Sales Taxes: What to Know Going into 2013

Tax law can be a source of confusion and worry for small business owners. Online merchants selling on eBay, Amazon, and eCommerce stores in particular should be aware of recent changes that might impact 2013 taxes, as well as industry trends and pending bills that may impact them in the near future.

The first thing merchants and individuals should be aware of in 2013 is that there will most likely be delays in the IRS processing returns. The IRS had to reprogram their computers to adjust for changes in the tax law, and did not start accepting returns until January 30. Many business tax filers could file for 2012 starting February 4th, but business owners should expect delays in refunds if they’ve filed for credits in depreciation, business, and certain other categories.

Online merchants should also be aware that at this time there are several sales tax collection bills before Congress that might impact them. These include the Marketplace Fairness Act, the Marketplace Equity Act, and the Main Street Fairness Act. One provision these bills have in common is that merchants that fall into the “small business” category would be exempt; however, the definition of small business varies by bill – under the Marketplace Fairness Act, it’s $500,000 annual revenue, and under the Marketplace Equity Act it’s $100,000.


In addition to the bills mentioned above, there is the Streamlined Sales and Use Tax Act (SSUTA) that is already in place in 24 states, with Texas, Massachusetts, Florida, Illinois, Virginia, Missouri, Maine, California, and Hawaii recently passing legislation to become members.

The Streamlined Sales and Use Tax Act was put in place to simplify the collection of sales tax online and compel online merchants to collect state tax on out of state transactions. A small business exemption of $100,000 of gross remote taxable sales nationwide applies under the SSUTA.

  

The SSUTA is controversial because it will effectively reverse a Supreme Court decision from 1992 upholding the federal government’s right to regulate interstate commerce. It may also place an administrative burden on smaller online retailers who would have to calculate, collect, and report taxes based on their customers’ location.

Under current law, each state and municipality has it’s own rules and regulations governing the collection of state sales tax. Be sure to check the Department of Revenue to familiarize yourself with your state and local laws.

For most people, tax law is intimidating and difficult to interpret, and changes to tax law can have significant impact on a business. Small merchants selling on eBay, Amazon, and online stores should do their best to stay on top of current laws, pending legislation, and new developments coming down the pipeline.

Because of the complexity and dynamic nature of tax law, Vendio recommends that you always seek out the services of a tax professional for your tax needs.

Disclaimer:
The information on this web site is presented without any representation, warranty or guarantee whatsoever, including as to the accuracy or completeness of the information. Vendio Services, Inc. expressly disclaims all liability in respect to actions taken, or not taken, based on any or all the contents of this web site. Information on this web site should not be construed as legal advice or legal opinion on specific facts or circumstances.

Leave a Reply