WA destination based sales tax

pmaland

Are there any WA state shooters here selling prints? I'm at a complete loss as to how to handle the destination based sales tax if selling prints through SmugMug. Thanks for any guidance.

Andy

Wow, how timely!
We just released this last night

http://blogs.smugmug.com/release-notes/2010/02/05/sales-tax-tool-flexible-payment-handling-bug-fixes/

pmaland

Andy,

Thanks, but I just created a Pro site last night and (amazingly) saw that feature before coming here to post my question. The issue is:

Destination-based sales tax applies only to businesses that ship or deliver the goods they sell to locations within Washington. Under the new rules, if a retailer delivers or ships merchandise to a buyer in Washington State, the sales tax is collected based on the rate at the location where the buyer receives or takes possession of the merchandise.

So one tax rate for every order isn't possible in WA. I know the state is full of pro shooters, I just wondered if any of them are selling prints through SmugMug and how they are able to comply with the law.

Sam

OK, I am now officially confused.

I thought Smugmug as the seller, is responsible for any sales tax due???

Has all this changed?

Sam

Andy

Sam wrote:

OK, I am now officially confused.

I thought Smugmug as the seller, is responsible for any sales tax due???

Has all this changed?

Sam

Sam: you'd have to consult with many different states.

We are the seller, and charge, collect, and remit to the State of CA for CA orders.

Sam

Andy,

Thanks! As you know I live in The Peoples Republic Of California, so I am covered.

Sam

DrDavid

I agree with Sam.. This just seems odd.. If WA is doing this, isn't that a violation of interstate commerce rules? Without a physical presence in WA, how can they possibly enforce such a law. Long-Arm Statutes aren't unlimited in scope!

Besides.. Anyone who uses SM is NOT the seller! They're getting a commission from SM for the referral. It's exactly akin to Amazon's affiliate program. If you refer people to amazon, you get x% of the purchase price. You most definitely do NOT need to remit sales tax to the states based on the buyers amazon purchases--even if you're paid a commission.

In my opinion, this is a bad idea to even attempt to collect tax for other states--even your OWN state--if you, the photographer are NOT the one selling the goods!

Maybe I'm missing something vital here, but, this just makes no sense to me.

BTW: an important question. Are all Sales Tax amounts sent in full to the photographer? Or, is the 15% commission still taken from that too? It would make sense that it would be taken (credit card fees aren't free), but, there doesn't seem to be a definitive answer.

** PLEASE NOTE: This is my OPINION. Talk to your tax professional.. **

David

Andy

To any reading this thread: I strongly urge you not to listen to non-professionals in this matter!

Consult your business adviser, tax person, or State / Local taxing authority.

pmaland

Well, as you can see, SmugMug just implemented a feature to allow us to collect sales tax on purchases, so this is something they thought we needed, and not just for WA state.

WA has a page that sounded promising by the title, but doesn't give a good answer:

http://dor.wa.gov/Content/FindTaxesAndRates/RetailSalesTax/DestinationBased/OnlineSellers.aspx

Under their Q&A, they do have this:

Q. What is the Streamlined Sales and Use Tax Agreement (SSUTA)?
A. The SSUTA is a cooperative effort of 44 states, the District of Columbia, local governments and the business community to simplify and make more uniform sales and use tax collection and administration by retailers and states. It is intended to reduce the cost and administrative burdens on retailers that collect the sales tax, particularly retailers operating in multiple states. It would encourage "remote sellers" selling over the Internet and by mail order to collect tax on sales to Washington customers. It seeks to make local "brick-and-mortar" stores and remote sellers all operate by the same rules and in the same competitive environment.

Q. What are "remote sellers"?
A. Remote sellers are businesses that sell products to customers in a state, using the Internet, mail order, or telephone, without having a physical presence in that state. These sellers currently cannot be required to collect and remit sales tax as brick-and-mortar stores must do. The U.S. Supreme Court ruled in 1992 (Quill vs. North Dakota) that the burden of collection was too high given the number of taxing districts in the country and variations among states as to what was taxable and at what rate.


I sent them an email asking for how this situation should be handled and was promised an answer within 10 business days. I would love it if I was just considered an affiliate and not required to deal with the sales tax. I guess it's almost the same deal if I was putting pictures up on ShutterStock or such, huh?

DrDavid

Andy wrote:

To any reading this thread: I strongly urge you not to listen to non-professionals in this matter!

Consult your business adviser, tax person, or State / Local taxing authority.

Good advice!

But question.. What about SmugMug's 15% fee on taxes collected?

Sam

Andy wrote:

To any reading this thread: I strongly urge you not to listen to non-professionals in this matter!

Andy,

I am only listening to you, a SmugMug pro.

Sam

Andy

Sam wrote:

Andy,

I am only listening to you, a SmugMug pro.

Sam

Hi Sam, wasn't directed to you

Andy

DrDavid wrote:

Good advice!

But question.. What about SmugMug's 15% fee on taxes collected?

Huh? Where does it say we're doing that?

DrDavid

Andy wrote:

Huh? Where does it say we're doing that?

I asked earlier... I was curious if SmugMug is taking anything out of the sales tax fund, or just paying 100% of collected to photographers.

Sorry if it wasn't clear.

David

SamirD

Wow, another tax discussion. Seems like this issue is beginning to heat up.

IMO I think in the end, it will be found that SM is the seller and will need to collect and remit all these taxes. And I think our fees will go up as a result to cover the costs of the taxes and administration of the tax nightmare. Licensing will also start to become an issue as states are now comparing the tax filings with licenses filings. Then SM will have to have licenses in all the districts/cities/counties/states that require one, and our fees will have to go up to cover those expenses as well.

Just an opinion. I'm waiting on the sidelines to see where all this will pan out...

Andy

DrDavid wrote:

I asked earlier... I was curious if SmugMug is taking anything out of the sales tax fund, or just paying 100% of collected to photographers.

Sorry if it wasn't clear.

David

We charge 15% of markup, not the tax.

safaricat70

Andy wrote:

We charge 15% of markup, not the tax.

So which amount is the sales tax applied to? The "Your price", "Gross profit" or "Your Profit"?

Andy

safaricat70 wrote:

So which amount is the sales tax applied to? The "Your price", "Gross profit" or "Your Profit"?

Your Price.