Interesting Facts About Online Sales Tax Accounting That You Didn't Know!

Professionals pursuing jobs in tax accounting have a lot to talk about after the recent announcement of the online sales tax-bill. As someone on a tax accountant job, whether you are with the bill or against in, some of these interesting facts about sales and use of tax may just be the reason why you change your perspective.

Before you choose a side on whether one should tax or not on online sales, consider this-

Mississippi has been historically the first state in America to impose a general state sales taxes. After its announcement in 1932, 23 other states followed suit in 1940.By the time the economy reached the 1960's 45 states including the District of Columbia enforced a general sales taxes.Vermont was the last state to do so in the year 1969.Grocery has been exempt from state and local sales taxes or there exists a lower rate of taxation on these products in 34 states including the District of Columbia.As recently as in 2012, California is known to charge the highest state sales taxes that is of 8.25%. Most other states also levy a local sales taxes. When combined, Arizona is known to levy the highest local rate of 12.7% and Alabama comes second at 12%.Most state governments rely on sales and use taxes for 33.33% of their total taxation revenue. On the other hand, local governments derive about 11.2% of their tax revenue from this source.IN the year 2010, the U.S. Bureau of Census released an approximate figure of 4.1 trillion dollars in retail and wholesale transactions that took place over the internet.It was believed that the loss of tax revenue due to internet sales estimated to about 11.4 billion dollars last year. Within California itself, the figures were about 1.9 billion dollars. In Texas, this figure is believed to be hovering around 870 million dollars and in New York about 865 million dollars.Local revenue loss due to internet transactions was believed to be 11.4 million dollars in 2012.The recently announced 'Internet Tax Moratorium' forbids new taxes on internet access services or any other discriminatory taxes on e-commerce.

The congress extended this Moratorium for the second time recently, up until November 2014. Though, tax accounting experts but note that this moratorium has little to do with the use tax collection problem that is prevalent.

However, as a tax accountant, in spite of all the confusion surrounding online sales taxes, the only thing that you truly need clarity on is how to pay. Remember that every state that has sales tax also has a use tax. The later is a replication of the sales taxes and applies in scenarios when the merchant does not collect any sales tax but you still have the goods shipped into your state.

If you are placing an order on the internet and getting goods shipped into any of the 45 states or the D.C area that has sales tax, you are expected to pay use taxes.

Make as a tax accountant, you are clear on all norms and regulations pertaining to online sales tax before you work for an e-commerce company.

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Dhruv Roy has published 68 articles. Article submitted on June 04, 2013. Word count: 516

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