Hi, experts
I'm operating a new LLC based on Wyoming. Our company operate a website which sell wooden dog sculpture to the entire united state. All of purchase including sale tax are collected by PayPal and stripe payment gateway.
I just learned that there is no consumption tax at the beginning of eCommerce business before the THRESHOLD reached of each state. (example: Virginia requiring tax collection and remittance when
200 transactions threshold is reached)
Here is my question:
1. Could I refund the sale tax collected to all paid customers to avoid early registration and remit sale tax to corresponding states? As these collected tax are incorrectly charged.
2. if my first assumption is wrong, please help me to advise a solution (affordable cost) to sort this issue out.
Sincerely appreciate help of my small business.
You will be allowed to repay the sales tax collected. I have had it done after we filed sales tax. We had to get a refund from the state and then repay the buyer. You definitely are allowed to do that if that is an option.
Going forward, you will need to find a way to keep track of which states passed the minimum requirement and which has not. You will need to work with amazon to in knowing how to set that up so that certain buyers are not tax and some are.
I assume the rule behind you not collecting sales tax in a state until you have reached a certain amount of sales is like a physical presence test. If I purchase from a jeweler located in another state, I don't pay sales tax because there is no physical presence in my state.
Paypal collected it for you..you did not make an error. It will be far easier to file the sales tax returns than to pay the individuals back at this point in time.
Thanks for the advice.
Here are some additional conditions:
There are more than 40 states in which our current orders have been placed. So we will need to register and sale tax returns more than 40 states. This will be a massive job for a starting business.
Could you advise us a better solution which is more suitable for our small business? (for example, could my first assumption which is pay the individuals back work legally? )
Sincerely appreciate your kind.
You will be allowed to repay the sales tax collected. I have had it done after we filed sales tax. We had to get a refund from the state and then repay the buyer. You definitely are allowed to do that if that is an option.
Going forward, you will need to find a way to keep track of which states passed the minimum requirement and which has not. You will need to work with amazon to in knowing how to set that up so that certain buyers are not tax and some are.