• Embed Doc
  • Copy Link
  • Readcast
  • Collections
  • CommentGo Back
Download
 
w w w. v i s i o n - m u l t i m e d i a . c o m
 G en er   al   M e d i    a
I      
A l   
Y 
 C 
  (   
P  3  3  9   (    8  0  0   )   I   nf    or  m a t   i    on:  R el    a t   i    on s :  
N
i   nv  e
- 
 8   5  1  
- 8 i   nf    o  @ ex  a c  t    or  
i    s  a
...
 c  om c  o c  om
 
All You Need is a Mouse
  w  w  w .  v   i  s   i  o  n  -  m   u   l   t   i  m   e   d   i  a .  c  o  m
I
NTRODUCTION
One of the more commonly recurringincorrect perceptions in running onlinerelated businesses is the notion that salestaxes are not due on Internettransactions. It should be clear from theoutset that Yes, retailers are responsiblefor sales taxes on Internet basedtransactions; Yes, retailers must provideclear auditable tracking methods of theirtransactions, through the entire life cycleof the transaction; and No – theserequirements are not relevant to largebusinesses only, they pertain to retailersof all categories and of all sizes.The original misperception originates backfrom a 1992 Supreme Court ruling,known as the Quill case. The Quill casewas determined in the pre-Internetarena, but was subsequently applied toonline transactions because of thesimilarity in circumstances. In Quill, theSupreme Court stated that it will notenforce sales tax rules. One rationale forthe ruling was that of the undue burden.In other words, because of the inherentborderless nature of Internet transactions– each transaction has the potential of being subject to any-one of the over7,400taxing jurisdictions in the U.S. alone. TheSupreme Court stated that tax systemsare so complex, and there are so many jurisdictions, that it would be an undueburden to require retailers to be familiarwith each and every jurisdiction, andcomply with all of the different rules and jurisdictions. The Court was very explicitthough to say that sales taxes do apply tothese transactions, the court merelyrefused to enforce the rules.Obviously, lack of compliance is quick tofollow failure of enforc ement. As a result– retailers have traditionally failed tocalculate, collect and pay sales taxesowing on Internet transactions. Manyconfused this lack of collection with theTax Moratorium Act that was enacted in1998. The Moratorium Act has nothing todo with Sales taxes. The Moratorium Actmerely stated that no new taxes could becreated on Internet transactions. ThisMoratorium Act was enacted in responseto ideas that politicians started floatingfor creating new types of taxes especiallyfor the Internet, such as ‘Internet Accesstax” or “bit rate taxes.” But the TaxMoratorium Act was very explicit to
have no effect upon existing taxes,such as Sales taxes. States did notenforce Sales taxes for much morepractical reasons: there just was notenough activity taking place on theInternet – the dollars were simply notthere.
Retailers havetraditionally failed tocalculate, collect andpay sales taxes
In the last two years both thesevariables have completely changed.There is much activity taking place.In fact, studies are showing thatnearly $20B will be left on the tablein 2005 as a result of uncollectedtaxes on Internet transaction.State governments have also beenoperating in the red, and haveempowered their agencies to seeknew sources of revenue. They needto act, and act fast.
 
  w  w  w .  v   i  s   i  o  n  -  m   u   l   t   i  m   e   d   i  a .  c  o  m
To address these circumstances andrespond to the Quill ruling, statetaxing agencies banded together todraft and sign the Streamlined SalesTax Agreement, where emphasis isplaced upon rule uniformity andsimplification of compliance. Thestates hope that with this process inplace, Congress will pass legislationwhich will expand the long armcapabilities of the court system, toreach out to out-of state retailers.The SSTP came into effect on October1
st
, when a dozen states formallyratified rules reflecting those rulesrequired under the SSTP, withanother six states being in partialcompliance – associate members.Nearly all other states have signedthe SSTP contract, but it will takethem some time until they fullyimplement the rules.
Sales tax compliance does not begin andend with the SSTP however. CurrentSales tax rules also apply to onlinetransactions.
State taxing authorities
are aggressive in enforcing existingrules, and not waiting for SSTP to comeinto effect. Barnes-&-Nobles,Borders.com and OfficeDepot found thisout the hard way via back-taxes,interest and fines imposed upon them.Thousands of consumers nationwidewere recently invoiced for taxes theydid not pay when purchasing cigarettesthrough the Internet. Under InternetSales Tax Fairness rules, companies arefinding that they need to register andpay
All You Need is a Mouse
sales taxes if they want to sell tostate governments.
Small companies, with revenue in the lowmillions, are being hit with audits andpenalties of tens of thousands of dollarsfor failure to collect taxes. Then there isthe offer that cannot be refused – startcollecting now, and receive an amnestyfor failure to collect in the past.
The bottom line is that sales taxcompliance is a real issue, independentof the SSTP. Retailers need to be awareof this issue, and address it heads on. Itis not one of those situations that youcan beg forgiveness after the effect –you will owe penalties and fines forfailure to comply on a timely basis.Fortunately, there are solutions that canhelp you address this issue. In fact,Next Generation Solutions that arebeing introduced into the marketpromise to make this apainless process, providing asimple, cheap, reliable,accurate and effectivesolution that operates in acompletely automatedmanner, so that businessowners can focus upongenerating business, ratherthan on whether or not theyowe taxes, how much, whenand to whom.The perfect Next Generation Solutionwould be (i) hooked straight into yourtransaction engine; (ii) provide theinformation necessary to assure thatthe correct tax is being calculated; (iii)save the transaction and tax datafor further reference; (iv) be hookedinto systems that will allow it to trackthe transaction through its life cycle; sothat (v) any changes made to thetransaction are reflected in the system;(vi) on a periodic basis as may bedetermined by statutes and regulations– compile the data necessary for filing;(vii) generate a return and reportnecessary for complying with statutoryfiling requirements; (viii) make thereturn available for review and approvalby the retailer; (viii) file the returnautomatically and electronically straightinto the systems of the state taxingagencies on the required date, helpingthe retailer avoid fines, penalties andinterest associated with late filing; (ix)obtain from the retailer funds necessaryfor payment of tax proceeds; and (x)pay thetaxes owing on a timely basis, applyingelectronic funds transfer methods toassure timely payment at the lastpossible moment without incurringpenalties for late payment.
This paper is dedicated to providing
a review of the Next Generation Solutions, howthey provide comprehensive solutions
to addressall sales & use tax requirements,
and entirelyremove the burden of compliance and auditingfrom the retailer.
Why, and how, are theNext Generation Tax Solutionsthe “True Compliance Tool”?
of 00

Leave a Comment

You must be to leave a comment.
Submit
Characters: ...
You must be to leave a comment.
Submit
Characters: ...