Sales Tax And E-commerce - MIT OpenCourseWare
Sales Tax and E-commerce1
Courtesy of the Tax Foundation. License: CC BY-NC.2
Ohio Department of Taxation. All rights reserved. This content is excluded from our Creative Commons license.For more information, see http://ocw.mit.edu/help/faq-fair-use. Nevada Department of Taxation. All rights reserved. This content is excluded from our CreativeCommons license. For more information, see http://ocw.mit.edu/help/faq-fair-use/3
Source unknown. All rights reserved. This content is excluded from our CreativeCommons license. For more information, see http://ocw.mit.edu/help/faq-fair-use/.4
Tax-exempt items Massachusetts Department of Revenue. All rights reserved. This content is excluded from ourCreative Commons license. For more information, see http://ocw.mit.edu/help/faq-fair-use/.5
Lipka, Mitch. “Taxes on Fertilizer Illustrate Gray area of Mass. Law.” The Boston GlobeJuly 29, 2012. Tredyffrin/Easttown School District. Footnote 18 from “Applications of PercentsInformation & Background (from Wikipedia). “ April 2014. Tredyffrin/Easttown School District. All rights reserved. This content is excluded from ourCreative Commons license. For more information, see http://ocw.mit.edu/help/faq-fair-use/.6
Sales Tax HolidaysFederation of Tax Administrators’ Sales taxholidays7
Current legal landscape The US Supreme Court has held on multiple occasions(1992 Quill v. North Dakota, 1967 National Bellas Hess)that retailers cannot be compelled to collect sales taxon sales to states where they do not have physicalpresence (“nexus”). Most states require that their residents pay a use tax(equal to the amount that would be paid if their homestate sales tax were levied on out-of-state purchases),but this tax is widely ignored. So purchases mailed to out-of-state customers are defacto tax-free.8
Current attempts to change landscape Some states’ attorneys general are attemptingto broaden the definition of “nexus.” Federal legislation has been introduced (anumber of times) to simplify and harmonizethe system of sales taxes. States have negotiated bilaterally withAmazon to not engage in litigation and/or toextend their tax-free status temporarily ifAmazon builds a facility in the state.9
Amazon Sales Taxes 2012Cohan, Peter. “Amazon’s Sales-Tax-Free Status Cost States 8.6 Billion.” Forbes. October17, 2012.Luhby, Tami. “Get Ready to Pay Sales Tax on Amazon.” CNN Money July 18, 2012.10
Amazon sales taxes 2014 Bensinger, Greg.“Which States Make You Payan Amazon Sales Tax.” The Wall Street Journal.October 1, 2014.11
Fulfillment centers See a map of Amazon.com’s FulfillmentCenters as of April 2015.12
2006:– 21 fulfillment centers 2012:– Collects taxes in 5 states– 30 fulfillment centers (in US) 2014:– Collects taxes in 21 states– 37 fulfillment centers (in US)13
Questions How important is tax-avoidance to consumers(and online retailers)? If the tax-advantaged status of mail-orderretail disappears, what are the likely directeffects on mail-order retail, traditional retail? Are there important general-equilibriumeffects (in addition to the direct effects)? Is the tax-advantaged status likely todisappear?14
Evidence on these points First two questions:– Goolsbee (2000)– Ellison and Ellison (2009)– Einav et al (2012) Third question:– “Amazon, Forced to Collect a Tax, Is Adding Roots” inAmazon packet—Gets at Third Questions Fourth question:– My sense is that tax-advantaged status of mail-orderis likely to continue to be eroded and may disappearcompletely.15
Tax-inclusive priceslowest2ndlowest2ndlowestlowestSuppose we had datafrom ConnectComputers Pricewatch. All rights reserved. This content is excluded from our Creative Commonslicense. For more information, see http://ocw.mit.edu/help/faq-fair-use/.16
So Connect Computers should sell less into NJ@ 11 than @ 9 if consumers care about taxes.Also they should sell more into VA @ 11 than@ 9. Also compare magnitudes of purchasedifferences to get estimate of home-statepreference. Have CC sales into NJ, VA, CA at each hour aswell as prices @ each hour.17
MIT OpenCourseWarehttp://ocw.mit.edu14.27 Economics and E-CommerceFall 2014For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms.
Current legal landscape The US Supreme Court has held on multiple occasions (1992 Quill v. North Dakota, 1967 National Bellas Hess) that retailers cannot be compelled to collect sales tax
Sales Tax Sales tax – tax on purchased goods and services Tax is determined by? Paid by? Helps fund? Does your state have sales tax? A percentage added to the original price of an item 1.00 item charged 6% sales tax 1.06 Anyone who purchases an item charged with sales tax Some states don’t have sales tax Expenses of state .
2 Basic principles for generating a sales tax code respectively a sales tax transaction. A Sales tax code will only be generated if 2 records are available for a transaction: 1. Sales tax group 2. Item sales tax group Criteria for the Sales tax group: this is information about the customer / vendor.
Wisconsin . Sales and Use . Tax Information . Includes information regarding — 5% state sales and use tax 0.5% county sales and use tax 0.1% baseball stadium sales and use tax Publication 201 (1/19) Important Change Menominee County tax begins April 1, 2020 Baseball stadium district tax ends March 31, 2020 Outagamie County tax begins January 1, 2020
The tax rate of 5% applies for both the Wisconsin state sales tax and use tax. The sales tax is based upon the sales price from retail sales. The use tax is based upon the purchase price of the product or service purchased. In counties which have adopted the county tax (see Appendix C for a list of these counties), the tax rate is 5.5%
Pasadena (CA) Chamber of Commerce Paso Robles Chamber of Commerce Perris Valley Chamber of Commerce Petaluma Area Chamber of Commerce . East Haven Chamber of Commerce Fairfield Chamber of Commerce Granby Chamber of Commerce Greater Danbury Chamber of Commerce Greater Hartford BOMA
its sales tax from 5.95 percent to 6.1 percent in April 2019. Sales tax rates differ by state, but sales tax bases also impact how much revenue is collected from a tax and how the tax affects the economy. Sales tax rate differentials can induce consumers to shop across borders or buy products online. FISCAL FACT No. 737 Jan. 2021
its sales tax from 5.95 percent to 6.1 percent in April 2019. Sales tax rates differ by state, but sales tax bases also impact how much revenue is collected from a tax and how the tax affects the economy. Sales tax rate differentials can induce consumers to shop across borders or buy products online. FISCAL FACT No. 686 Jan. 2020
Stamp Duty 83 Tax Payments and Tax Return Filing 85 Monthly tax obligations, Annual tax obligations, Early tax refunds Accounting for Tax 91 Tax Audits and Tax Assessments 93 Tax Collection Using Distress Warrant 100 Tax Dispute and Resolution 102
