Suppose I was to sell via my own website (in UK) but don’t collect VAT at the point of sale. What exactly happens if you were to buy an item (say a $30 item) from my website?
1. Do you get contacted by customs asking you to pay the tax before the item is realeased?
2. is this inconvenient/ more expensive to you (customer) than paying tax at checkout.
Just to be clear, I’m not trying to circumvent paying tax. I’m trying to figure out if getting customers to pay tax upon delivery a viable option.
4 comments
The feds don’t have a VAT/sales tax. Its all handled at the state level.
The likelihood that you would be able to collect payment on your own website is very small. You’d likely have to use some type of service like PayPal. I imagine anyone who does business through PayPal, Etsy, or whatever will probably be forced to collect sales taxes.
The taxman gets his due no matter what. It isn’t more expensive paying at the point of service or later down the line, its the same either way.
Everything I can remember buying internationally has been tax free. I *think* I’m supposed to pay a “Use tax” to Washington state for anything I buy out of state that gets shipped in and didn’t collect sales tax in the first place but the only time I’ve ever heard of that actually happening was a car.
There is nothing federal level AFAIK.
Just use Shopify or Square or anything like that to power your store, they handle any applicable US sales tax perfectly. Payment on delivery is virtually unheard of in the US.
See https://www.cbp.gov/trade/basic-import-export/internet-purchases for a lot of details, but when a package is sent through regular mail, the US does not normally charge customs duty on items less than $800. For more expensive items, the recipient must pay through the post office to receive the item.
Sales tax is charged by state governments. If the seller doesn’t collect the tax, it would not be charged before receiving the item. Rather, the buyer is required to report the purchase to the government and submit taxes separately, though I suspect many people simply don’t bother to pay it.