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Do I need to collect sales tax for online sales?

New York, NY |

I will be selling tropical fish online from a new york based business. The new york business will never take possession of the fish, instead the fish will be mailed directly from the supplier to the customer. Do I need to collect sales tax? Is it based on my address or my buyers address?

Attorney Answers 4

Posted

What you are doing is known as a "drop shipment" in the state and local tax world. Each state has it's own drop shipment rules. The answer is way to complicated for a free online service like this and I do recommend you get an accountant or lawyer with knowledge in drop shipments to make sure you are complying with the laws of the states in which you sell.

If you'd like to do a little research own your own first, then search for "drop shipment sales tax listing by state." Also look for web site for the streamlined sales tax project, which has listing of rules for some of the states. The multistate tax commission may also have download that can generally help.

Just remember, if a state proves that you should have been collecting tax and you did not, then the state will hold your business liable for the tax for as far back as the statute of limitations in that state will allow. This is one of those things that are work getting right in the beginning.

I hope this helps.

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James H Sutton Jr.

James H Sutton Jr.

Posted

One other thought - some states might not subject the sale of fish to sales tax. The complications. However, I must agree with my colleagues that if New York subjects the sale of fish to sales tax, then you better get registered and collect tax. That state is a given. The rest of the states can be much more questionable if you have no other connection other than a sale. The states from which you purchase your fish for direct delivery to your customers will be the most challenging states to figure out the right answer. I dare to say, when in doubt, collect and remit just to be safe.

Posted

Generally, you have to collect sales tax for any state where you have a physical presence, and it is based on the place of delivery. This is not a completely simple concept as state taxes never are. I can almost guarantee you will be collecting sales tax for sales in NY to the extent that they are imposed by that state.

Christopher Larson
Insight Law
www.insightlawfirm.com

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Curtis Lamar Harrington Jr

Curtis Lamar Harrington Jr

Posted

Annette Nellen maintains this site which is excellent for historical perspective: http://www.cob.sjsu.edu/nellen_a/TaxReform/PL86-272-50thAnniversary.htm

Posted

If you are physically in New York you should collect on NY sales. There may be an issue as to whether you also have a presence in Florida where the fish are. You should check with an accountant.

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Posted

....how do you sell fish online? I mean do they ride in coach? sorry, it just sounds funny and the internet is changing so much.

Legal Disclaimer: Richard W. Beck is licensed to practice law in Colorado. His answers are for general information and no Answer or Comment shall be deemed to create an attorney-client relationship or create any right of confidentiality. The reader should never assume that this information applies to his or her specific situation or constitutes legal advice. Therefore, please consult an appropriate attorney in your jurisdiction and who is familiar with your specific facts and all of the circumstances as there is likely a time limit related to the question that could expire at any time and you would lose any rights you had.IRS CIRCULAR 230 DISCLOSURE: As required by U.S. Treasury Regulations governing tax practice, you are hereby advised that written advice contained herein (if any) was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.

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Christopher Michael Larson

Christopher Michael Larson

Posted

I thought it was weird that Attorney Gold guessed that they were from Florida without being told. Must be an NY thing.

Richard W Beck

Richard W Beck

Posted

NY and Florida are actually connected by a secret tunnel--or else there would be no one left in NY. I just want to know how you mail a fish?

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