Sales Tax Information
Since we started selling our products online back in 2007, we've witnessed significant changes in the way the internet operates, and it continues to evolve every day! We understand that nobody enjoys paying taxes. While we can’t eliminate that burden, we can at least provide you with information to help you better understand current tax laws and how they affect our customers across the country.
Sales Tax or Use Tax — What's the Difference?
Chances are, you’ve paid tax on most of your purchases—unless you’re one of the lucky ones living in Oregon, Montana, Alaska, Delaware, or New Hampshire. Even in these states, there might still be a small tax! Taxes are commonly applied to items like TVs, appliances, school supplies, clothing, shoes, food, and home goods—the list goes on. Some businesses are even required to pay an annually recurring Use Tax on items they’ve already paid Sales Tax on. Ouch!
Since we all pay these taxes, it’s important to understand the difference between Sales Tax and Use Tax.
Sales Tax
Sales Tax is a tax on the sale, transfer, or exchange of taxable items or services. It is generally added to the sales price and is paid by the purchaser at the point of sale. This tax is collected by the seller and then remitted to the government, ensuring compliance with state and local tax laws.
Use Tax
Use Tax is a tax on purchases made outside your state of residence for taxable items or services where no Sales Tax was collected. It serves as a complementary tax to Sales Tax and applies when purchases are made without paying Sales Tax. If Sales Tax has been charged, Use Tax does not apply.
Should Tax Be Charged for Online Purchases?
To understand the current landscape of online sales tax, we need to revisit 1992 when the U.S. Supreme Court ruled in Quill v. North Dakota that states couldn’t require out-of-state retailers, without a physical presence (or "nexus") in the state, to collect and remit sales tax. This meant that consumers were responsible for reporting and paying a “Use Tax” on untaxed purchases in their annual tax returns.
However, as internet shopping grew, many online shoppers discovered they could avoid sales tax by purchasing from out-of-state retailers, resulting in significant lost tax revenue for states. To address this, the U.S. Supreme Court made a pivotal decision on June 21, 2018, in South Dakota v. Wayfair. The ruling allowed states to require businesses without a physical presence, but with an "economic nexus" (such as a certain volume of sales in the state), to collect and remit sales tax.
This ruling set a precedent for other states, leading to various enforcement methods. Some states require businesses with over $100,000 in sales or 200 transactions within the state to collect sales tax, while others have different thresholds or no requirements at all. This ongoing evolution impacts both online retailers and consumers nationwide.
There are hundreds, if not thousands, of different tax jurisdictions across the United States—too many for any small business to keep track of! It's not uncommon for one address to have a specific tax rate while the house next door has a completely different one. That's why Starfire Direct uses sophisticated automated tax software to provide accurate, real-time tax calculations for every address in the country.
If your order is shipping to an address in one of the highlighted orange states, the tax calculation is precise, down to the penny. Once your order is placed, we collect the tax payment and forward it to your state for processing. Starfire Direct does not profit from this transaction in any way.
Where We Collect Tax
If your state is highlighted in orange above, Starfire Direct collects and remits sales tax on your behalf.
AZ, CA, CO, CT, FL, GA, ID, IL, IN, LA, ME, MD, MA, MI, MN, NV, NJ, NC, OH, OK, PA, SC, TN, TX, UT, VA, WA, WI, DC*
Where We Don't Collect Tax
If your state is highlighted in gray above, Starfire Direct DOES NOT currently collect and remit sales tax on your behalf.
Your order will exclude tax, although, you should still be aware that you may be liable to remit a 'Use Tax'.
Legal Terms
The terms outlined here are subject to change as online transaction taxation continues to evolve. Starfire Direct is committed to complying with current state and local tax laws and will continue to monitor and update its taxation policies as those laws change.
