15 replies to this topic

[little73]

In Oklahoma we are rquired to charge tax on the in state shipping address, I have found a couple of modules, one does state and city, and the other does county, does any one have amodule that will do all three?
Obviously I am very much a novice.

Oh Yeah, Today when I brought up my site my banner was gone and even when I recreate it and it says it was successfully loaded it never shows up on the page.

[GraphicsGuy]

little73, on Nov 5 2005, 12:49 PM, said:

In Oklahoma we are rquired to charge tax on the in state shipping address, I have found a couple of modules, one does state and city, and the other does county, does any one have amodule that will do all three?
Obviously I am very much a novice.

Before investing too much effort into doing that, I would urge you to get a second opinion on the interpretation of the Oklahoma Sales Tax laws from a CPA (Certified Public Accountant). Given the nature of bureaucracy I'm not saying that this interpretation is necessarily incorrect. But it would cause such an accounting burden for any small business that shipped throughout the state, that it seems it would be challenged in the legislature by small business advocacy groups. Most states require retail businesses to collect sales tax at the rate in effect at the place of business and file the returns to the state and the applicable local jurisdictions.

I'm sure osc can be set up to collect the correct tax for each jurisdiction using zones. Custom reports would also have to be designed to report tax collected by jurisdiciton. But those tasks would be trivial compared to the effort and dilligence required to keep the rates current. (Consider, every city council or county commission meeting or local bond issue election in hundreds of jurisdictions can potentially change a local rate at any time.) Even that daunting task would pale compared to the accounting work needed for filing potentially hundreds of jurisdictions each quarter.

[little73]

GraphicsGuy- Thanks for the reply, I will check with the small business assoc.-
I was told by the state tax comm. that taxes based on the shipping address only applies to internet sales and that there are many states going to this method to collect taxes on sales from online companies. A word of warning to those in other states to keep a close watch on what tax laws pertaining to on line businesess are being passed in their states.
And in Oklahoma all businesses have to report sales taxes to the state tax comm. monthly

[GraphicsGuy]

little73, on Nov 6 2005, 06:34 AM, said:

A word of warning to those in other states to keep a close watch on what tax laws pertaining to on line businesess are being passed in their states.

Excellent advice that all should follow. There is very little that is more painful than back taxes with penalties and interest. And when it comes to unreasonable changes to tax codes, nothing surprises me. Please post what you find out.

I do know that some states designte that the shipping address rather than the purchasers address be used when deterimining if sales tax should be collected. But the rate to be applied still reflects the jurisdiction that the business has nexus in. This primarily impacts gift sales where the person buying it is out of state, but the shipping address is in-state. But the main reason for it is to prevent purchasers of high ticket items from giving an out of state address but taking delivery in-state to avoid sales tax.

Edited by GraphicsGuy, 06 November 2005, 15:06.

[little73]

Is anyone aware of either a state or national organization that lobbies for internet based businesses? I have contacted both my state rep. and senator and they both basically said they saw nothing wrong with requiring on-line businesses to have to collect sales/use taxes for state, county, and city. Here in Oklahoma that means over 450 tax jurisdictions.

[GraphicsGuy]

Well, I did a little Googling and came to one conclusion. Oklahoma and the other states spearheading the poorly named "Streamlined Sales Tax Effort" are a bad place to run an Internet business from. Indeed, in Oklahoma all 450 in-state jurisdictions and their different rates have to be taxed at their local rate and reported on accordingly.

If it wasn't so antogonistic to online businesses, it would almost be laughable:

Quote

The Streamlined Sales Tax Project was organized in March, 2000 and is an effort created by state governments, with input from local governments and the private sector, to simplify and modernize sales and use tax collection and administration.

The "private sector" that they are referring to are the local Chambers of Commerce. And of course those are made up primarliy of brick and morter stores that view Internet seller as unfair competition. Hence the reason why Oklahoma's sales tax laws now state that for on premise sales, the store is the point of sale and for online sales the deliery address serves as the point of sale. Hence, brick and mortar stores only have to manage the accounting for their local jurisdictions, 3 at the most, while online sellers have to keep up with 450 jurisdictions.

