Online Sales Tax, With Tax Lawyer Robert Wood, San Francisco

For businesses making online wholesale purchases for resale, they shouldn't be paying an online sales tax.  Tax lawyer Robert Wood, of Wood, LLP in San Francisco says that the idea is that the sales tax should be applied at the final sale at retail and it is assumed that the consumer will pay sales tax at the final point of the distribution chain.

Robert Wood Source: Woodllp.com

Robert Wood

Source: Woodllp.com

As there is no uniform national law on sales tax, it is still a state item but Wood believes it's better to impose uniform standards on what states can and can't do, as this would "generally be good for businesses in that it would streamline the process of compliance."

In the early 90's, the Supreme Court said that a business needs to have a presence in the state in order to be subject as a business to collect sales tax, says Wood.  When buying online, it matters where you are because if that merchant has a store in your state, then it doesn't matter if you're buying online or from the actual store, as the sales tax would apply, he adds.

The use tax is the mirror image of the sales tax, which is when the merchant doesn't collect sales tax but you have the good shipped into your state, according to Wood.  

Attorney Robert Wood, of Wood, LLP in San Francisco is a featured commentator with The Tax Law Channel, part of The Legal Broadcast Network.