New Tax Spurs Need for Small Businesses to Seek Legal Counsel

a lawyer talking to a client

The Internet sales tax for U.S. e-commerce transactions may have been imposed just recently, but its implications for businesses in Colorado are already making an impact.

A small business attorney from Miller & Steiert, P.C. in Denver may help you find out the nuances of the new law, which generally refers to the physical presence of an e-commerce business.

State Laws​

Some states already impose tax laws on online sales, which are otherwise called the Amazon Laws. Colorado’s jurisdictions on sales taxes currently comprise around 100 areas, and navigating through them without legal counsel can be difficult. E-commerce firms in the state are required to report transactions worth more than $500 every year-end.

The new sales tax means that tax reporting would make it even more complicated. Some say that it could also lead businesses to operate in a state where taxes are lower based on the physical presence. For instance, e-commerce companies in Illinois where taxes cost up to 10% may transfer to Colorado if the latter only charges a 3% sales tax.

Leveling the Playing Field

While online businesses balk at the Internet sales tax, traditional stores are in favor of it to level the playing field. It’s no secret that online retail has been on an advantage in terms of sales taxes compared to brick-and-mortar stores.

Under the new tax, an online company has to collect taxes from transactions in a state where they have a physical presence. This could be either a warehouse, office, sales representative or a physical store. Hence, local businesses in their home state are covered by the regulation.

Online enterprises in Colorado should regularly check if the state department of revenue has changed its laws on sales taxes. It’s better to consult with a business lawyer especially if you deal with clients from outside of the state.