In 2007, local tax authorities saw hundreds of thousands of dollars in projected sales tax revenue magically vanish when copies of the final Harry Potter book stayed on local store shelves while customers purchased online instead. One rumor on Capitol hill says that’s what began the push for an Internet sales tax.
This summer, small business owners around the U.S. have a new worry: getting ready to collect and pay Internet sales taxes in all 50 states. Even though the law isn’t yet in place, 1-800Accountant is fielding phone calls from clients who are worried about how the Internet sales tax law will affect them.
In fact, worry over the new law is casting a cold sense of dread over many a small business that sells products or services online, almost as if some evil wizard had cast a spell. That idea might not be so far-fetched. It could be that we owe The Marketplace Fairness Act of 2013, at least in part, to the global Harry Potter phenomenon.
One rumor making the rounds on Capitol Hill says the battle over Internet sales tax collection started about the time the final installment of the Harry Potter book series was released. Local tax authorities saw hundreds of thousands of dollars in projected sales tax revenue magically disappear as buyers left books on local store shelves and ordered online.
Whether the rumor is true or not, it is true that The Marketplace Fairness Act of 2013 – better known as the Internet Sales Tax law – has been passed by the U.S. Senate and seems likely to pass in the U.S. House of Representatives. The law will require companies with more than $1 million in annual revenue to collect and pay sales taxes to the taxing authority where the buyer lives, regardless of where the seller’s business is located. (The House version increases the threshold to collect the taxes to $10 million in annual sales.)
The so-called “Amazon.com law” won’t affect the micro-businesses and home-based businesses that might have the hardest time complying with the law. But there’s no doubt that it can create new bookkeeping and accounting tasks and possible penalties for a small business.
Download the Internet Sales Tax Planning Guide
1-800Accountant has the answers that small business owners need in order to be ready to profit from online sales once the law goes into effect. A short 2-page overview of the provisions of the law, with practical steps small business owners need to take now to get ready for Internet sales tax collection, filing, and payment, includes:
- The Law’s Silver Lining for Small Businesses
- Is Your Shopping Cart Ready?
- Five Important Steps to Take NOW
The new PDF, called Prepare for Internet Sales Taxes – Don’t Fear Them, is available now for immediate download on the 1-800Accountant Resources page.Photo credit: This snapshot of a copy of Harry Potter and the Deathly Hallows delivered from Amazon.com on July 21, 2007, is ©2007, Deb McAlister-Holland; used with permission. All rights reserved.