to short-term and long-term gains from these two asset classes.
India's tryst with taxes  Forbes IndiaWhile the rich pay a bulk of the income tax paid by individuals in India, many wealthy people do not pay their share of taxes.
Panel to overhaul, simplify Direct Tax laws to submit report by Feb 28  Economic TimesThe finance ministry Monday said the task force to draft a new direct tax law to replace the existing Income Tax Act will submit its report by February 28.
Withdrawals Under National Pension Scheme To Be Tax-Free  BloombergQuintWithdrawals made by subscribers of the National Pension Scheme at the time of retirement will be made tax free.
‘Historic’ Tax Refunds Will Extend Retail Boom Into 2019  BloombergPolling shows that many Americans don't like the landmark tax overhaul passed a year ago, but maybe that's because they haven't received a bulk of the ...
'Tax Liens' Mean Towns Win, Homeowners Lose  NPRWhen homeowners can't, or won't, pay their property taxes, local governments auction off the right to pay those taxes to private companies. Housing advocates ...
All you need to know about gift tax this wedding season  Times NowGifting a valuable asset during a wedding is quite common in India. However, it is crucial to know that these gifts attract a gift tax as per the Income Tax Act.
An Echo Press Editorial: In defense of tax increases...  Alexandria Echo PressOK, the headline for this editorial is a little misleading. Nobody — including the newspaper's editorial board — believes that local governments should go around ...
The Tax Cuts And Jobs Act: 3 Changes You Should Know  ForbesTax season is coming more quickly than you might think — has the Tax Cuts and Jobs Act affected you? Read here to discover more!
7 year-end tax tips to boost your refund  CNBCThe new tax law has put a whole new spin on year-end tax planning, though it hasn't eliminated the need to do it altogether. "The tricks we had in our back ...
Divorcees can save on taxes — if they take this one step  CNBCIf you're planning on shedding weight in 2019 — in the form of your soon-to-be ex — be sure you understand this tax-planning benefit. Why the "head of ...
Roanoke's treasurer taking a tougher approach to delinquent meals taxes  Roanoke TimesTwo Roanoke restaurateurs are facing embezzlement charges for failing to pay more than $30000 in meals taxes to the city.
What the Amazon tax breaks really mean  Vox.comI think the easiest way to understand Amazon's HQ2 and the specific question of cities handing out tax subsidies is to abstract away from the particular details of ...
The New 2019 Federal Income Tax Brackets And Rates  ForbesWe're just about to enter 2018 tax filing season. But already the IRS has issued new federal income tax brackets for 2019. Confused? That's completely ...
Beware! These tax-saving investment mistakes can sink your finances  The Financial ExpressIt's said, if you fail to plan, it means you plan to fail. So, it's better to plan before you make your tax-saving investments, so that you may reach your financial goal ...
California considering text message tax – but iMessages would be exempt  9to5MacCalifornia is considering introducing a tax on text messages. The reason? Because nobody makes phone calls any more. While you might not be aware ...
Partial win for Dartmouth developer in bid to reduce property taxes  CBC.caThe owner of the King's Wharf redevelopment in Dartmouth, N.S., will save some money on property taxes after a case that went before the Nova Scotia Utility ...
Feds Collect Record Taxes Through November; Still Run $305.4B Deficit  CNSNews.com(CNSNews.com) - The federal government collected record total tax revenues of $458,653,000,000 in October and November, the first two months of fiscal 2019, ...
Taxmen catch buffalo meat, slap Rs 25 lakh in taxes, penalty  Economic TimesThe Commercial Taxes department officials in Belagavi have collected Rs 25 lakh in GST levies as well as penalty after intercepting four trucks mounted with ...
No tax on up to Rs 50,000 interest for senior citizens  Times of IndiaIndia Business News: In a notification issued on December 6, it has clarified that no TDS has to be deducted under section 194-A of the Income Tax (I-T) Act in ...
Pay Your Taxes In Bitcoin, Trigger Tax Losses On Price Drop Too  ForbesWith Bitcoin and other crypto prices down again, many holders don't want to sell. But if you owe taxes, how about paying them in Bitcoin? Selling now may ...
