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Letter: Collect Sales Tax Based on Where a Product Is Shipped From or Shipped to?

An issue that the press seems to be missing in the state sales tax debate is that many states’ laws require state sales tax to be collected based upon where the product is shipped from, not where it is shipped to. If this continues, would mail-order companies charge out-of-state customers based upon the sales tax rate of the state in which they are shipping from? If so, a few states with large mail-order distribution centers would benefit greatly, and the remaining states would be no better off than they are today.

In Washington state, where we do business, the state has determined that sales tax is charged based upon where the item ships from. For example, if a person buys a sofa at a retail furniture store in City A and has it delivered to his home in City B, sales tax is collected based upon City A’s tax rate, not City B’s. That makes it relatively easy for us to collect and remit Washington state sales tax for in-state sales. We could not afford to collect sales tax for every tax district in Washington state — there are several hundred tax districts in the state.

If each state’s law is changed to reflect where the item is delivered to, many retailers that deliver goods (appliance stores, furniture stores, etc.) will be upset. Instead of collecting the sales tax based upon the retail store sales tax rate for the store where the customer purchased the item, they will have to charge based upon the tax rate for where the item was delivered.

This would cause substantial changes in many retail store point of sale tax collection systems since these systems are not designed to collect sales tax based upon a delivery location. Instead of collecting tax for a few locations in the state, they potentially will have to collect and remit tax for every jurisdiction in every state in the United States!

Mark Mackaman, ComputerGear Inc., Redmond, WA

[email protected]

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