To Tax Or Not To Tax

A Note From Tina Kersen, AccountingWEB Contributor

The other day I hopped online to order some Ray Ban sunglasses. I was pleasantly surprised when I signed onto Shades.com to find the exact pair of shades I admired in the mall for exactly half the price. Prior to ordering at the virtual "check out," I figured my total savings

· $60.00 ($120 retail vs. $60.00 online)
· $9.90 (taxes I would've paid on the retail price - lucky me, I'm not a resident of Massachussetts)
· $4.95 (shades.com's typical S&H charge was waived as a "bonus")
· $74.85 - exactly $14.85 more than I actually paid for the sunglasses.

I couldn't help but be happy about my tax savings. Apparently I'm not the only one who has noticed that I skipped out on paying taxes because I conveniently ordered out of state. Next week a Federal Advisory Commission on Electronic Commerce will meet to try to figure out what to do about online tax issues.

Some of the questions facing online sellers are:

· Will a Federal tax be applied to all products sold on the Internet?
· Will states try to impose a sales tax on products sold from other states' online companies?
· Will the temporary suspension of new Internet taxes be lifted when it expires (18 months from now) or will it be extended?

Don't worry. There are plenty of taxes to be found on the Internet. As accountants, you understand that sales tax applies to sales made in the state where a merchant has a "physical presence." The Internet has thrown a kink in the system, however. If the merchant has a physical store in the state from which the customer is ordering, sales taxes are in order. But what about virtual retailers like Amazon.com and Etoys? That's right, they only have to collect tax in the states where they have an actual presence.

The subject has been batted around for some time now and it doesn't look like there will be any tax answer relief anytime soon. Stay tuned…

You may like these other stories...

I am a recent MS Accounting degree graduate and I am looking into a programming/IT related career. Anyone here have experience or know any accountants that diverted their careers into IT/Programming/System design, etc?...
Event Date: May 29, 2014 In this presentation Excel expert David Ringstrom, CPA brings you up to speed on the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both...
No field likes its buzzwords more than technology, and one of today's leading terms is "the cloud." But it's not just a matter of knowing what's fashionable. Accounting professionals who know how to use...

Upcoming CPE Webinars

Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.
May 1
This material focuses on the principles of accounting for non-profit organizations’ expenses. It will include discussions of functional expense categories, accounting for functional expenses and allocations of joint costs.