Tax Free Shopping

Is tax free shopping coming to an end? Are online sales taxable and if so who gets the money? Why is tax free shopping such a controversy? Is there truly tax free shopping?

Tax free shopping on the internet is a great advantage. If your purchase is made with a business that does not have a physical location within your state of residence, they are not responsible for collecting sales tax from you. Many states have tried to force online businesses to collect sales tax and have failed due to 1992 decision by the Supreme Court. This decision stated mail-order companies have no need to collect sales tax in a given state if they do not have a physical presence in that state.

Sales and Use Tax collection is the responsibility of the selling entity as well as the purchaser in many states. Sales tax is collected by the seller in the states they have a physical presence and paid to that state. Use Tax is paid by the consumer to the state in which the live for all their taxable purchases. Many states now have a line on their state income tax form asking for the amount of money spent on non-taxed taxable purchases. This total is then taxed at the state sales tax rate.

States that do not have sales tax and duty-free shops are two other areas of tax free shopping. For the time being, until congress changes the law or overturns the 1992 Supreme Court Decision, online shopping is the easiest way to  stretch your hard earned dollars. There is no need to travel to a duty-free shop or a sales tax free state. Pull up a chair and enjoy your tax free shopping experience and be mindful of your state sales and use tax laws.