e-commerce sales taxes

[zach26]

Hi,
For the past year or so I've been designing graphics and posters. I'm now in the process of building a website to sell them on, so I'm looking for legal advice. If I live in NJ and sell posters online do I charge NJ sale taxes? Any additionally information on the legal methods (in regards to taxes and permits) with selling products online and reporting sales would be very helpful.

Thanks,
Zach

[GuyBBY]

Hey Zach. I own an LLC in VT and live in MA. All of my business is service though (online classifieds) so I have no property, plant, manufacturing, or tangible products. Therefore, VT (where all of my customers are basically) does not get any sales tax, nor does MA. The only tax I pay is income tax to VT and make sure I note that on my own personal filings. My suggestion is to contact someone through SCORE. They are great at answering these questions, and do so right through email or you can make an appointment to go in and sit with someone. Here is your NJ SCORE link, but read up on the organization itself. (About SCORE Metro,NJ Starting and Managing Your Own Business in New Jersey). Go here to email them directly, they respond very fast, and you have access to lawyers, tax attorneys, business consultants, etc (SCORE | Counselors to America's Small Business | SCORE).


Here is a small article I found regarding Internet/E-Commerce and sales tax.

Hope this helps.

Guy
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Collecting Sales Tax: Some Sites Have To, Some Don't

If an online retailer has a physical presence in a particular state, such as a store, business office, or warehouse, it must collect sales tax from customers in that state. If a business does not have a physical presence in a state, it is not required to collect sales tax for sales into that state. This rule is derived from a 1992 Supreme Court decision which held that mail-order merchants did not need to collect sales taxes for sales into states where they did not have a physical presence.

[zach26]

Thanks for the helpful info Guy. I'll definitely be inquiring with score. Do you think keeping merchandise temporarily in my house before it's shipped out be considered a physical presence in my state?

Thanks, Zach

[GuyBBY]

Hi Zach-

Not a problem, glad it could help. My gut feeling says no, but my business experience with knowing there is always another take on issues, says to research this with SCORE or contact other local businesses that do the same thing with the same or different products.

See, I would say no because of the examples usually cited in these scenarios that deal with mail order businesses. You are not manufacturing the posters in NJ yourself, you are not selling them from a store in NJ, etc. Therefore, I think sales tax is overlooked here. Again, take this scenario, with your facts and questions, and put it in a nice email to the SCORE counselor you chose from the national list. I would recommend someone involved in Internet/E-Commerce Law or Taxes, general business counselor or tax attorney.

PM me if you want to discuss anything further.

Guy

[David Rocci]

Zach; According to the new jersey department of taxation, if you are based in NJ, you are only required to collect sales tax on sales made within the state of NJ. For example, if a customer orders from California, you do not charge them sales tax.

"New Jersey based direct-mail businesses must collect sales tax on all taxable items which are delivered to a New Jersey location. You must collect the tax if your customer or his agent takes possession of the merchandise in New Jersey, even if the items are later shipped out of State. You are not required to collect New Jersey sales tax on merchandise you ship directly to an out-of-State customer."

State of New Jersey Division of Taxation

You can also find more detailed information about registering with the state of New Jersey, how, when and where to pay the sales tax you collect to the state and other valuable information from their website: State of New Jersey Division of Taxation

Here is a link for a publication specifically for Internet Sales in New Jersey:
http://njdivisionoftaxation.org/pdf/pubs/sales/su5.pdf

Lastly, setting up your shopping cart to charge tax only to NJ customers is easy. The biggest challenge in this whole proces is getting setup with the state and making sure you pay them on time (usually quarterly).

Good luck!

-dr

DISCLAIMER: I am not a lawyer and I am not representing myself as such.