Sales Tax Law for “TheGreetingCardShop.com” – June 11, 2016

Federal Sales Tax e-commerce law:

Introduced in Senate (03/10/2015)

Marketplace Fairness Act of 2015

Authorizes each member state under the Streamlined Sales and Use Tax Agreement (the multistate agreement for the administration and collection of sales and use taxes adopted on November 12, 2002) to require all sellers not qualifying for a small-seller exception (applicable to sellers with annual gross receipts in total U.S. remote sales not exceeding $1 million) to collect and remit sales and use taxes with respect to remote sales under provisions of the Agreement, but only if such Agreement includes minimum simplification requirements relating to the administration of the tax, audits, and streamlined filing. Defines “remote sale” as a sale of goods or services into a state in which the seller would not legally be required to pay, collect, or remit state or local sales and use taxes unless provided by this Act. Prohibits states from beginning the exercise of the authority granted by this Act for a specified period after enactment.

States would have to meet certain criteria to simplify their sales tax laws and make sales tax collection easier before they could require sellers to collect the tax.

State specific Sales Tax Laws: All states have the Physical Presence law… and some states have additional laws in place

The General Rule: Physical Presence in the State

The current default rule throughout the United States is that you must collect sales tax on Internet sales to customers in those states where your business has a physical presence. The physical presence rule is based on a1992 United States Supreme Court decision, Quill Corp. v. North Dakota, that addressed the obligations of mail order businesses to collect sales tax on out-of-state sales. The decision has been extended to include online retailers. Generally speaking, a physical presence means such things as:

• having a warehouse in the state
• having a store in the state
• having an office in the state, or
• having a sales representative in the state.

  If – 1 of the above 4 criteria exists, then there is a Physical Presence.

The corollary to the physical-presence rule is that, if you do not have a physical presence in the state, you generally are not required to collect sales tax for an Internet-based sale to someone in that state.