Robert W. Wood, Contributor
If you are paying sales tax on all your internet purchases you’re in the minority. Many transactions still escape it legitimately and many others slip through the cracks. Most of us got used to convenient online buying. The bonus of no tax was sweet, but it was always clear it wouldn’t last.
45 states and the District of Columbia have sales tax. Each has a use tax too. Property purchased online and brought into your state triggers use tax. The only states without sales and use taxes are Alaska, Delaware, Montana, New Hampshire, and Oregon. Thus, unless you are in one of those 5 states, you probably should have been paying use tax all along on purchases escaping sales tax.
Use tax applies whether the purchase was personal or business. States historically didn’t enforce it except against businesses, but that’s changing. Many state income tax forms now collect use tax. Think of it as a timing difference.
If you don’t pay sales tax at checkout, you pay use tax later. The tax collector prefers the money sooner, so that’s why there’s such pressure on merchants to collect. Here are the basics. ...more
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