Sales Tax

Shopping on line can be easy, simple and save you lots of money. It can also take a lot of your time, frustrate you, and result in unwanted purchases. Now the same can be said for regular high street shopping, but with the vast opportunity presented by the Internet it will pay you to spend a few minutes reading this and understanding how to better optimize your Sales Tax shopping experience:

1. Compare - without doubt the biggest advantage that the Sales Tax offers shoppers today is the ability to compare thousands of Sales Tax at a time. This is a great thing, but not necessarily all the time! Too much can be daunting at times so take advantage of the great comparison sites and where possible let them do the hard work for you.

2. Research - if it has been said it will be on the internet. Ignorance is no longer a justifiable reason for buying the wrong thing. Take the time to research in detail everything that you could possible want to know about

3. Testimonials - don't know anybody that has bought a Sales Tax? Wrong! If the Sales Tax is good the internet will let you know. Use the Internet as a friend and get testimonials before you buy.

4. Questions - Got a question about Sales Tax then search the Forums, FAQ's, Blogs etc. Don't be afraid to ask .....

5. Reputation - Never heard of the company selling Sales Tax? Don't worry, no reason why you should know every company in the world, but you know someone that does! Use the internet to find out what people are saying about Sales Tax and build up a picture of their reputation for sales, returns, customer service, delivery etc.

6. Returns - still worried that even after all of the above your Sales Tax wont be what you want? Check out the returns policy. There is so much competition now that someone, somewhere is bound to offer the terms that you are comfortable with.

7. Feedback - happy with your Sales Tax then let people know, after all you are depending on others people input in your buying decision, so why not give a little back.

8. Security - check for the yellow padlock on the Sales Tax site before you buy, and the s after http:/ /i.e. https:// = a secure site

9. Contact - got a question about Sales Tax, or want to leave a comment then check out the sites contact page. Reputable companies have them and respond.

10. Payment - ready to pay for your Sales Tax, then use your credit card or PayPal! Be aware of companies that don't accept them, there may be genuine reasons but given the huge amount of choice you have when buying online there is no reason at all not to buy via credit card or PayPal.

A sales tax is a consumption tax charged at the point of purchase for certain goods and services. The tax is usually set as a percentage by the government charging the tax. There is usually a list of exemptions. The tax can be included in the price (tax-inclusive) or added at the point of sale (tax-exclusive).

Ideally, a sales tax is fair, has a high compliance rate, is difficult to avoid, is charged exactly once on any one item, and is simple to calculate and simple to collect. A conventional or retail sales tax attempts to achieve this by charging the tax only on the final end user, unlike a gross receipts tax levied on the intermediate business who purchases materials for production or ordinary operating expenses prior to delivering a service or product to the marketplace. This prevents so-called tax "cascading" or "pyramiding," in which an item is taxed more than once as it makes its way from production to final retail sale.

Effect on consumers Sales taxes are considered by some to be regressive tax; that is, low income people tend to spend a greater percentage of their income in taxable sales (using a cross section time-frame) than higher income people. However, this calculation is derived when the tax paid is divided not by the tax base (the amount spent) but by income, which is argued to create an arbitrary relationship. If all purchases are subject to the same tax rate, the tax rate itself is flat with higher income people paying more tax as they consume more. While the tax on spending as a percentage of gross income may be regressive, the effective tax rates can be progressive tax on consumption due to exemptions or rebates. If a sales tax is to be related to income, then the unspent income can be treated as tax-deferred (spending savings at a later point in time), at which time it is taxed. Sales taxes often exclude items or provide rebates in an effort to create progressive effects. In many locations, "necessary" items such as non-prepared food, clothing, or prescription drugs are exempt from sales tax to alleviate the burden on the poor. Others consider sales tax preferable since it taxes only consumption (economics), which creates an incentive for savings and investment.

A related type of tax is the value-added tax or VAT. It is a system in which all businesses remit taxes on their sales but they are also refunded the amount of VAT remitted by their suppliers. In addition to avoiding cascading, under VAT there is no need for government to determine which sales are taxable and which are not, since all sales--retail, wholesale and intermediate--are taxed. Some or all of these taxes may be refunded but it generates a lot of paperwork (and income). The VAT paperwork can be burdensome but it remains a major source of tax income for most of the European Union, Mexico and other countries which charge on average a 15-25% VAT rate. Canadian sales taxes range from 0% in Alberta to an effective 16.6% in Prince Edward Island where sales tax is also applied to the federal Goods and Services Tax (Canada).

Most countries in the world have sales taxes or value-added taxes at all or several of the national, state, county or city government levels. Countries in western Europe, especially in Scandinavia have some of the world's highest valued-added taxes. Norway, Denmark and Sweden have the highest VATs at 25% although reduced rates are sometimes used. In some countries, there are multiple levels of government which each impose a sales tax. For example, sales tax in Chicago is 9%, consisting of 5% state, 2.25% city, 0.75% county and 1% regional transportation authority. And in Baton Rouge, Louisiana, the tax is 9%, consisting of 4% state and 5% local rate. 1 However, there is no nationwide sales tax in the United States.

Since the 1990s, the idea of replacing the income tax with a national sales tax has been floated in the United States; many of the actual proposals would include giving each household an annual rebate, paid in monthly installments, equivalent to the percentage of the tax (which varies from 15% to 23% in most cases) multiplied by the poverty level based on the number of persons in the household, in an effort to create a progressive effect on consumption. While many political observers consider the chances remote for such a change, the FairTax has attracted more cosponsors than any other fundamental tax reform bill introduced in the US House of Representatives.

In the United States, if a consumer purchases personal property from an out-of-state vendor, the consumer's state may not have jurisdiction over the out-of-state vendor and no sales tax would be due. However, the customer's state may make up for the lost sales tax revenue by charging the consumer a use tax in an amount equal to the sales taxes avoided. For example, if a person purchases a computer from a local brick-and-mortar retail store, the store will charge the state's sales tax. However, if that person purchases a computer over the internet or from an out-of-state mail-order seller, sales tax may not apply to the sale, but the person could owe a use tax on the purchase. Some states may also charge a use tax on the in-state transfer of used goods such as automobiles, boats and other consumer goods.

Because of exemptions, not all goods and services are taxed. The typical consumer will pay sales tax on approximately 1/3rd of all his/her expenditures, i.e. a 7.5% tax will collect on average about 2.5% of a person’s income.

Sales Tax Planning In the United States, corporate sales tax planning may include the following:

Determination of ways to legally reduce the amount of tax due on a transaction. For instance, how a company structures its invoices can affect the taxability of the entire transaction. In many states an item can become taxable if not separately stated on the invoice.
Review of company purchases to determine which assets may qualify for exemptions. Finding overlooked exemptions often results in significant savings.
Periodic review of procedures relating to Sales & Use Tax data gathering and retention so that proper supporting documentation, including exemption and resale certificates, are available in the event of a State audit.