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Remote Sales Taxes and the Death of the Small Business

Remote Sales Taxes and the Death of the Small Business

With more and more people purchasing online instead of at retail stores, the sales tax laws needed to be changed to affect e-commerce businesses and Amazon resellers, but the way this was done has already begun forcing many small businesses to close their doors.  


On June 21st, 2018, in a case titled South Dakota v. Wayfair, the United States Supreme Court ruled that internet retailers who sell into the State of South Dakota are subject to collecting and remitting sales taxes.  Since this ruling, one state after another has joined the ranks of South Dakota in demanding sales taxes from companies shipping to their States.

 

Had the Supreme Court ruled to allow internet vendors to charge every customer their own state tax rate and pay those taxes to their own state, this would have been a simple process that every e-commerce website could have complied with.  However, the way the laws are written, e-commerce companies must charge the taxes associated with the state they are shipping into and file the taxes with that state. That may not sound too difficult, but then add in the additional complication that many of these states force you to charge the tax rate specific to the city or county you are shipping to and file paperwork each month detailing which taxes need to be sent to each location.  

 

The cost and time for a small business to comply with these laws is detrimental.  For KarateMart.com, we spent months reprogramming the website to handle the new taxes, as well as a massive amount of time and money consulting with multiple accounting firms, registering for tax accounts with each state and learning how to file taxes with each state and municipality.  These expenses are ongoing with the monthly filings that we must complete.

 

Perhaps the biggest detriment to these new laws is that WE NO LONGER SHIP TO KENTUCKY.  The cost of time and money to comply with Kentucky's tax laws is disadvantageous to us doing business in that state.  In addition to collecting and filing Sales and Use Taxes with them, they also require us to file an Annual Report, Corporate Income Taxes, Limited Liability Entity Taxes, and Kentucky Nonresident Income Tax Withholding on Distributive Share Income Tax.  We do not have the resources to handle these things in addition to all of the other state tax filings we must do each month.

 

This is a real problem, but you can help. Contact your local state representative and let them know that this is a problem. With your help, the state governments can change the way remote sales taxes are collected and filed. Until then, you can expect to see more and more small businesses close up shop because they can't afford to comply with these laws.


 


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15 Comment(s)
paul
4/10/19 - 3:18am
hi there im in the uk im intrested in a collaspsible bo staff can you ship to the uk.
KarateMart.com Team.
4/10/19 - 8:04am
Hi Paul. Yes, we are currently shipping to the UK. You can see how international shipping works here
Chloe (me)
4/13/19 - 4:21pm
Yaw really not shipping to Kentucky no more?
Kevantae
4/14/19 - 11:01am
Where do y’all ship to near Kentucky
KarateMart.com Team
4/15/19 - 8:52am
We currently ship to every other US state (barring weapons restrictions. So the states on Kentucky's border (Ohio, West Virginia, Virginia, North Carolina, Tennessee, Missouri, Illinois, and Indiana are all fair game.
Keith Riley
4/15/19 - 3:55pm
WTF? I buy A LOT from you guys... In Kentucky. Please email me when You've fixed the problem.
Joseph
4/16/19 - 9:25pm
Do you ship to California. Nunchack wooden
Zaeem
4/20/19 - 2:46am
Can you still ship to UK in 2019. Thanks for listening
Natasha
4/20/19 - 3:48pm
Do u ship to Canada? Newfoundland to be specific.
KarateMart.com Team
4/22/19 - 8:45am
Hi Natasha and Zaeem. You can see our international shipping policy here
Dave
5/7/19 - 1:52pm
Hey do you guys ship to Ireland yet? Cheers
KarateMart.com Team
5/8/19 - 8:13am
Hi Dave. We haven't yet, but we're willing to give it a try. You can see our international shipping policy here
Sam
5/14/19 - 7:44am
For Keith (and really, all of us), KarateMart doesn't have a way to fix this. _We_ have to fix it. We have to get in touch with our representatives, both state and federal, and encourage them to find a way to fix the law so that it is not crippling for small businesses that operate across state lines. The issue isn't just that small businesses have to pay taxes, it's the hoops that some states make you jump through in order to pay those taxes. Figuring out tax rates and registering as a business in fifty different states takes time and effort. That is more time and effort that is not spent doing day-to-day business stuff, creating product, etc...
jerry
5/16/19 - 4:08pm
Can you currently ship to NYC swords or Nunchucks. Please check current laws I do not think any of your weapons are illegal anymore in any state, this could make your company grow and increase sales.rnrnJerry
KarateMart.com Team
5/17/19 - 8:07am
Hi Jerry. Yes, the laws in New York (and Arizona) have changed to allow us to expand where we ship nunchaku to.

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