The latest item to enter the discussion of internet sales tax is the news that Connecticut is about to put an end to tax free shopping by requiring Amazon to collect online sales tax for purchases shipped to Connecticut addresses. Recently, Illinois started charging Illinois sales tax on purchases shipped to their state, and other states such as New York, North Carolina, and Rhode Island have passed similar legislature.
The Differences Between Sales and Use Tax
Currently, sales tax is collected by the seller and paid to the state only on goods sold within the seller’s state. Sellers do not collect sales tax on goods shipped outside the state, but buyers are technically required to pay use tax to the state in which the good is purchased. For example, if a buyer in California wants to buy from a seller in Illinois, the seller does not have to collect an Illinois sales tax, but the buyer is required to pay a use tax at the California sales tax rate. However, since the use tax is difficult to enforce, many states now want to make sellers collect internet sales tax on goods purchased out of state.
This new online sales tax legislature will affect both international shopping and US online shopping.
How Internet Sales Tax Affects US Online Shopping
Let’s say you live in California and want to buy an iPad 2 from Amazon in order to avoid sales tax. Under the new legislation, Amazon will have to charge you the California internet sales tax rate, because you’ll presumably be shipping your iPad 2 to your address in California.
States With No Sales Tax
Now, let’s say you have an address in a state with no sales tax, like Oregon. You can still enjoy tax-free shopping, since Amazon will only be required to charge sales tax online if they ship to a state that collects sales tax.
Of course, residents of tax collecting states can take advantage of “no sales tax states” like Oregon by using a package forwarding service when they shop online.
How Internet Sales Tax Affects International Shopping & Package Forwarding
One reason international shoppers love using package forwarding services to shop online in the US is that they can typically find lower prices than in other countries. But if your forwarding service offers a US address in a state that collects internet sales tax, your savings get reduced dramatically. For example, Bongo US provides a US address in Connecticut, where the new legislation was just passed.
However, using a US address in Oregon allows international shoppers to shop tax-free at any US online store. If you have a US address in Connecticut, New York, or Florida, you can avoid internet sales tax and maximize your savings by switching to an Oregon US address today.
What to Know About Internet Sales Tax
If you’re used to shopping tax-free online in the US, you might be surprised the next time you hit the checkout button. US residents can download a free tax-free shopping guide to stay ahead of the new laws.
International shoppers can get a US address in Oregon today to keep saving by shopping online tax-free in the US.
How much do you expect to save with tax-free shopping from Oregon? Tell us in the comments section!