taxforms

Sales Taxes For Online Sellers, Made Simple

EBay makes it easy to sell just about any merchandise online. Just open an account, use an app like Worldlister.co or the eBay mobile app, and scan your item’s barcode, and bada-bing, the app takes care of the rest. Well, almost. Selling online means you have to pay sales taxes on your sales within your state, and it gets a little sticky for online sellers.

Here are the rules:

• you must always – always — register for sales tax in the state where your business or home office is located;

• whenever you sell something to a buyer who resides in your homestate, you must collect and pay your state’s sales tax on that transaction;

• you do not have to worry about sales tax in other states, UNLESS your business has a mailing address in another state, or (in the case of selling through Amazon’s FBA program) they are storing your stuff in one of its warehouses there;

• if you are in either of those situations, then whenever you sell your business or home office is located; state, you must collect and pay your state’s sales tax on that transaction;business has a mailing address in another state, or (in the case of selling through Amazon’s FBA program) they are storing your stuff in one of its warehouses there; something to a buyer who resides in THAT OTHER state, you must collect and pay THAT STATE’s sales tax on that transaction.

That was pretty easy, except for the Amazon part. How do you know if Amazon is storing your stuff in an out-of-state warehouse?

Short answer: you don’t, unless they tell you.

If Amazon tells you your stuff is being warehoused in another state, you have to contact that state’s tax authority (search online for “[name of state] department of revenue” and you probably will get there), fill out a registration form, and start collecting sales taxes there quarterly (four times a year).

DO NOT do this yourself – have your accountant do it for you. It’s easy to make mistakes on the registration form, and most accountants won’t charge you for filling it out. Your accountant can also teach you how to fill out sales tax returns in each state where you are doing business.

When you sell on eBay, etsy.com and other online retail sites that don’t operate “brick and mortar” warehouses and therefore don’t require you to charge sales tax anywhere but the state in which you are selling from.

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Cliff Ennico

Cliff Ennico

Cliff Ennico is a small business attorney, syndicated columnist, author and former host of the PBS television series "Money Hunt." This post is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.