I am sure you are already familiar with this site http://www.oktax.onenet.net/pod/retven.htm . It details their very helpful manual system for looking up the addresses. But at the bottom of the page a method to obtain a copy of the databse to incorporate into retailer systems. That will be instrumental in building something for getting osc to look up the right tax based on zip+4.

I don't offhand know of Internet Business Advocacy Groups, but there are small business advocacy groups that claim to represent small Internet businesses as well.

National Federation of Independent Business

Quote

The National Federation of Independent Business (NFIB) is the largest advocacy organization representing small and independent businesses in Washington, D.C., and all 50 state capitals. NFIB was ranked the most influential business organization (and 3rd overall), in "Washington's Power 25" survey conducted by Fortune magazine.

National Small Business Association

National Small Business United - site currently offline at the time of this posting

Then of course there is the federal government's Small Business Association . (The US federal government is the main reason that states can't demand sales tax on interstate commerce at this time.)

[little73]

Thanks, that is very helpful!!
I learned from talking with my state senators office tha the oklahoma congressman Earnest Istook has a bill pending that would require all states to adhere to the 'simplified sales tax project'.

[GraphicsGuy]

little73, on Nov 8 2005, 08:37 PM, said:

I learned from talking with my state senators office tha the oklahoma congressman Earnest Istook has a bill pending that would require all states to adhere to the 'simplified sales tax project'.

I saw that a bill was pending too but didn't look to see who was sponsoring it. But, for now, there isn't adequate support in Congress for it to have a chance at passing. But that is changing fast. After what I have read in the last couple days, I would say that it is inevitable that within 5 years we will all be having to collect and report taxes to somewheres between 50 and 7,500 jurisdictions per month. When that happens the accounting industry will become the largest U.S growth industry. Every accountant's office in the country will have to add several clerks just to fill out returns for their business clients. It will also be the best thing that ever happened to online businesses based in Canada and Mexico.

I wonder how many "online only" businesses will move to Canada or Mexico? From there they could sell in the U.S. without having to collect sales tax and have a 6%-10% price advantage on their U.S. based competitors (as long as the business and owner did not have nexus in the U.S.). And thanks to NAFTA there wouldn't be any duties. Set up in a significant border city and shipping transit time would only be 1 or 2 days longer.

Food for thought.

[little73]

I could not agree more. Maybe instead of doing an online business, more money could be made from investing in accounting stocks!!!!!
But then again the gov't would take a good chunk through capital gains taxes!!!

[pruco]

Looks like a good reason to get behind the Fair Tax effort. It would be a whole lot easier to collect and report one national sales tax than having to report to a zillion counties and cities.

You can get more information about the FairTax Here

[GraphicsGuy]

pruco, on Nov 16 2005, 12:38 PM, said:

Looks like a good reason to get behind the Fair Tax effort. It would be a whole lot easier to collect and report one national sales tax than having to report to a zillion counties and cities.

You can get more information about the FairTax Here

Well, actually that plan is to replace witholding tax with a national sales tax of 23%. There would still be state sales taxes and unless they get all states to unify their tax rates for online sales, there would also be a plethora of county and city sales taxes.

While I despise the complexity of our current income tax system, a national sales tax combined with all state and local sales taxes would put most U.S. based online stores either out of business or out of the country. Imagine trying to compete with stores based in Canada and Mexico selling at retail while you are having to sell at retail plus over 30%.

If that ever passes, I guess I will be heading to Mexico.

[little73]

I read the explaination about the embedded tax, and once I investigate it a little further will most likely support it, but unless there is something I am missing, how is it different than the value added tax used in most of europe?

[DailyLunatic]

GraphicsGuy, on Nov 6 2005, 12:39 AM, said:

Before investing too much effort into doing that, I would urge you to get a second opinion on the interpretation of the Oklahoma Sales Tax laws from a CPA (Certified Public Accountant). Given the nature of bureaucracy I'm not saying that this interpretation is necessarily incorrect. But it would cause such an accounting burden for any small business that shipped throughout the state, that it seems it would be challenged in the legislature by small business advocacy groups. Most states require retail businesses to collect sales tax at the rate in effect at the place of business and file the returns to the state and the applicable local jurisdictions.

