Home > Internet, Taxes, The Economy! > The tax you should be paying

The tax you should be paying

February 28, 2011 Leave a comment Go to comments

CNN ran an article today discussing one of my favorite topics:  State and local tax!  The article,The tax you should be paying, discusses one’s obligation to pay use tax (which is like sales tax) on Internet purchases.

Realizing I’m probably one of 15 people in the world who find this interesting, I’ll keep this post brief.  There is an interesting dilemma for states because there are millions of dollars at stake, but the costs of enforcement are extremely high. It costs a lot of money to go after someone who is not paying use tax.  However, the amount that states would collect from each person who violates this law (read: everyone) is less than the cost of tracking down how much each person owes.

It’s also interesting how amazon.com, which has little/no actual physical presence in most states does not have an obligation to remit sales tax (legislation is trying to change this), but a business like staples.com has physical presence in 48 states, and has a duty to collect and remit sales tax on its purchases.  I could talk about this all day.  Contact me if you’re interested (ha!).  On a serious note, when starting a new business, it is very important to ensure that you are properly registered with your state’s taxing authorities.

Interesting tidbit: there are five states that do not have a sales tax.  Those states are New Hampshire, Oregon, Montana, Alaska and Delaware.  The acronym is “NOMAD.”  I dare you not to mention that at your next cocktail party.

Categories: Internet, Taxes, The Economy!
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