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Online traders to review tax obligations following US court ruling

Geoff Collis

26 July 2018

Businesses operating via online platforms to sell goods into the US could now face new taxation laws, regardless of whether or not they are based there.

Until recently, companies selling goods to customers in the US did not have to pay any sales tax, as long as there was no physical premises that could link them to a state. However, that has now changed.

In the wake of a recent court case, the US Supreme Court ruled in favour of collecting state sales taxes from any business with any form of connection with a state. This could be physical premises, but it could also be people, such as staff or customers, or by the sales themselves into those states.

The consequences of the ruling will result in any businesses trading with the US via internet sales, especially through sites such as Amazon and eBay, will need to consider reviewing any obligations to register for tax. Whilst Amazon and eBay themselves may collect tax, the responsibility is on the business to file a return and pay the correct amount of sales tax. This will need to be replicated in all states where the business is trading.

For businesses that do a small amount of trade, you may be able to consider other options, such as appointing a distributor that could take away the filing headache, but this should be approached with care.

If you would like further information about how the ruling may affect you, please contact the International team at Wilkins Kennedy.

About Geoff Collis

Geoff Collis

Geoff joined Wilkins Kennedy in November 2013 following the merger with CW Fellowes . He joined CW Fellowes in January 2009. He trained locally before joining one of the top six accountancy firms in the south where he was a director in the business outsourcing and advisory team. Geoff has more than 25 years' experience in advising small and medium-sized enterprises on domestic and international matters. He advises start-ups to multi-million pound turnover businesses including asset-rich sole traders, partnerships and companies in a variety of sectors. Geoff has also undertaken non-executive finance roles for businesses in the defence, environmental, professional, property and fast-moving goods industries.

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