I'm sure osc can be set up to collect the correct tax for each jurisdiction using zones. Custom reports would also have to be designed to report tax collected by jurisdiciton. But those tasks would be trivial compared to the effort and dilligence required to keep the rates current. (Consider, every city council or county commission meeting or local bond issue election in hundreds of jurisdictions can potentially change a local rate at any time.) Even that daunting task would pale compared to the accounting work needed for filing potentially hundreds of jurisdictions each quarter.

I'm a newbie and know that with 450 zones and, so far as I know, only zip+4 to keep track of each them thats its way, way, way above anything I could do to configure OSC. Add to that revisions every 3 months (recent law passed to help prevent what you were mentioning there at the last) and I just dont think (baring a module just for OK) that the few sales I might generate via internet within OK to be worth the time.

As I see it (please correct me if I'm wrong) I have two choices:

1] Configure OSC to not accept sales within OK. Redirect to a page explaining why and were they can contact their congressman to complain. (I'm a newbie, to OSC so I don't know if this is even possible.)

2] Calculate the Maximum tax rate possible and use that for all of OK. I'd still have to manually calculate all the OK sales and log them to the various zones, plus the additional downside that I don't even know the legality of this. (i.e., personally, I'd want to keep my hands shed of the excesses. but where do they go?)

Personally, I like option 1, but I've always been stubborn that way.

[Java Roasters]

Quote

Before investing too much effort into doing that, I would urge you to get a second opinion on the interpretation of the Oklahoma Sales Tax laws from a CPA (Certified Public Accountant).

Call the local tax office and get their opinion and then get it in writing. If you just phone them and they give yu the wrong info then YOU are liable for any missed tax. Getting it in writing is your only defence.

[DailyLunatic]

Java Roasters, on Sep 25 2006, 10:30 AM, said:

Call the local tax office and get their opinion and then get it in writing. If you just phone them and they give yu the wrong info then YOU are liable for any missed tax. Getting it in writing is your only defence.

710:65-18-3. Sourcing of retail sales
For those sales that are not sales of mobile telecommunications services and are not the lease or rental of tangible personal property other than transportation equipment, the sales shall be sourced to the location for which city and county sales taxes will be charged in the following manner:

(1) When the product is received by the purchaser at a business location of the seller, the sale is sourced to that business location;

(2) When the product is not received by the purchaser at a business location of the seller, the sale is sourced to the location where receipt by the purchaser, or the purchaser's donee, designated as such by the purchaser, occurs, including the location indicated by instructions for delivery to the purchaser or donee, known to the seller. Provided, this [paragraph] shall not apply to florists until January 1, 2006. Prior to that date, all sales by florists shall be sourced to its business location;

(3) When the provisions of paragraphs (1) and (2) of this subsection do not apply, the sale is sourced to the location indicated by an address for the purchaser that is available from the business records of the seller that are maintained in the ordinary course of the seller's business when use of this address does not constitute bad faith;

(4) When the provisions of paragraphs (1), (2), and (3) of this subsection do not apply, the sale is sourced to the location indicated by an address for the purchaser obtained during the consummation of the sale, including the address of a purchaser's payment instrument, if no other address is available, when use of this address does not constitute bad faith; and,

(5) When none of the previous rules of paragraphs (1), (2), (3) or (4) of this subsection apply, including the circumstance in which the seller is without sufficient information to apply the previous rules, then the location will be determined by the address from which tangible personal property was shipped, from which the digital good or the computer software delivered electronically was first available for transmission by the seller, or from which the service was provided, disregarding for these purposes any location that merely provided the digital transfer of the product sold. [68 O.S.Supp.2003, § 1354.27(A)]

[aaanativearts]

You can't just collect at the highest rate for your state, even from locations that owe less, that is illegal. I'm in Washington state, not Oklahoma, but the way they explained it to me here is I have to collect sales tax from everyone in WA state at their local rate, not mine, and if I undercollect the proper tax rate for their locality, I have to make up the difference out of my pocket. We have 26 different county rates plus various city taxes.