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Tag Archive for tax collection

Should Your Business Begin Collecting Out Of State Sales Tax?

William Rogers, Sales And Use Tax Collection

You’ve probably heard about the recent U.S. Supreme Court decision allowing state and local governments to impose sales taxes on more out-of-state online sales. The ruling in South Dakota v. Wayfair, Inc. is welcome news for brick-and-mortar retailers, who felt previous rulings gave an unfair advantage to their online competitors. And state and local governments are pleased to potentially be able to collect more sales tax.

But for businesses with out-of-state online sales that haven’t had to collect sales tax from out-of-state customers in the past, the decision brings many questions and concerns.

What The Requirements Used To Be

Even before Wayfair, a state could require an out-of-state business to collect sales tax from its residents on online sales if the business had a “substantial nexus” — or connection — with the state. The nexus requirement is part of the Commerce Clause of the U.S. Constitution.

Previous Supreme Court rulings had found that a physical presence in a state (such as retail outlets, employees or property) was necessary to establish substantial nexus. As a result, some online retailers have already been collecting tax from out-of-state customers, while others have not had to.

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Pay Your Tax Or Get A Credit Rating Downgrade!

According to Nassim Kadem’s article in today’s Australian Review (13 March 2014), the Australian Taxation Office (ATO) has floated the idea of having outstanding tax debts listed by the personal credit rating agencies. This would require a change to the secrecy provisions of relevant taxation statutes.

However, in the last several decades, these provisions have been considerably watered down to accommodate information exchange between the ATO and various Australian and international government agencies. Accordingly, it might be expected that Australia’s Parliament will not be averse to the ATO suggestion.

ATO Second Commissioner Geoff Lepper was appearing before a Parliamentary hearing Read more

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