Sales Tax on Internet Sales
Online Retailers to Collect Sales Tax
Internet sales tax has been a hot topic lately because sales tax and other mandated taxes will soon be collected by online retailers. Providers that reach the minimum and new economic Nexus limits will be required to collect sales tax as a result of the recent Supreme Court ruling in South Dakota v. Wayfair. In the past, a physical presence in the state was needed to establish physical Nexus. Now that has all changed.
Fleetistics’ plan of action.
An advance letter was sent to all customers and prospective customers on October 8, 2019, explaining the coming changes.
- Until Fleetistics begins to collect sales tax, customers should continue to pay all taxes related to products and service purchased from Fleetistics to their sales tax authority.
- If you have not paid applicable taxes on the products and services purchased from Fleetistics (formerly GPS Fleet Solutions), you need to do so quickly, per your purchase agreement and standard accounting practices.
- It has been our experience that failing to pay taxes for any and all online purchases may flag your company with your state Department of Revenue (DOR) leading to an audit. Audits are time consuming, expensive and can lead to interest and penalties, and even the cost to defend Fleetistics.
- If taxes have not been paid, paying the taxes before 2020 may be a way to reduce your current year tax liability.
Your sales tax responsibility.
Current and former customers are responsible for reporting and paying all taxes until such a time that Fleetistics collects sales tax on behalf of customers. Paying sales tax for online purchases is a standard accounting practice and well known to accounting professionals. This is likely already being handled by your accounting department but confirming prior to an audit is a prudent step. The responsibility to pay tax for online purchases for all products, and possibly services, may go back seven years or longer. Fleetistics is working to establish a tax collection process per the Supreme Court ruling to remit sales tax on behalf of customers across all 50 states and has a target date of 1 January, 2020 to begin.
What to do if you owe sales tax.
Fleetistics is not a licensed authority on taxes and the content herein is solely Fleetistics’ opinion, so be sure to consult your accounting and tax professionals for advice. It seem logical that if you voluntarily pay any sales tax owed before being audited, you are more likely to avoid interest and penalties. This may be done to encourage companies to come forward and pay back taxes. Local government would avoid the cost of audits and legal proceedings to fine and collect back due taxes. If taxes have not been paid, your company is at risk.
We are communicating this to you because it represents a major shift in how business is done online and with Fleetistics. It is an opportunity to review your standard accounting practices to ensure the proper handling of all online purchases. Any company selling you goods and services should be transitioning to collecting and paying sales taxes. If they are not, they are doing your company a disservice and are unlikely to remain in business. It is Fleetistics’ belief that there will be so many companies failing to implement this important process. State tax collection agencies may be busy for years prosecuting cases. Those doing it right will avoid the hassle and may continue doing business with less DOR scrutiny.
Fleetistics sincerely appreciates your business and the strong working relationship built over the years. We believe this change is a good one even with a significant increase in cost and effort to implement this program nationwide.
