Internet Sellers Should Understand Sales Tax Provisions in 12 States That Have Special Remote Sales Tax Policies

Since 1992, when the Supreme Court decided Quil Corp v. North Dakota[1], states have to be careful about how they collect sales tax from remote sellers, otherwise they might violate the Constitution. At the present time, U.S. Congress is in the midst of debating measures to provide for taxation of remote sellers uniformly across all 50 states. see Marketplace Fairness Act, S. 743. However, with the Supreme Court ruling still the law of the land and no federal legislation enacted, 12 states have different and inconsistent rules on tax collection from remote sellers, including internet sales.

Currently, 25 states claim to have power to collect taxes on internet sales to buyers in their state, but only 12 of those have a statute in place. Those 12 states are: Arkansas, California, Connecticut, Georgia, Illinois, Kansas, Maine, Minnesota, Missouri, New York, North Carolina, Pennsylvania, Rhode Island, and Vermont. Each state has different variations and provisions about when and how to collect taxes if you sell into their state.

 Without a federal law or uniform code on the matter, it is important to understand and know what taxes you must collect and pay to each of those 12 states as a remote seller. While it may take extra time up front, be sure to investigate prior to selling into these states to ensure you aren’t stuck with extra tax liability.

 [1] Quil Corp v. North Dakota, 112 S. Ct. 1904 (1992).

© 2014 Parsonage Vandenack Williams LLC

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