The Impact of Washington’s Destination Based Sales Tax on Your Small Business
ByIf you live in Washington State, new changes in sales tax laws that may impact you went into effect mid 2009. Basically, it used to be that if someone bought something from you over the Internet, you charged sales tax based on your location. Now it’s just the opposite. You have to charge taxes according to the rate at the “ship to” location.
This means you have to know their address, and find out what the tax rate is there, in order to charge clients properly—Whether you’re shipping a physical product or selling something that’s downloadable.
So far this has proved to be a huge pain in the butt. In the first month my bookkeeper informed that I paid her $25 to figure out that I owed a customer less than $1 in overpaid sales tax thanks to this new law. Jeez!
For now we’re looking up the sales tax manually each time in order to charge the correct amount. I haven’t come up with a simple solution to this problem, but my bookkeeper is on it. I’ll keep you posted with what I discover.
In the meantime, you can get all the details about the new law and find tax rates for cities in Washington State here:
http://dor.wa.gov/Content/FindTaxesAndRates/RetailSalesTax/DestinationBased/MoreSST.aspx
What’s your opinion on this new law?
Have you found a way to simplify dealing with this new tax law?
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Most of my deliveries are to outside the state, so there are still no state sales taxes for me to compute.
Whew.
I wonder if the people who drew up this new law had any idea of the impact it would have to some small businesses – all for what? a difference in a few tenths of a percent?
Doesn’t seem worth the trouble.
Thanks for your post – the link is very helpful!
I’ve been involved in taxes for longer then I care to admit, both on the personal side (all my working life!!) and from a legal standpoint since passing the bar and pursuing tax law. I’ve provided a lot of advice and righted a lot of wrongs, and I must say that what you’ve posted makes perfect sense. Please keep up the good work – the more people know the better they’ll be equipped to deal with the tax man, and that’s what it’s all about.
I’ve been interested in taxes for longer then I care to acknowledge, both on the personal side (all my employed life!!) and from a legal standpoint since passing the bar and following up on tax law. I’ve rendered a lot of advice and rectified a lot of wrongs, and I must say that what you’ve put up makes utter sense. Please uphold the good work – the more people know the better they’ll be equipped to cope with the tax man, and that’s what it’s all about.