Traditional, “brick-and-mortar” businesses (with a physical storefront) charge t

Question

Traditional, “brick-and-mortar” businesses (with a physical storefront) charge their customers the sales tax required by the jurisdiction where the business is located. So, if a retail store operates in Atlanta, GA, it should collect both state and local sales taxes from customers buying merchandise at the store. Now, suppose the company starts selling products online. Does it mean it should charge them the same sales taxes on those coming into the physical store? How should the company collect tax for international, online sales?

Explanation / Answer

The traditional "brick-and-mortar" businesses possess sales tax which varies from place to place charged to the customers. The state and local sale tax possess extra citing of the product when sold by traditional business method. But if, the product is sold online then, the brick-and-mortar business is affected because the product is sold at same rate everywhere. The product possess delivery charges kept constant at rate. The e-commerce world is not liable to so many taxes as in the traditional method of business. In a research conducted, Walmart which is the largest retailer of the state made a joint venture with an e-commerce company Accel which avoided the former to collect sale tax. It affected the cost in an effective manner to the custoemrs and thereby, the products are sold at discounted price as compared to the market price. It is a fact that the e-commerce companies do not charge sale tax thereby, the products offered to the custoemrs are available at low cost compared to the market rates online.

The difference in the price of the products sold through e-commerce website or physical store does not mean to charge same sale tax on the e-commerce sales. The consumers select the product as per the difference in the price of the products offered tot hem which is most likely affordable online.

The company should collect tax for international, online sales by procuring tax on heavy electronic products sold online to international buyers. In July 2009, The Washington State Department of Revenue announced that all online products must charge sales tax on their digital products and services offered to the customers. It did not hold sales tax on web hosting, backup, advertising services, interactive session held live, etc as stated by the department in June 2010.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.