Home
>
Tax
>
The Internet Tax Man Cometh

The Internet Tax Man Cometh

Q: I was contacted by the city tax collector to say that my business is scheduled to be audited to see if I owe sales tax on items purchased on the Internet. Can they really make me pay sales tax on internet purchase? I thought you could buy things online tax free? -- Charlie B.

A: Sorry, but your local municipality is well within its rights to audit your business to identify items purchased online. The city can also demand payment of sales tax on those items if sales tax was not previously paid. Don't be surprised if the auditor asks for access to your books and to see purchase receipts and invoices for at least the past year.

One of my companies recently underwent such an audit and it really was not as painful as you might think. Being a software company, the majority of our online purchases were for computer equipment, technical manuals, and software development tools. Since we purchase computers from a large supplier who collects sales tax at the point of sale (ditto for the development tools), the only sales tax we ended up owing was for an inordinate number of technical manuals and books purchased at Amazon.com.

If your small business is like most, the majority of your large purchases are made locally from companies that already collect sales tax. Furniture and computer equipment are typically the largest ticket items a small business buys, so unless you bought your desks and computers off of Ebay (which is highly possible these days) you should be OK.

Internet sales taxation has been a topic of contention even before Amazon sold its first book and Priceline booked its first flight. One of the more controversial points is that no one, including our own government, seems to have a clue how to implement a fair and logical Internet taxation process. With over 7,500 different local, county and state taxation systems in the United States, you can understand the controversy.

In 1998, Congress did what it usually does when faced with a potentially explosive issue like Internet tax collection -- it decided to put off making a decision. Congress enacted a three-year moratorium on the collection of taxes to give an appointed advisory board time to come up with an acceptable solution. That moratorium ended in 2002 and opened the door for municipalities to begin collecting sales tax on their own.

Here in Alabama the state sales tax collection department has aired radio spots asking Alabamians to step up to - and toss dollars into - the proverbial collection plate. The commercial kindly suggests that if I have purchased anything from an online retailer, I am honor-bound to proclaim such purchases and submit the appropriate sales tax to the collection department right away. They thank me in advance for my cooperation.

So, Charlie, when the auditor shows up at your door the best thing you can do is smile politely and be totally forthcoming. The sales tax that you pay is a small price for the convenience of shopping online.

Or at least that's what you should tell yourself as you write the auditor a check.

Small Business Q&A is written by veteran entrepreneur and syndicated columnist, Tim Knox. Tim's latest books include "Small Business Success Secrets" and "The 30 Day Blueprint For Success!" Related Links: http://www.smallbusinessqa.com http://www.smallbusinessqa.com

quick home cleaning Arlington Heights ..

In The News:

In response to infostealer activity increasing 500% in a year and harvesting 1.7 billion user credentials, the CyberGuy offers four ways to stay safe from infostealer malware.

Looking Glass has developed a 27-inch light-field display that allows you to see digital objects in three dimensions without headsets or glasses.

A CCTV video purportedly originating from a Chinese factory shows a robot appearing to lash out at two men in an unexplained incident.

After years of delays, travelers must now show a REAL ID, a valid passport or another federally approved ID to travel. May 7, 2025, is the deadline.

Driverless tractor-trailers are already traveling on Texas roads, raising questions about safety, reliability and the future of trucking.

Tech expert Kurt “CyberGuy" Knutsson reveals that a new AirPlay bug lets hackers take over Apple devices via Wi-Fi with no clicks needed.

This Mother's Day, gift Mom tech gadgets that simplify life, connect and show love. Tech expert Kurt “CyberGuy" Knutsson offers some ideas.

Tech expert Kurt “CyberGuy" Knutsson reports that Tesla owners are facing threats as hackers weaponize leaked data. Are you next?

Kurt “CyberGuy" Knutsson discusses how a paper pill bottle could revolutionize pharmacy packaging and cut plastic waste drastically.

The private information of about 4 million people was exposed after a major data breach involving VeriSource Services, a Texas-based HR firm.

Archer Aviation and United Airlines have teamed up to offer a more environmentally friendly way to skip New York City's traffic jams and reach your destination more quickly.

Healthcare company data breaches have leaked personal data of millions of people in recent years, and the CyberGuy offers ways to keep your information safe.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents

Police around the world are adding robots powered by artificial intelligence to their departments, and Thailand has emerged as one of the key players.

Kurt "CyberGuy" Knutsson explains five cleanup hacks — a few smart automations and tools — to declutter your technology and keep things running smoothly.

Kurt the CyberGuy breaks down whether it’s better to remove your personal information from the web yourself or use a data removal service.

Google’s scam detection features, powered by artificial intelligence, are a significant step forward in safeguarding Android users from fraud.

The FBI has issued a warning that scammers are impersonating doctors, police and banks using spoofed numbers as "smishing" texts surge nationwide.

Communities with unreliable internet service stand to gain after Amazon's Project Kuiper launched its first full batch of satellites into orbit April 28.

Tech expert Kurt “CyberGuy" Knutsson says unsubscribing from spam might actually backfire. Learn when to avoid it and stop junk effectively.

Tech expert Kurt “CyberGuy" Knutsson talks about how the first nonstop beating heart transplant, called zero ischemic time, at Taiwan hospital changes surgery.

Kurt “CyberGuy" Knutsson: FBI warns of "time-traveling" hackers.

Kurt “CyberGuy" Knutsson talks about a soft, vine-like robot called SPROUT that aids safe survivor rescues in collapsed buildings.

Health insurance giant Blue Shield of California confirmed it had been sharing private health data of 4.7 million users with Google for three years without even realizing it.

Delta and JetZero’s blended wing body aircraft marks a meaningful step toward a cleaner, quieter and more efficient future for air travel.