Simple fact, people like shopping online. They like how they can quickly scan a store and see what they can buy, they like to search for products online, they like to comparison shop, they like not waiting in checkout lines and having the products delivered to their door.
Brick and Mortar Stores that do not have an online presence, complain about online stores because of sales tax reasons. As a brick and mortar store, you charge sales tax on ALL sales that are made, because the products are being sold in the state they are registered in. Online retailers, do not have to charge sales tax on products being sold in other states other than where they are located “physically”, and most of their sales and traffic probably come from different states. Hence, no taxes charged to the customer and no taxes collected and reported to the Government. But with the Senate recently approving the Marketplace Fairness Act, moving it one step closer to enactment, online shoppers will have to pay sales tax on the majority of online purchases.
The Marketplace Fairness Act would allow the states in the Continental US and DC (the states that currently charge sales tax) to require online retailers to collect tax on purchases.
But, and this is a BIG BUT! If you are a small online retailer, with no physical operation like a brick and mortar store or a warehouse, and less than 1 million dollars in sales a year, you DO NOT have to collect sales tax. This only applies to BIG retailers that make a lot of money every year online.
CNN reports that close to 30% of online shoppers surveyed by advisory firm AlixPartners recently said they would shop more at brick and mortar store if the tax became a reality. Nearly half, though, said that an Internet Sales Tax would have no effect on their online shopping habits.
As a small retailer, that offers products that big chain stores also sell online, you can target that 30% by touting NO INTERNET SALES TAX as a marketing angle to get more shoppers to your store!
So don’t be concerned about this new Act, use it to your advantage.