NYCPHP Meetup

[David Krings]

wkamm at rvyriptide.org wrote:
> I'm no tax accountant either, but it seems to me that the location of your
> dropshipper is irrelevant.  He is not the one selling the product to your
> customer.  He is selling it to you.  And you don't have to pay sales tax
> to him because you should have a state resale certificate, making you
> exempt from having to pay sales taxes.  And, IMO, the location of your web
> server is meaningless.  I've never heard of that being an issue.
> 
> So, the only transaction that could possibly be taxable is between you (in
> Michigan) and the end customer (in California).  Unless Michigan law
> requires you to collect sales tax on something sold to a person in
> California, and I doubt that is true, no sales tax gets collected at all
> here.

Again, IANAL, but from what I read that may not be correct. The "sales tax" is 
considered to be a tax on the added value (which is in some places it is 
called value added tax). And vene besides that, the shipping of goods is also 
a sale of services. So what at least should happen is if any sales tax is to 
be collected the tax from the shipping location (that is where the customer 
buys the shipping service from) and the tax from the sales location are to be 
applied. The supplier (manufacturer of the piece of jewelry) charges the 
seller the applicable tax since that sale happened before the end-user made 
the purchse. Leaves the only question where the location of sale is when 
buying on the web. Is it where one of the parties involved is located, where 
the server is located offering the product, or where the server is located 
that is used for conducting the money transaction?
That is why one hires accountants and at least one lawyer that makes sure that 
the accountant doesn't screw up. Depending on how much budget there is, hire 
another lawyer to take care of the other lawyer. Or just pay the sales taxes, 
whatever is cheaper.

David