Monday, August 04, 2008

More legal stuff - Tax Free!


Two posts today. I'm catching up on things and I've been meaning to post this info for a while.

Mail orders and the new sales tax. That's the issue. If you've been reading along, I've mentioned the BIG SALES TAX CHANGE of July 1st. What happened, in case you missed it, is that sales taxes have changed in the state of Washington - in a really big way across the board. Everyone now pays the sales tax rate at the place they receive goods, instead of the sales tax rate from where it was shipped. Destination-based they call it.

Up until now, people who mail ordered from me had to pay the Seattle sales tax rate, because that's where I am located and from where the goods were shipped. Now you pay whatever sales tax rate you have at your house, if it's going there. Which is generally a bonus, because there are few places who have the same high rates as me, nobody has it any higher, and most people are paying less. Ok, it's only a few cents here and there, but it matters.

The whole thing is a royal headache for me. Because reporting it is going to be a nightmare and tax dollars are headed all over the place. Some places are going to be rolling in it, and some towns are going to be hurting badly. For instance, Kent is warehouse heaven. The entire city is comprised of industry, manufacturing and warehouses where things are stored and shipped. The old way: you live in Kirkland, buy a couch in a Bellevue showroom, but the furniture is located in a warehouse in Kent and trucked off from there to be delivered to you. You were paying Kent tax rate and the money went to Kent municipality because that's where it was shipped from. Kent survived on those tax dollars. Now they will have vastly less money coming in, because people are paying taxes to their own city whenever something is delivered. I have no idea how this will all shake out, but there will be reverberations.

What it means for me and you however, and I'm always looking for a silver lining - this is going to be sweet for out of state shipments. Whenever you order from me and have something delivered to family or friends out of state -- NO TAX at all!!! Think about that. It's one of the major reasons internet sales were so good anyway. Lots of times it was tax free because the company was located out of state. Now it applies to me and you both in Washington, but sending a little special something to your pal in California, your Mom in Florida, the sis in New York and the aunties in Missouri. All those shipments are tax free, even though we are located here. It's good.

I hate taxes too. Hate. So I wanted to mention this new tax free bonus which came out of the new legislation. So you can give it some thought before the holidays roll around.

ETA: to be more clear, in case it all went too fast. It is written in the U.S. Constitution that no taxes can be collected across state lines, so I don't think that's going to change any time soon (no matter how badly those politicians want to collect on internet sales). So all shipments going to someplace outside of Washington state will not have taxes charged. Period. Make sense? No? Call me.