Do I need to collect sales tax for online orders

[Grandpaw]

I have a Pro SmugMug account and I am trying to be able to turn on the "BUY NOW" option. For those of you that do this, do you collect sales tax and if do, how do you handle it? I called H&R block and they said not to worry about it unless I have some serious sales. I called the state tax commission and they said SmugMug should be collecting the tax and taking care of it. SmugMug says they will collect it for me but are not responsible for turning it in. On the SmugMug site it won't let me not collect the tax. I am getting very frustrated with the whole thing and would appreciate some help with this from someone that may actually know what needs to happen. Any help will be greatly appreciated, Jeff

[mjs1973]

SmugMug says they will collect it for me but are not responsible for turning it in.

This seems odd. If they collect it, what do they do with it? Do they give it to you to turn in or do they pocket it?

I don't have my site set up for online sales, but here is how I handle my sales tax. I don't charge sales tax per se, but I do have it built into the price of my products. I keep track of all of my taxable sales and at the end of the year I figure out what I owe the state by multiplying my sales by the tax rate. You could do the same thing with your online sales.

[Grandpaw]

This seems odd. If they collect it, what do they do with it? Do they give it to you to turn in or do they pocket it?

I don't have my site set up for online sales, but here is how I handle my sales tax. I don't charge sales tax per se, but I do have it built into the price of my products. I keep track of all of my taxable sales and at the end of the year I figure out what I owe the state by multiplying my sales by the tax rate. You could do the same thing with your online sales.

They say they give you the option to be collected but if I don't put in the state and tax rate it says I'm not finished. This is just not making sense to me. SmugMug says they are not responsible but the state tax commision says they are. This just can't be this complicated, Jeff

[Loupey]

In my state, I need to collect sales tax if 1) I am selling direct, and 2) the customer to whom I am selling buys (resides) in my state.

I don't know how SmugMug works but it sounds like they are acting as an intermediary and they are responsible for collecting and paying the sales tax. Do you get payment from SmugMug for the sales or from the end customer?

I sell most of my work through galleries on a consignment basis. As such, the gallery collects all payment from the customer (including sales tax) and I get my payment from the gallery and it alleviates me dealing with sales tax issues. It sounds like SmugMug might be acting in the same capacity.

Consider that If you have the ability to put Paypal html codes directly into your site, you can dictate the sales tax rate to charge and to who.

[mjs1973]

I sell most of my work through galleries on a consignment basis. As such, the gallery collects all payment from the customer (including sales tax) and I get my payment from the gallery and it alleviates me dealing with sales tax issues. It sounds like SmugMug might be acting in the same capacity.

This brings up a good point. I too have some of my work that is sold through a gallery and they do the same thing. They take care of collecting and paying the sales tax for me. At the end of the year, I get a tax form from them (I forget the form) that states my income from those sales that I report on my taxes.

This brings me right back to my original question. If SmugMug is collecting the tax, but not responsible for sending it into the state, what are they doing with it? Are they paying that extra money to you?

Will you get a tax form from SmugMug at the end of the year stating your income?

[Grandpaw]

This brings up a good point. I too have some of my work that is sold through a gallery and they do the same thing. They take care of collecting and paying the sales tax for me. At the end of the year, I get a tax form from them (I forget the form) that states my income from those sales that I report on my taxes.

This brings me right back to my original question. If SmugMug is collecting the tax, but not responsible for sending it into the state, what are they doing with it? Are they paying that extra money to you?


Will you get a tax form from SmugMug at the end of the year stating your income?

Mike and Loupey, I really appreciate you trying to help me out. I'm not expecting a lot of sales and don't want to turn this into a major operation but I DO WANT to be able to sell prints and find out if some will sell.

According to Smugmug if I make over $600.00 income they will send me a 1099 form stating my income.
As far as the sales tax they will collect it and send it to me monthly or quarterly. When I called the state tax commission they told me that if I received my check from Smugmug that they are responsible and the orders were made through SmugMug that they should collect it and turn it in. I am getting paid from SmugMug and not they end customer.

Is there anyone out of the many thousands of members on this site that has a Pro account with them that can add some input? Jeff

[mwfanelli2]

It has been a very very long time but maybe it still applies.

I had a company that sold some CDs with software of mine (they handled credit cards and such). I had to get a certificate from the state that allowed me (!) to collect sales tax. Each quarter, the company sent me two checks: one for the sales, one for the taxes. The taxes were sent in to the state, by me, quarterly.

At the time, it was made very clear to me that not collecting sales taxes where required was a very bad thing! Oh yeah, this was New York.

YMMV.

[Loupey]

When I called the state tax commission they told me that if I received my check from Smugmug that they are responsible and the orders were made through SmugMug that they should collect it and turn it in. I am getting paid from SmugMug and not they end customer.

Jeff, I wouldn't worry about it too much. Keep a copy of your correspondence/conversations with Smugmug and copies of your checks. These and any 1099-MISC forms should be sufficient to prove to the state that you are selling to a reseller and that they are responsible for filing/paying the taxes. What Smugmug does with the taxes that they collect is not your concern really.

[Grandpaw]

Jeff, I wouldn't worry about it too much. Keep a copy of your correspondence/conversations with Smugmug and copies of your checks. These and any 1099-MISC forms should be sufficient to prove to the state that you are selling to a reseller and that they are responsible for filing/paying the taxes. What Smugmug does with the taxes that they collect is not your concern really.

Thanks Loupey, Mike and Micheal for your input. Loupey I think I will take your suggestion. I would also like to say that I have figured out how to turn on the buy now option on Smugmug. I have to say I really feel like a dummy once I figured it out. I was making a major production out of something very simple. Sometime you just over think the problem when the answer is actually right there looking at you, :blush2: :blush2: Jeff

[Frog]

"Sometime you just over think the problem when the answer is actually right there looking at you, Jeff"

happens to me all the time but then I have a neuro-chemical disorder :wink5: :confused5:

[JETA]

I have a pro smugmug account and sell quite a bit during football season. Smugmug does not charge my customers sales tax. At least customers within my State they do not. So I do not have to pay sales tax on my smugmug sales. I obviously pay income tax.

I'm sure it's different in every State, but that's how it works for me.

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[KevinLop]

Do I need to charge sales tax on online orders? I've been running an ecommerce store for a while now and the whole sales tax situation is starting to confuse me. I mean, I've read the articles, talked to a few people, but the rules seem to be very different. Some say it depends on where my business is located, others say it depends on where the client is located. And then there are these thresholds - if you sell more than a certain amount in any state, do you have to collect tax there? Sounds like a bureaucratic maze. I want to do everything legally and ethically, but this is seriously overwhelming. How can I even begin to solve this problem?

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