The Truth About the Internet Being a Tax-Free Zone

More and more shoppers are getting lured by online shops and retailers because of their famous tag line of "no-tax shopping". What most people don't know is that that certain tag line used to lure online shoppers is not applicable to all states.

For you to be able to understand this concept better, here is an example: A woman from Indiana regularly purchases exotic orchids through an online shop based on Switzerland.

Since she purchases and sends her payments directly to Switzerland, she is not obliged to pay any sales tax in Indiana since her orchid supplier has all of its facilities in Switzerland.

A few months later, the exotic orchid supplier of that woman has decided to open a store in Indiana. The woman still purchases online but she already has to pay for the sales tax of the orchid since there is already a store based in the place where she is staying.

In other words, the responsibility to pay for taxes is an interdependent status between the consumer and the supplier. By that example, we can come to a conclusion that the Internet is not really a tax-free zone. It depends on the location as well as the type of business that one is involved in.

The Responsibility To Pay Sales Tax

Admit it, nobody really loves to pay taxes. Perhaps even the rich people are irritated come tax-paying time because it is sometimes a tedious and complicated process. There are a lot of rules and laws to refer to before one can actually come to a clean calculation of the taxes that he or she must pay.

If an individual lives in a state that is known for collecting "sales tax", you are not exempted from it even though you try to escape it by making a lot of purchasing through the Internet because you are still required to pay for the "sales tax" directly to the state.

When you pay a "sales tax" directly to the state, it is no longer called a "Sales tax" but rather a "use" tax. Perhaps the only difference between "sales" tax and "use" tax boils down as to which person - the buyer or the seller - pays the state. "Use" taxes are usually used by the state to make sure that they collect the right amount of revenue on every taxable item purchased within the state borders.

There are actually still a lot of points to be discussed about taxes and online business and the points mentioned here are just what we may call "a tip of the iceberg".

In determining what's the right thing to do in handling taxes and your online business, it would be best to go beyond researching for legal answers alone. Consulting the help of lawyers and other legal professionals would probably benefit you more than you expect.

The government is strictly issuing penalties for businesses that fail to adhere to the law.

Online businesses are not excused from this law, in fact, more law enforcers and agents are being sent to check on the legality of online stores and businesses.

One common Internet myth is that the Internet Tax Freedom Act allows online businesses from being exempted from collecting sales tax from their consumers. It is truly considered as one big myth because in reality, it does not actually stop the states from collecting sales tax on online businesses and other e-commerce.

Sure, the Internet Tax Freedom Act does not impose sales tax on Internet access fees but aside from that, taxes are already imposed.

When you make money online, you have to pay taxes when you earn, you really have to pay taxes; it's a known fact and perhaps what we can call a bittersweet reality. Sure, it may be a bit difficult on our part to surrender a part of our hard-earned money for tax dues but the truth is, everyone is doing so.

All income-generating businesses and stores are required to pay their due taxes. A law is a law and it must be followed at all costs. Some people who are involved in online businesses try to doge their tax-paying responsibilities. They think they are smart enough to be able to escape their tax-paying duties but the truth is, they'll get into deeper trouble once the government finds out their dirty work. If you want to be successful in your career as an online businessman/woman, try to be as clean and honest as you can with your taxes and your online business.

Taxes and your online business should work together, if you want you business to become successful.

Copyright Anne-Marie Ronsen

Well-established internet marketer & web marketing consultant. I work with clients all over the world to fill their business needs by reaching a targeted audience through proven internet marketing strategies.

Publishers are free to use this article on an ezine or website, provided the article is reprinted in its entirety, including copyright and disclaimer, and ALL links remain intact and active.

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