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| Posted: 22 Jan 2008 17:39 Last Edited By: jc | ||
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Posts: 52 Join Date: Oct 2007 |
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Neoflix collects sales taxes on all sales shipped within California. Clients headquartered in California or have a significant business presence in California are not required to collect any additional sales taxes for orders shipping within California. We collect, report, and pay the taxes directly to the California State Franchise Tax Board. Clients outside California may be obligated by their state and local tax code to collect taxes that are shipping into their state.
While there is not supposed to be taxes for interstate shipping (for example, from California to New York), Internet sales using third-party fulfillment may have additional state and local tax rules governing it. For example, it is possible for a client headquartered in New York to have an obligation to collect taxes for orders that ship from California (where Neoflix is located) to a purchaser in New York. This is the reason why we urge all clients to consult a local accountant to learn your state and local regulations regarding Internet sales and third-party fulfillment. As an example, a client in New York indicated that New York's sales tax code obligated them to collect and pay sales taxes for all sales shipping to New York based on the destination county's tax rates. That seemed extremely burdensome, and frankly there no e-commerce site we know have shopping carts that sets sales tax rates for each and every county in the US. This client's accountant decided to collect sales tax based on their county's rate. For their shopping cart, a sales tax is collected and paid to New York by the client for orders shipping to New York; and a sales tax is collected and paid to California by Neoflix for orders shipping within California. While we're on the subject, I also want to bring up something that a client's accountant had brought-up. By their interpretation of California's tax code, a client is deemed to have a business presence in California if they possess inventory they own in California. If this is true, that means that all our non-Californian clients who sends DVDs and merchandise to the Neoflix warehouse in California are required to apply for a business entity with the California Secretary of State. At this point, we have not yet inquire further into this, but we will this year. I would encourage all our clients to also ask their accountant, and appreciate any feedback they have about this issue. |
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