Internet Sales Tax? It depends on where you make your purchase.

Posted by Bill Warmoth on

Internet sales tax, the short story.

On April 17th, 2018 the Supreme Court heard South Dakota vs. Wayfair, an argument that states should be able to collect a tax from residents of their state, for purchases made online.

South Dakota’s state Attorney General argued that state’s small businesses on Main Street are being harmed because of the unlevel playing field created where out-of-state remote sellers are given a price advantage.

The playing field was leveled, and states were poised to go into action, requiring all online transactions to be taxed. This would be an enormous burden for small companies, if it were not for the “nexus” or minimum level of sales (varying by individual state), by which a small business tax liability is measured based on sales revenue within each state.

Sound complicated? It is!

Learning more about the levels where “minimum sales revenue” would kick in, it is apparent most states were going after bigger fish. Amazon negotiated compliance early on (in my view, anticipating the law going into effect), while eBay fought it in Washington with lobbyists

While some state minimums are as low as $100k, many states have raised their minimum to $500k to $1m – clearly indicating they are angling for the larger fish, using a bigger net.

So, Reverb buyers beware, most purchases made there require their company to collect sales tax.

Your direct purchases from Artisan Guitars are not subject to sales tax when purchased from outside the state of Tennessee*.

(*True for 2020 and 2021, subject to change in future).

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