How Online Sales Tax Affects the Promotional Products Industry
You’re probably used to getting charged for sales tax. You go to the store, checkout, and pay a little bit more than what’s listed on the shelf. It’s a common way we do business at brick-and-mortar stores and at this point you probably don’t think anything of it.
Until recently, shopping online was an entirely different ballgame. If a company has nexus (a fancy way of saying a connection and therefore an obligation to collect) to a location, then they would be charged sales tax. For instance, Quality Logo Products® had nexus in Illinois where our offices are located, therefore orders shipped in Illinois were charged Illinois’s sales tax. All online shopping followed this format as a result of the Wayfair Act.
However, that all changed as of June 2018. The U.S. Supreme Court reached a decision in South Dakota v. Wayfair that each state has the right to collect sales tax for sales made over the internet, regardless of where the online company is physically located. Since this law has been introduced, it means that sales tax will be collected from the state in which your promotional product order is being shipped as of November 1, 2018.
The Law of the Land
Sales tax isn’t something an online business chooses to collect just so they can have a couple extra dollars in their pocket and maybe take a trip to Hawaii. It’s required by law and each state operates differently.
Do you have an order of water bottles to ship to Montana? What about some stress balls to send over to Oregon? The sales tax will be different in either location, and as long as Quality Logo Products® does enough business in that area, we are required by law to collect the sales tax on those orders.
See the chart below to see how much each state charges for sales tax!
The chart above gives you an idea of a base amount you could be charged for your order. However, the issue is in the fact that every state requires something different for their taxes. With close to 10,000 different sales tax jurisdictions in the United States, it’s impossible to boil down a set number that you should expect to pay on your online order. This is even harder in the promotional products industry based on all the variables that exist in shipping, quantity, etc.
Plus, municipal taxes based on the area code could change that number even more, meaning just because you’re in Texas, doesn’t mean you’ll be charged a flat 8.2% in taxes on your order.
If that’s not enough, there’s also the fact that this law is fresh as a field of daisies. The kinks and loose ends are still being worked out and many are opposed to the law altogether. As we speak, there is a group of 24 states under the Streamlined Sales Tax Governing Board that are committed to making the sales tax process simpler for businesses.
Communication is Key
Is this giving you a headache? Same. Here’s the thing, though, you don’t have to worry about trying to understand all the noise.
At Quality Logo Products®, we always have your needs in mind and will communicate directly about the cost of your sales tax to the best of our knowledge. You will never have a surprise fee on your bill that we haven’t talked with you about first.
Still have questions? Reach out to our awesome sales team at any time, and they’ll help break it down. You deserve a fair and honest shopping experience, every time!