Cell Phone Taxes and Fees in 2018  Tax FoundationA typical American household with four wireless phones paying $100 per month for taxable wireless *service* can expect to pay about $229 per year in wireless ...
French lesson for Modi: Don't raise fuel tax  Economic TimesRIOTERS IN PARIS Last weekend, demonstrators turned Paris's wealthiest neighbourhoods into a battle zone to make themselves heard. Until Saturday ...
Is NPS More Attractive after Additional 20% Tax-free Component?  MoneylifeOn Monday, finance minister Arun Jaitley announced changes to the National Pension System (NPS), increasing the total tax-exempt cover to 100% of the NPS ...
California is considering taxing its citizens for sending text messages  BGRRegulators in California have come up with a proposed plan to raise more money to pay for expanding internet connectivity in the state by adding a text ...
FCC panel wants to tax Internet-using businesses and give the money to ISPs  Ars TechnicaAt AT&T's urging, committee proposes tax on websites to pay for rural broadband.
Maybe It’s Not Taxes That Scare Off Business but Failing Subways  The New York TimesAmazon is coming to New York despite the city's transit horrors. Other companies may not be so forgiving.
Why only 2% of Chinese pay any income tax  The EconomistOF COURSE NOT, I'm not an idiot,” says Liu Yongli, a chauffeur in Beijing, when asked whether he has ever paid personal income tax. Despite earning well ...
10 things you probably didn't know you could deduct on your taxes  Business InsiderWhat deductions are you missing when filing your tax return? Here are 10 that are often overlooked ahead of tax day 2019.
Ten companies pay 45% of all corporate tax in Australia  The GuardianCorporate tax increased by 20% between 2015-16 and 2016-17, rising $7.5bn to $45.7bn, driven by surging commodity prices.
Even with tax cut, Dem Delco councilman says county could slash more  The Delaware County Daily TimesEven as Delaware County Council moved forward to reduce taxes for county property owners, one councilman said even more could be saved if corruption was ...
Final decision on Allentown's tax increase to come Saturday  69News WFMZ-TVA battle between Allentown's mayor and city council over a hefty property tax increase -- the first in 13 years -- is going down to the wire.
State judge OKs Brookhaven-LIPA tax settlement  NewsdayA State Supreme Court judge on Friday gave the green light to a settlement agreement between LIPA and Brookhaven Town that will gradually cut the utility's ...
Going Through Divorce? Start These 3 Steps Today To Save On Taxes  ForbesThe Tax Cut and Jobs Act eliminated the alimony deduction for divorces after 2018. The new law will mean less money for expenses of the two household.
How to save tax on capital gains arising from selling a house  Economic TimesMy 71-year-old father had purchased a house in 1972 for Rs 1,000. Now he is planning to sell it for Rs 28 lakh. What will be his capital gains tax liability?
Scotland freezes threshold for higher-rate income tax  The GuardianScottish finance secretary to freeze threshold for higher-rate income tax at £43431 to help finance cuts for least well-off.
Gov. Inslee proposes $54.4B state budget with new tax on capital gains  The Seattle TimesGov. Jay Inslee's $54.4 billion proposed state operating budget represents a roughly 20 percent increase from the $43.7 billion budget that he and state ...
House Democrats to seek Trump tax returns: Pelosi  ReutersDemocratic leader Nancy Pelosi said on Thursday that members of congress from her party will seek to obtain President Donald Trump's tax returns when they ...
Madras High Court Rejects TTV Dinakaran Plea On Income Tax Reassessment  NDTV NewsThe Madras High Court on Friday dismissed petitions filed by AMMK leader TTV Dinakaran challenging the reassessment of his income tax for 1995-96 and ...
Taxpayers Beware! Never fall for this income tax refund fraud, warns I-T Department  The Financial ExpressIf you have received an email or SMS from someone asking you to share your debit card details to be able to get your tax refund in your bank account, then ...
Central govt staff can now save tax via NPS with only 3-year lock-in  Economic TimesSubstantially reducing the lock in for availing section 80C tax benefit on NPS investment the government has brought it on par with one of the most popular tax ...
