Have you ever purchased something online from an e-commerce website? Perhaps school books through Amazon.com, clothes through e-Bay, or a small shop across the country selling homemade jam? The internet has made shopping online quite convenient, but have you ever wondered how taxes are calculated when making an online purchase?
There are two ways that e-commerce retailers collect taxes from online orders.
E-commerce retailers either charge the buyer’s local tax rate, or establish a “NEXUS” rate, which means that the retailer has registered as conducting business from a particular state or county because they:
- Have a physical location in the state
- There are resident employees working in the state
- The business has property (including intangible property) in the state
- If there are employees who regularly solicit business in the state