Sales tax on internet purchases

November 23rd, 2011 → 8:33 am @

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Creative Commons License photo credit: ilouque

Don’t Mess with Taxes, Kay Bell, is keeping her eye on the issue of sales tax for on-line sales.

This can affect many writers and self publishers who sell their books via their websites. States are beginning to pass laws requiring on-line retailers to collect sales tax from out-of-state customers.

Tax software maker and publisher CCH reports that of the 45 states that have a sales tax, 16 have enacted or have legislation pending that would require online retailers to collect sales and use tax or, at the very least, to more strongly urge in-state customers to pay use tax.

The Marketplace Equity Act (MEA) of 2011 (H.R. 3179), which reflects the tax wishes of the Retail Industry Leaders Association, was introduced last week. It would require sellers to collect sales and use tax for states in which they lack a physical-presence nexus.


Ouch! Small booksellers/authors will have to collect and pay sales tax to states even when they lack a physical presence in that state!

What a paperwork headache!

Fortunately, HR 3179 has a small seller exemption.

An exception for remote sellers with gross annual receipts in the preceding calendar year from remote sales of items, services, and other products in the United States not exceeding $1,000,000 (or such greater amount as determined by the State involved) or in the State not exceeding $100,000 (or such greater amount as determined by the State).


Don’t panic yet. The bill is still in a US House Committee and many never become law. I’ll keep you posted.

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Carol Topp, CPA


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