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E-Commerce Taxation
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Flashcards
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Sales Tax
A tax on sales or on the receipts from sales. Online sellers are required to collect and remit sales tax in states where they have a nexus.
Nexus
A legal term that refers to the sufficient physical presence of an online seller that would require them to collect and remit sales taxes to a state.
VAT (Value Added Tax)
A consumption tax placed on a product whenever value is added at each stage of the supply chain. For online sellers, it's important when selling internationally.
EIN (Employer Identification Number)
A unique number that the IRS assigns to businesses for tax purposes. Online sellers need an EIN to hire employees and to file business tax returns.
Estimated Taxes
Quarterly tax payments that online sellers, as self-employed individuals, must pay to the IRS based on estimated income.
1099-K Form
A tax form used to report payment transactions processed by third-party networks. Relevant to online sellers who process a large number of transactions.
Use Tax
A tax on the use of goods or certain services when sales tax has not been paid. Online sellers may need to pay use tax on inventory items they use personally.
Tax Exemption
An exclusion where a transaction is not subject to tax. Online sellers can apply this when selling to resellers or certain non-profit organizations.
FBA (Fulfillment by Amazon)
A service offered by Amazon where they handle storage, packaging, and shipping for sellers. This can create a nexus for the seller in different states.
Cost of Goods Sold (COGS)
A financial metric that represents the direct costs associated with the production of goods sold by a company, which for online sellers includes the cost of inventory sold.
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