The subject around collection of State Sales Tax as it applies to online businesses continues to evolve and took a substantial step during 2017. If you were charged State Sales Tax on your order, it means that your state government is requiring all online businesses with TAX NEXUS doing business in your state, by law, to register their business and collect the appropriate sales tax or be subject to substantial penalty and/or jail time.
Although The Rag Company doesn't necessarily have a physical presence/operation in your state, your state government has determined that we legally have "Tax Nexus" due to:
- The presence of an Amazon warehouse (we also sell our products on Amazon); and/or
- Because The Rag Company has exceeded the minimum sales/revenue threshold established by your state to qualify as having Tax Nexus there.
If it was our choice, things would continue as they used to be where we only collected state sales tax in Idaho where our warehouses and corporate offices are located. Taking all of the steps required is expensive and time consuming for any online business.
Online businesses doing business in the U.S. currently have a choice:
- Ignore the laws around the collection of state sales tax as established by states across the U.S. and potentially receive substantial penalties/fines; or
- Register and comply with those laws where they are required to do so.
The Rag Company made the conscious choice to register and collect state sales tax where we are required to do so as we're not in a position to pay the substantial fines for ignoring the laws.
There is no doubt that this topic and associated issues will ultimately go to the U.S. Supreme Court sometime in the next few years, but in the meantime we will abide by the laws as established by your state.