State income tax to drop, edging closer to 5 percent  The Boston GlobeThe state's income tax rate will drop from 5.1 percent to 5.05 percent in January. But other changes could be in store for taxpayers if the economy keeps ...
US State of Ohio Accepts Bitcoin for 23 Types of Taxes  Bitcoin NewsThe U.S. state of Ohio has set up a cryptocurrency payment portal and reportedly starts accepting payments in bitcoin for 23 types of taxes this week. “Ohio has ...
Good jump! Corporate tax collection up 18 per cent in April-November, fastest in five years  The Financial ExpressCorporate tax collection grew an impressive 18.3% in April-November of FY19, the fastest pace in at least the last five years.
California proposes a plan to tax text messages  CNNSan Francisco (CNN Business) California regulators want to tax text messages to increase funds for programs that bring connectivity to underserved residents.
More Property Tax, Health Plans Part Of Proposed Delhi Civic Body Budget  NDTV NewsHike in property tax, levying of professional and betterment taxes, and plans for a health scheme on the lines of Ayushman Bharat for Class IV employees were ...
Income Tax Return (ITR) filing: No need to generate slip! From bank ATM to Aadhaar, 5 steps to tax redempti...  Zee BusinessIncome tax return (ITR) filing: Taxes form a major part of the outgo for any salaried employee. However, not everyone has to pay taxes and file for Income Tax ...
Direct tax collections rise 15.7% YoY for April-November period  Economic TimesThe direct tax collections are up 15.7% for the April-November period from corresponding period a year ago, data released by the government on Monday ...
How senior citizens can avail tax break on interest income under Sec 80TTB  Economic TimesBudget 2018 introduced a new section, 80TTB, under the Income Tax Act which allows senior citizens to claim tax break on specified interest income up to Rs ...
Income Tax panel won’t cut rates; but don’t lose heart, here’s what it will do for taxpayers  The Financial ExpressThe task force was set up by the finance ministry in November last. Arbind Modi was made the convenor of the panel and he retired on September 30.
France’s protesters are part of a global backlash against climate-change taxes  Washington PostThe single most effective weapon in the fight against climate change is the tax code — imposing costs on those who emit greenhouse gases, economists say.
The Golden Age of Rich People Not Paying Their Taxes  The AtlanticAn eight-year campaign to slash the IRS's budget has left the agency understaffed, hamstrung, and operating with archaic equipment. The result: a ...
Are the French hit especially hard by fuel taxes?  The GuardianA planned rise sparked the gilets jaunes protest – here's how their fuel costs compare with the rest of Europe.
New Arizona ban on taxing 'services' might wreck city budgets. So cities lawyer up  AZCentralProp. 126 bars new or increased taxes on services, but the voter-approved measure did not define "*service*". Restaurant waitress. A waitress retrieves dishes at ...
Tax on free services: PMO set to wade into ₹40,000 cr spat between banks, revenue dept  BusinessLineMumbai, November 25. With banks staring at a massive tax outgo of ₹40,000 crore on free services provided to customers to maintain a minimum balance, and ...
'Taxes, Taxes and Taxes': Tax-Burdened Protestors Reach Tipping Point in Socialist France  CBN NewsThe French are used to high taxes, but it was a new carbon tax that finally pushed French taxpayers to the tipping point, and ignited the worst protests in 50 ...
Edmonton city council approves 2.6-per-cent property tax hike  CBC.caProperty owners in Edmonton can expect a 2.6-per-cent tax increase in each of the next four years after city council passed the 2019-22 operating budget Friday.
Oregon lawmakers get a taste of possible tax hikes in 2019  OregonLive.comBusiness begins for the day on the floor of the Oregon House of Representatives on May 14, 2015 at the Capitol in Salem. Randy L. Rasmussen/Staff LC- The ...
Taxman starts questioning & issuing notices to BPOs  Economic TimesIndustry trackers fear that more and more companies may now be issued notices and questioned.
Paris Is Burning Over Climate Change Taxes -- Is America Next?  ForbesThe bottom line is this: economic freedom—the kind you get with a large middle class—leads to prosperity, economic growth, and technological innovation.
