Online Sales Tax Guidelines

In the early and largely unregulated heyday of the web (roughly 1990 to 1998), the precursors to ecommerce occurred in a largely chaotic environment. Government regulators and auditors didn’t have much precedent for enforcing sales tax collection rules. Thus, early ecommerce was in a sense a kind of gray market business.

Today, web site owners need to understand the implications for both the Streamlined Sales and Use Tax Agreement and the Internet Tax Freedom Act for their businesses. If your web site sells merchandize, you are not necessarily granted amenity from having to collect sales tax by the Internet Tax Freedom Act.

You can talk to an attorney about your rights and responsibilities with respec

A web site which sells to a buyer who lives in a tax exempt state, like Montana, Alaska, or Oregon, may still be required to collect taxes if the web site or the web site support network is located in a state which requires the levying of sales taxes.

To keep things simple for your business, you may want to hire an entity called a Certified Service Provider (CPS for short). This entity collects taxes on your behalf, and you don’t have to pay the CPS a dime (the states cover all the costs). Moreover, if the government ever audits your web site tax return, the CPS will be responsible for dealing with the government auditor -- you absolve yourself from all responsibility the moment you enter into an agreement with the CPS.

Finally, realize that you may not have to collect sales tax for certain web site ecommerce items. Keep things clear. Understand the rules and regulations governing the jurisdiction under which you plan to file your taxes. Just because you are based out of Oregon doesn’t mean that you are automatically dispatched of your obligation to collect sales taxes from ecommerce done in Washington state, particularly if you maintain contacts, factories, other facilities in Washington.

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