Quarterly taxes?

[amaranth]

This is my first year with my own business, and up to this point, all of my payments have come from outside of my state, thus, I've not had to pay any in-state sales tax. But now I'm working with portals who reside in my state and now, it's time to pay the state.

My question is this... When you get a payment from a portal, do you have to pay sales tax to your state on the payment? Or is this something that the portals do?

[DFG]

You are only responsible for the sales tax from buyers from your state (i.e. WA). You do have to pay the excise tax though. I believe you can get a deduction from any sales that occur outside the state. Problem with this is it is a real pain to track. I just end up paying 100% and end up getting some of it back since it is a federal tax deduction (any state taxes). I am overpaying every quarter, but it is isn't that high of a tax and it is better than paying too little and having to deal with the whole issue down the line.

This might be a good one to call the state tax help line - they are actually really nice in WA :) I do think the burden of proof is on business owners to show which customers reside in and out of state in order to get the deduction though.

[Adrian Lopez]

If I'm not mistaken it is the merchant of record's responsibility to collect and remit taxes. The merchant of record is the company whose name appears on the credit card.

Can anybody confirm this?

[FlySim]

eSellerate takes care of the sales tax for us. I would be suprised if the portals don't collect it. Do you even get enough info from the portals to decide who is in/out of state? Income tax is a different animal and you should make quarterly payments to avoid penalties.

[arcadetown]

If I'm not mistaken it is the merchant of record's responsibility to collect and remit taxes. The merchant of record is the company whose name appears on the credit card.
Correct me if I'm wrong but think this is correct. The portal is the point of sale and takes care of sale tax / VAT collection and remittance. You're just receiving royalties from said portal which isn't subject to sales tax. It is however subject to income tax and so forth, and you should be paying your quarterly estimated tax payments for that as necessary.

Check with state tax board however beware as they'll always say err to their benefit. I knew a Florida internet merchant that was bullied into collecting sales tax on interstate purchases, just like many US merchants are bullied into the EU's VAT.

[LilGames]

Amanda:
This is probably the worst place to get the right answer. I would look up .gov pages with the specific tax information you are looking for.

[Adrian Lopez]

I found a 1992 Supreme Court decision (http://www.law.umkc.edu/faculty/projects/ftrials/conlaw/quill.html) that prohibits one state from requiring a company in a different state to collect sales tax for the former (provided the company doesn't have a physical presence in that state). I don't know if that decision still applies, but it's still worth reading.

[amaranth]

Okay, that's it, I'm going to an accountant! *groans* :eek:

[LilGames]

I found a 1992 Supreme Court decision (http://www.law.umkc.edu/faculty/projects/ftrials/conlaw/quill.html) that prohibits one state from requiring a company in a different state to collect sales tax for the former (provided the company doesn't have a physical presence in that state). I don't know if that decision still applies, but it's still worth reading.

Doubt it still applies. E-Commerce didn't emerge until a few years later.

[Adrian Lopez]

Doubt it still applies.I think it continues to apply unless the Supreme Court has reversed its own decision. E-Commerce is new, but it's still fundamentally the same as mail-order.

[Tom Gilleland]

Okay, that's it, I'm going to an accountant! *groans* :eek:
This is exactly what you need to do. Everybody is in different situations. Get ideas and suggestions from the forum, make a list and bounce it all off your accountant.

And remember what Jack Sparrow set about the code - it's really just guidelines. ;)

Tom

[FlySim]

One thing to ask your accountant about is a SEP-IRA.
May save you alot on taxes if you qualify.

[LilGames]

I think it continues to apply unless the Supreme Court has reversed its own decision. E-Commerce is new, but it's still fundamentally the same as mail-order.

True. Though it may change soon:
http://www.wilsonweb.com/ecommerce/salestax-sst.htm

[Adrian Lopez]

True. Though it may change soon:
http://www.wilsonweb.com/ecommerce/salestax-sst.htmHoley moley! Look at this little nugget from the Streamlined Sales Tax Project (http://www.streamlinedsalestax.org/) (emphasis added):

06/12/06 - Effective June 1, 2006 the Executive Committee of the Streamlined Sales Tax Governing Board has determined that there are adequate Certified Service Provider and Certified Automated System services available. Any seller who registered as a Model 1 or Model 2 seller on the Streamline registration system has 60 days from June 1, 2006 to enter into an agreement with a Certified Service Provider if you registered as Model 1 or a Certified Automated System if you registered as a Model 2.

Two companies, Avalara and Taxware, have achieved the distinction of being Certified Service Providers and one company, Taxware, has also achieved the distinction of being a Certified Automated System.

What a nice little business deal for Avalara and Taxware! I wonder how much they'd charge if congress enacted a law allowing for Streamlined Sales Tax. Nothing like mandatory adoption of certified software to send those profits through the roof!