Tax Implications For Electronic Commerce

Taxation implications of electronic commerce have been an ongoing concern since this new way of doing business emerged. The U.S. Internet Tax Non Discrimination Act has been repeatedly extended. Due to these extensions, e-commerce buyers may not have to pay taxes for online purchases, except local sale taxes that some jurisdictions still impose on online sales despite the precepts of this Act. After many years of Internet commerce, there are still discrepancies as to whether online sales should be taxed. Some U.S. states are currently imposing sales taxes on online purchases. Other states are still exempting online sales from sales taxes. E-commerce entrepreneurs must check the taxation policy of each of those jurisdictions with which they are dealing online because even though they may not be liable for sale tax payments in their own jurisdiction, they might incur sale tax liability in some other jurisdictions where their buyers are located.

The following questions have been addressed in this article:

What tax would apply if the merchants and consumers are in different jurisdictions?
What are the problems with the use tax and electronic commerce?

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