Taxpayers Alert! Have you filed your income tax? Remember these deadline nears; know from TDS, TCS to chall...  Zee BusinessAlthough one would not like to share their income and income from other sources with authorities, however, it comes as a helping hand for government in ...
BIR files tax raps against 20 firms, 4 businessmen  ABS-CBN NewsMANILA- The Bureau of Internal Revenue (BIR) filed with the Department of Justice Thursday tax evasion cases against 20 companies and 4 individuals based ...
Nassau property taxes take spotlight at reassessment meeting  News 12 Long IslandNassau residents are getting the chance Wednesday night to weigh in on the county's controversial property reassessments.
Qualifying for disability tax credit an uphill battle for many amid spike in CRA rejections  Financial PostOne of the most valuable tax benefits for persons with disabilities is the disability tax credit (DTC), which can be worth between $1,500 to $2,700 of combined ...
North Dakota governor proposes tax exemption for military pay, pensions  Military TimesGov. Doug Burgum wants to exempt military pay and pensions from North Dakota income taxes, arguing in part that retaining veterans could help the state fill ...
Tax savers start hunting for best ELSS ahead of tax-saving season  Economic TimesTraditionally, January to March is known as the tax-saving season. However, the season has already started in December ahead of the tax season next year.
Why the days of fuel taxes funding bridges and roads are numbered  Stuff.co.nzOPINION: A recent United Nations report suggests we're having the wrong debate at the pump. The UN Intergovernmental Panel on Climate Change (IPCC) ...
China Seeks to Defuse Trade War With Reversals on Cars, Corn  BloombergQuintChina will remove the punitive duty on automobiles imported from the U.S. for three months in an effort to defuse trade tensions with the world's biggest ...
'No tax benefit on house sale if new flat is in wife's name'  Times of IndiaIndia Business News: The Income-Tax Appellate Tribunal (ITAT)'s Mumbai bench recently denied a taxpayer I-T benefits available when long-term capital gains ...
Rs 262 crore cyber-tax fraud unearthed in Delhi  Times of IndiaNEW DELHI: The Delhi government's Trade and Taxes Department has unearthed a cyber-tax fraud totalling Rs 262 crore, happening since 2013 with over 8,.
Hindustan Unilever pitches for reducing corporate tax rate  Moneycontrol.comWhile GST has proven to be a game changer and is positively impacting taxation practices,
Five ways to e-verify your ITR  Economic TimesFind out the various easy, secure and quick ways to verify your income tax returns (ITR).
Six tax deductions you'll lose on your 2018 return  CNBCIf you were hoarding receipts in a shoebox with the hope of claiming a big break on your 2018 taxes, prepare to be disappointed. That's because the Tax Cuts ...
How Trump's (Private) Tax Returns Could Become Public: QuickTake  BloombergThough candidates for the U.S. presidency aren't required by law to show voters their tax returns, they almost always do so as a gesture of personal disclosure.
Converting company to LLP is a transfer, hence taxable, rules I-T Appellate Tribunal  Economic TimesMUMBAI: A new tax ruling threatens to challenge a strategy that allowed thousands of businesses and professionals to reorganise themselves and attract ...
National Pension system: Now get tax-free maturity withdrawals; check details here  The Financial ExpressThe government has made the whole 60% of the NPS accumulated corpus tax free, bringing it at par with PPF and EPF, besides raising its contribution to 14% of ...
ETWIW: Multicap funds, financial planning errors, and efficient tax planning in Kolkata  Economic TimesDo multicap mutual fund schemes make more sense after the recent re-categorisation exercise by Sebi?
How to avoid tax saving traps set by unscrupulous wealth managers, bank officials  Economic TimesBy Team ET Wealth Looking for a tax-saving option? How about a plan that gives your tax savings, provides tax-free income at regular intervals and gives a big ...
How long do you have to keep your income tax related documents?  Economic TimesDocuments such as rent receipts, section 80C tax saving documents etc. which prove the claims made by you in your tax-return are advised to be kept safely.
Big crackdown on GST evaders! Tax evasion worth whopping Rs 12,000 crore detected in April-November  The Financial ExpressThe government has detected GST evasion worth Rs 12000 crore in 8 months till November, a senior tax official said Wednesday.

