Back on the subject of collecting sales tax by on-line retailers.....does anyone know how that works in the US in detail?
In Canada, the retailer needs a government issues sales tax number to legally collect and then submit the sales tax.
There are three potential types of sales taxes in Canada:
Federal or GST (Goods and Services tax) of 5%
Provincial or PST - percentage varies by province, some like Alberta have no PST
Harmonized or HST which combines the GST and PST into one sales tax - again percentage varies by province.
Point is that a retailer needs to have this tax number to legally collect and then submit the sales tax to the government.
With brick & mortar sales, this was pretty much straight forward- if the store was in Ontario for example, the retailer would get the HST number for Ontario, collect the sales tax applicable to Ontario and submit that since most customers would live in Ontario.
With on-line sales, things got a bit complex, I live in Ontario and when I ordered something from British Columbia, for a while I paid only the GST (which applies to every province) but not the PST for BC.
That changed a while back and we have been paying the Ontario HST even if items are bought from another province.
I never checked into this in detail, but I assume the retailer in BC needs an Ontario HST number to collect and submit the appropriate sales taxes.
We only have 10 provinces and territories in Canada, so I assume the extra bookkeeping is manageable.
But in the US with 48 states...do retailers there need some sort of tax number not just for each state, but some cities in the US as well that levy their own sales tax.
Sounds like a can of worms although with software it's probably not that much of an issue.
The interesting thing I remember a couple of years back is when US retailers were collecting Canadian sales tax on items I wanted to buy.
Or better "trying to collect" ...because I went back and asked them for their GST and PST number (no HST at the time) - never heard back.
I assume those retailers were just pocketing the extra 10 to 12% at the time since Canada customs didn't collect the Canadian sales tax at the time either so customers didn't get hit with the tax twice which would have raised some eyebrows.