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Supreme Court: Online shoppers can be forced to pay sales tax

Taxes and regulation

fhs8

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Anybody found a solution to this?

I found this news article (it doesn't clarify much): America’s New Sales-Tax Mess

I also figured this thread needed a bump ;)

The solution is to start registering in states where you need to register. Coming up Oct 1st 2018 many states are enacting their remote sellers sales tax laws.

New Jersey apparently requires foreign registration with the secretary of state to remit sales tax.

https://www.state.nj.us/treasury/taxation/pdf/pubs/tb/tb79r.pdf

A foreign corporation has a corporate franchise in this State if:
1. It has registered with the New Jersey Department
of Revenue and Enterprise Services; and/or
2. Holds a certificate, license, or other authorization issued by any other State department or agency authorizing the company to engage in corporate activity in this State.

So yes now you also need to file income taxes in NJ if you're required to charge sales tax. You can't register a corporation to pay sales tax in NJ through their system without registering a foreign corporation and getting a registered agent. Nobody is mentioning this. None of my competitors are even bothering charging sales tax yet in other states let alone going to pay income tax. It seems that everyone is asleep at the wheel.

If you sell ANYTHING in volume to people in other states I would really check to see if you need to charge sales tax. Sales tax can apply to services such as online memberships, online videos/content, mobile app services/purchases, telephone answering, repair, reports, data processing, etc... Two hundred app sales at $1.99 can mean a sales tax nexus and income tax nexus.

If this continues it's going to be a complete disaster for many online businesses and many will end up shutting down. If enough states add income tax nexus to remote sellers it will cost thousands for a startup business to pay for registered agents and minimum corporate taxes.


Disclaimer: I am not a legal professional and I do not give professional legal advice.
 

Patrickg

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I'll help bump, because I'm yet to find a solution.
The solution is to start registering in states where you need to register. Coming up Oct 1st 2018 many states are enacting their remote sellers sales tax laws.

New Jersey apparently requires foreign registration with the secretary of state to remit sales tax.

https://www.state.nj.us/treasury/taxation/pdf/pubs/tb/tb79r.pdf



So yes now you also need to file income taxes in NJ if you're required to charge sales tax. You can't register a corporation to pay sales tax in NJ through their system without registering a foreign corporation and getting a registered agent. Nobody is mentioning this. None of my competitors are even bothering charging sales tax yet in other states let alone going to pay income tax. It seems that everyone is asleep at the wheel.

If you sell ANYTHING in volume to people in other states I would really check to see if you need to charge sales tax. Sales tax can apply to services such as online memberships, online videos/content, mobile app services/purchases, telephone answering, repair, reports, data processing, etc... Two hundred app sales at $1.99 can mean a sales tax nexus and income tax nexus.

If this continues it's going to be a complete disaster for many online businesses and many will end up shutting down. If enough states add income tax nexus to remote sellers it will cost thousands for a startup business to pay for registered agents and minimum corporate taxes.


Disclaimer: I am not a legal professional and I do not give professional legal advice.

I read that document completely different than you. From my interpretation it clearly shows as an online business with no employees or office you wouldn't have to file.

These things slowly work out, and honestly even if it gets bad it's a barrier to entry. That's actually not a bad thing. Just trying to take the different route and be optimistic here!
 

fhs8

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I'll help bump, because I'm yet to find a solution.

I read that document completely different than you. From my interpretation it clearly shows as an online business with no employees or office you wouldn't have to file.

These things slowly work out, and honestly even if it gets bad it's a barrier to entry. That's actually not a bad thing. Just trying to take the different route and be optimistic here!

You can't pay or file NJ sales tax without registering with the New Jersey Department of Revenue. You can't register with the New Jersey Department of Revenue without an NJ entity ID. Registering with the dept. of revenue alone by statute causes a corporate franchise in the state to exist.


A foreign corporation has a corporate franchise in this State if:
1. It has registered with the New Jersey Department of Revenue and Enterprise Services; and/or
2. Holds a certificate, license, or other authorization issued by any other State department or
agency authorizing the company to engage in corporate activity in this State.


State of New Jersey Online Tax/Employer Registration

Registration is required to do business in New Jersey. Please note that all corporations, LLC’s and limited partnerships must register using their New Jersey Business Entity ID and EIN. If you are registering a partnership or proprietorship, you must provide either your SSN or EIN. This number will serve as your business tax ID in New Jersey.

