It has been a long held belief by most online shoppers that out of
state internet purchases are tax free. I have to admit that I believed
this for a long time myself, but unfortunately it’s not the case.
Just to dispel any theory dissolving that old ‘Death and Taxes’ quote, internet purchases are not tax free.
That’s right. As the wording goes, most internet companies don’t have
to collect out of state sales tax. However, consumers, businesses and
any end users still must pay a “Use Tax” on non-taxed purchases that
they make through mail-order or online.
Most states currently have Use Tax which specifically requires
consumers to pay their state sales tax on purchases they make online
that are not taxed by the business. There are some exemptions for
certain types of products and for states that do not have any sales tax,
but for the most part, taxes on these purchases are required to be paid
to your state government. With the exception of very large purchases,
use tax is rarely if ever monitored, as it would simply be an impossible
feat for any state government to handle. However, we can all be sure
that states are losing out on millions if not billions in uncollected
taxes, so if you aren’t paying them, enjoy the free ride while it lasts.
Here’s a Use Tax table that I came up with covering which states require it:
(Let me pre-apologize about all of the PDF links here, Government
websites are about as bad as they come, and in many cases PDF’s are the
only pages available.)
