The myth of tax free internet sales
It has been a long held belief by most online shoppers that out of state internet purchases are tax free. I have to admit that I believed this for a long time myself, but unfortunately it’s not the case.
Just to dispel any theory dissolving that old ‘Death and Taxes’ quote, internet purchases are not tax free. That’s right. As the wording goes, most internet companies don’t have to collect out of state sales tax. However, consumers, businesses and any end users still must pay a “Use Tax” on non-taxed purchases that they make through mail-order or online.
Most states currently have Use Tax which specifically requires consumers to pay their state sales tax on purchases they make online that are not taxed by the business. There are some exemptions for certain types of products and for states that do not have any sales tax, but for the most part, taxes on these purchases are required to be paid to your state government. With the exception of very large purchases, use tax is rarely if ever monitored, as it would simply be an impossible feat for any state government to handle. However, we can all be sure that states are losing out on millions if not billions in uncollected taxes, so if you aren’t paying them, enjoy the free ride while it lasts.
Here’s a Use Tax table that I came up with covering which states require it:
(Let me pre-apologize about all of the PDF links here, Government websites are about as bad as they come, and in many cases PDF’s are the only pages available.)
Subscribe to the RSS feed and have all new posts delivered straight to you.