Disclaimer: I am not a legal professional and I do not give professional legal advice.
 
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fhs8

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Colorado will be implementing their out-of-state sales tax on December 1st, 2018. What makes them different than other states is that they have what's called home rule municipalities. Meaning that municipalities can have their own sales tax license, rates, and rules. There's 271 of them and if you register for sales tax in Colorado you'll have to comply with each municipality regarding sales tax. Most of these municipalities don't even have a way to register or pay sales tax online so you'd have to file out the form by hand and mail them in. It can cost $60+ just to register for a sales tax license in one municipality. Also no software out there seems to work with these home rule municipalities.

Here's a small sample of the forms out of state business owners "doing business in Colorado" need to fill out. Some municipalities don't have online service so you'd need to fill out the forms by hand. These forms typically need to be filled out and filed even if there are no sales:

https://www.townofbreckenridge.com/home/showdocument?id=2498

https://www.gjcity.org/contentassets/f6f25b02056445b8bce0f4b40aadaf2e/monthly-sales-tax-returns.pdf

http://www.gunnisonco.gov/docs/Sales Tax Return Form.pdf

https://townofgypsum.com/sites/default/files/Sales Tax Form_2.pdf

Sales Tax | Wheat Ridge, CO - Official Website

Business Taxes | Denver Treasury Division

Some of these cities also require a BUSINESS LICENSE to remit sales tax and you may need to pay income/revenue tax on top of that plus registration. Not registering in one city can carry large fines.

They are already moving forward with this and it's expected to be implemented on December 1st. You CANNOT pay home rule sales tax through the state. You must register in each one in order to pay.

A final hearing is being held on November 30, 2018 at 2pm. So if you're going to be impacted by this you might want to read the regulations and then send an email in the PDF below about what you think about them.

https://www.colorado.gov/pacific/sites/default/files/102618 rule making rescheduled.pdf
 

Patrickg

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We are going to need congress to vote something in. And it’s rare that I side with the federal government over state government. Unfortantly, we just created a dead lock in the house and senate.

Welcome to a well established Repblic.

My hope is that one of the states creates a tax haven. If I was governor of a state like Montana. I would do that and you would have so many companies flocking to your state.
 

Tom.V

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Colorado will be implementing their out-of-state sales tax on December 1st, 2018. What makes them different than other states is that they have what's called home rule municipalities. Meaning that municipalities can have their own sales tax license, rates, and rules. There's 271 of them and if you register for sales tax in Colorado you'll have to comply with each municipality regarding sales tax. Most of these municipalities don't even have a way to register or pay sales tax online so you'd have to file out the form by hand and mail them in. It can cost $60+ just to register for a sales tax license in one municipality. Also no software out there seems to work with these home rule municipalities.

Here's a small sample of the forms out of state business owners "doing business in Colorado" need to fill out. Some municipalities don't have online service so you'd need to fill out the forms by hand. These forms typically need to be filled out and filed even if there are no sales:

https://www.townofbreckenridge.com/home/showdocument?id=2498

https://www.gjcity.org/contentassets/f6f25b02056445b8bce0f4b40aadaf2e/monthly-sales-tax-returns.pdf

http://www.gunnisonco.gov/docs/Sales Tax Return Form.pdf

https://townofgypsum.com/sites/default/files/Sales Tax Form_2.pdf

Sales Tax | Wheat Ridge, CO - Official Website

Business Taxes | Denver Treasury Division

Some of these cities also require a BUSINESS LICENSE to remit sales tax and you may need to pay income/revenue tax on top of that plus registration. Not registering in one city can carry large fines.

They are already moving forward with this and it's expected to be implemented on December 1st. You CANNOT pay home rule sales tax through the state. You must register in each one in order to pay.

A final hearing is being held on November 30, 2018 at 2pm. So if you're going to be impacted by this you might want to read the regulations and then send an email in the PDF below about what you think about them.

https://www.colorado.gov/pacific/sites/default/files/102618 rule making rescheduled.pdf
This is EXACTLY the type of craziness I was expecting. The short term play for smaller ecom stores will be just completely avoid sales in places that enact such legislation.
 

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