Amending Procedural Laws for Collection of E-taxation

The electronic transaction ordinance defines the certificated copies in which... Read More

To Tax or Not to Tax - This is the Question

To tax or not to tax - this question could... Read More

Reducing Taxes Through Dividend-Salary Mix Calculations

Should I take wages or dividends from my privately owned... Read More

Anticipating Your IRS Refund Can Cost You Plenty

While accountants are reaching for aspirin, millions of Americans are... Read More

Need an Offshore Sales Office in a Tax Free Environment?

The 100 year old investment-banking firm of... Read More

Where to Find Tax Breaks for Your Home Based Business

April 15th looms in front of most people every year... Read More

Taxation of Forgiven Debt: The 1099C & You

Often people fall on hard times and stop paying on... Read More

Hurricane Katrina ? How To Use Your Business Loss To Get A Refund on 2004 Taxes

With the massive losses caused by Katrina, the economy of... Read More

The Implications of Income Tax Charge on Estate Planning

OverviewIn the Pre-Budget Report of December 2003 the Chancellor Gordon... Read More

Marriage or Divorce ? Check Your Social Security Number

Newlyweds and the recently divorced should make sure that names... Read More

Your IRS Tax Appeal Rights

Are you in the middle of a disagreement with the... Read More

Tax Reform, My Way

We need real tax reform and we need it now.... Read More

Surprising Truths About Tax Preparers

Choosing the right tax preparer for your business is a... Read More

Small Business Tax Credit - Americans with Disabilities Act

Many small businesses complain when confronted with the expense of... Read More

Tax Strategy - Let Washington Pay for Your Corvette, Porsche, or Air Plane

Deducting Your Auto ExpensesAuto deductions are a very complex topic.... Read More

Keeping Your Own Money ? NOT Handing It Over To The Taxman

Most people trying to make a crust online (or offline... Read More

Identity Theft ? Impacting Your Taxes?

If your identity is stolen, your finances can quickly become... Read More

Home Based Business Tax Deductions

Running a home based business reaps many wonderful tax deductions... Read More

Rental Property Tax Deductions

Own residential rental properties? This article discusses how income from... Read More

Tax Trap #4 -- The Quagmire of Depreciation

If you are a Small Business Owner or Self-Employed Person,... Read More

How To Claim CHILD TAX CREDIT The Right Way And Add An Extra $2,000 To Your Refund

The U.S. Department of Agriculture estimates that it costs nearly... Read More

Correspondence From The IRS ? Yikes!

It's a moment every person dreads. You pick up the... Read More

Employment Taxes ? Depositing With The IRS

If your business has employees, you must pay employment taxes.... Read More

Military Reservists, Enlistees May Get Deferral of Back Taxes

Reservists called to active duty and enlistees in the armed... Read More

Highlights of IRS List of 2005 Tax Scams

Each year, the IRS lists various scams taxpayers get caught... Read More