You don’t need a subscription to read today’s Friday Archive Dive!
Even if you’re not a member of the site, you can read the entire post, which originally ran February 18, 2014. If you’ve ever been curious about the kind of information, tutorials and advice that you’ll get as part of your subscription to Webcomics.com, this is a good sample.
If you’d like to join the site, you can get a 12-month subscription for $30 — or you can get a one-month Trial for $5 … with no obligation after your 30 days expire.
Sales tax is a state-mandated tax on physical goods and products. Sales-tax guidelines vary from state to state, and, therefore, it’s really difficult to keep track of for webcartoonists who (a) sell merchandize on the Web and/or (b) travel to other states to do business at comic conventions.
General sales tax information
The Web site of legal-guide publisher NOLO* has an excellent state-by-state breakdown of sales tax agencies. To help ensure you’re complicit in your home state, be sure to go to the proper sales-tax agency and familiarize yourself with its procedures and expectations. You may be required to register for a sales-tax license or a seller’s permit.
Internet-based sales
The current default rule throughout most of the United States is that you must collect sales tax on Internet sales to customers in those states where your business has a “physical presence.” Physical presence is defined as:
- Store/office
- Warehouse
- Sales representatives in the area
Again, NOLO has a tremendous state-by-state breakdown to make it easy to find the laws that apply to you.
The Marketplace Fairness Act
The federal government is currently considering legislation that would affect Internet retailers. The Marketplace Fairness Act would allow states to require sellers not physically located in their state to collect taxes on online and catalog sales made to people in their state.
But don’t get too bent-outta-shape… sellers that make $1 million or less in annual sales and have no physical presence in the state would be exempt from this requirement.
Convention sales
If you exhibit at a convention (and if you plan to sell merchandise), you will probably need to register to collect-and-remit sales tax — even if you’re only in town for the weekend.
This can be a real pain because once you’re registered, you are required to fill out quarterly forms reporting your sales — even if you made zero sales in that particular quarter. This only stops when you cancel your sales-tax license in that state — which , of course, is inconvenient if you decide to go back to that state next year.
Some cities have a special temporary sales-tax license for people coming in to sell merchandise at trade shows and conventions. I know personally of the following cities that have this excellent feature in place:
- New York, NY
- Baltimore, MD
- Chicago, IL
(If you know of others, please share that in the Comments section below.)
In most cases, the organization running the convention will provide you with the necessary sales-tax registration information.
Don’t neglect this important part of convention prep! As state economies get tighter and tighter, they’re cracking down on conventions in an attempt to generate more tax revenue. And don’t be that person who thinks she’s going to “give away” merchandise “for free” and collect “donations.” You may be able to talk yourself that your customer didn’t buy it, but the IRS — they’re really not gonna buy it!
* “Nolo,” in Latin, means “I don’t choose to.” The founders of the site thought it was appropriate given that they had never intended to become publishers.