Page 27 - BusinessWest June 23, 2021

Accounting & Tax Planning
Selling Online?
You May Owe Sales Tax in Other States
In the early days of e-commerce, states attempted to get out-of-state companies to collect sales tax on transactions into the state — without success. Enter the Supreme Court, which issued a landmark decision that physical presence is no longer needed, and if a company’s activity has substantial ‘economic nexus’ with a state, it can be required to collect sales tax. That means online businesses of all kinds may have tax exposure they’re not even aware of.
T
By Kristina Drzal Houghton, CPA, MST
he shutdown of stores and malls during COVID- 19 fueled the already-prospering world of inter- net shopping. Many businesses were forced into direct-to-consumer marketing on their own web-
pages or using e-commerce online marketplace companies such as Wayfair, Amazon, and Etsy, just to name a few.
So, why is this important to you? Well, if you are one of those businesses who started selling direct to consumers on your web- site or if you turned a previous hobby into a business venture that markets using an online marketplace that does not collect sales tax for you, you might have a significant tax exposure you’re not even aware of.
In the 1980s and 1990s, states attempted to get companies to
ACCOUNTING & TAX PLANNING
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