Blog Layout

Your Online Shopping Habit Might Get More Expensive

nicholas • Sep 09, 2016

Does anybody actually go to the mall anymore? I can personally count on one hand the number of times I have been inside a mall in the last year. Many millennials, like myself, would much rather do our shopping in the comfort of our own homes. It isn’t only millennials, websites like Amazon.com and Ebay.com have seen their activity soar over the last decade. Online shopping is the new way to shop for many reasons. One of those reasons, that you may not even be aware of, is that in most cases you do not pay for sales tax on your purchases. Thus, online shopping is not only convenient, but it is also cheaper!

Well, Congress is well aware of this and the money that they are missing out on. The Census Bureau of the Department of Commerce estimated that in the 2nd quarter of 2016, there were e-commerce sales of $97.3 billion. For local purposes, let’s assume that this was all in the State of Wisconsin. At the general sales tax rate of 5%, this equates to $4.865 billion in uncollected sales tax.

Online retailers are not required to charge sales tax if they do not have a physical location that they sell from. Therefore, the sales are charged with what is called a use tax. The use tax puts the burden on the consumer to report the sales tax on their state tax return. If you ever wonder why your tax consultant may ask if you made any internet purchases for the year, this is why. Although consumers are supposed to report their internet purchases on their tax return, many do not.

Congress wants their money!

There have been attempts in the past by Congress to impose sales tax laws against the e-commerce businesses. Those efforts have failed, but they are not giving up. Judiciary Committee Chair Bob Goodlatte has taken it upon himself to take another swing at it. The big boys like Ebay and Amazon are keeping a close eye on his proposals as it would drastically effect their businesses.

His proposal states:   “A state may impose a sales, use or similar tax on a seller, or impose on a seller an obligation to collect such a tax imposed on a purchaser, with respect to remote sale of a product or service only if — (1) The State is the origin State for the remote sales (where the company had the most employees during the previous calendar year); (2) The tax is applied using the origin State’s tax base applicable to non-remote sales; and (3) The State participates in the State tax clearinghouse.”

The online shopping world is great for consumers, and it is a retail giant that is only going to continue to grow. So keep on clicking those purchases from your computer, but be aware that your checkout bag price may be a tad higher in the future.

 

Until next time,

Nicholas Hammernik, EA

Milwaukee, Waukesha, Brookfield, New Berlin, Wauwatosa tax preparation

See More Blog Posts

By nicholas 24 Dec, 2020
The “rescue package” has arrived. The COVID Relief bill is a whopping 5,593 pages long. I know you don’t want to sit and read through that novel, so I am here to summarize, in plain English, how this bill is going to effect your taxes. Have you ever been on a roller coaster before? A… The post The COVID Relief Bill Summarized appeared first on Talking Tax to Milwaukee.
By nicholas 04 Dec, 2020
This past week, I finally dove into a project that I has been brewing in my mind for a few years. I published my first podcast episode today. Is it any good? I’m not quite sure. To be honest, I’m not too happy with how it turned out. However, I accomplished part of my goal.… The post The Tax Slang Movement appeared first on Talking Tax to Milwaukee.
By nicholas 13 Nov, 2020
Your goal should be to get the IRS to owe you money. Of course, the IRS is not likely to cut you a check for this money (although in the right circumstances, that will happen), but you’ll realize the cash when you pay less in taxes.   Here are seven powerful business tax-deduction strategies that… The post 2020 Year-End Tax Savings Tips appeared first on Talking Tax to Milwaukee.
By nicholas 31 Jul, 2020
  With the 2019 Tax Filing Season just behind us, it is difficult to think of the next filing season, however, there are many issues that need to be addressed now, rather than wait. At this most difficult time for our taxpayers, we want to assure you that our firm is here to assist you… The post COVID-19 Tax Updates appeared first on Talking Tax to Milwaukee.
By nicholas 05 Jun, 2020
The goal of the Milwaukee Restart Program (Restart) is to help local businesses that suffered as a result of the pandemic to reopen and adapt to the “new normal” Eligibility Restart grants will assist for-profit businesses located in the City of Milwaukee that have 20 or fewer full-time or full-time equivalent employees and greater than $0 but less… The post Milwaukee Restart Grant Program appeared first on Talking Tax to Milwaukee.
By nicholas 05 Jun, 2020
Over the past few months COVID-19 has changed the way a lot of small businesses operate. Some have been unable to be open, some have adapted and changed, and some have even thrived. The Government had made a few loans available to try and help small businesses keep their employees employed and to also cover… The post Additional Grant Becomes Available For Wisconsin Small Businesses appeared first on Talking Tax to Milwaukee.
By nicholas 14 Jun, 2019
Choosing an Accountant Who Puts Your Goals First There is an endless supply of do-it-yourself tax preparation tools and websites, and the sheer volume of options can lead you to believe the process of filing your returns is simple. However, a DIY approach only works if you are satisfied with paying more than necessary. Tax… The post Finding the Right Accountant to Successfully Guide You Through the Tax Maze appeared first on Talking Tax to Milwaukee.
By nicholas 15 Feb, 2019
  Choosing an Accountant Who Puts Your Goals First There is an endless supply of do-it-yourself tax preparation tools and websites, and the sheer volume of options can lead you to believe the process of filing your returns is simple. However, a DIY approach only works if you are satisfied with paying more than necessary.… The post Finding the right accountant to successfully guide you through the tax maze appeared first on Talking Tax to Milwaukee.
By nicholas 08 Feb, 2019
  How do you know if your rental property qualifies for the 20 percent tax deduction under new tax code Section 199A? Just what we need–something else to learn along with all of the other tax code changes this year. Well, maybe not. There is a piece of good news: we won’t be required to… The post Does my Rental Property Qualify for the New Section 199A Deduction Under Tax Reform? appeared first on Talking Tax to Milwaukee.
By nicholas 07 Dec, 2018
Your company’s profitability depends not only on sales, but also on effective cost management. Are you adequately addressing the cost side of the business equation? Analyze Your Cost Structure You probably can readily identify the products and/or services that are generating your greatest sales volume. But can you identify all the costs associated with providing… The post Do You Truly Know Your Business Costs? You Better! appeared first on Talking Tax to Milwaukee.
More Posts
Share by: