Small businesses hope new Nevada tax rules curb e-commerce giants
Faced with competition from online sales, Renee Poole figures if you can’t beat them, join them.
The owner of Not Just Antiques Mart in Las Vegas, Poole has been migrating more and more of her business to online auctions.
“The kids have totally changed the marketplace,” she said. “I think people don’t like shopping at stores anymore.”
Poole hopes revised Nevada regulations will help even the playing field for brick-and-mortar retailers like her.
State rules that took effect Oct. 1 mandate that online retailers without a physical presence in Nevada must collect and pay sales tax of 8.25 percent in Clark County. This means a purchase of $100 online will have the added sales tax of $8.25.
Companies like Amazon and Bed Bath & Beyond with physical property in the state have already had to pay sales tax on online sales.
But in June, the Supreme Court ruled that states may tax companies like Wayfair, Overstock.com and Newegg even if they don’t have property in the state. This removes one advantage those companies have over businesses like Poole’s.
Affected companies must start collecting sales tax the first day of the month that is 30 days after the company’s sales in Nevada total over $100,000 or the company makes 200 or more separate transactions for delivery into the state.
Those rules should help protect small businesses that sell online from paying the tax, said Mike PeQueen, managing director and partner at wealth management firm HighTower Las Vegas.
Tax revenue
Tax revenue from online sales should grow as more people buy over the internet. But the state doesn’t expect it to result in an immediate windfall.
State estimates show $850 million more in sales will get taxed with the new rules. That brings the total amount of online retail sales the state can tax to around $2.1 billion, about 5 percent of all taxable sales, according to the state Department of Taxation.
Department estimates show that collecting sales tax from online businesses could add between $17 million and $29 million annually to the state general fund, which receives 2 percent of the sales tax, according to the department.
“It will, however, take time to reach many of the affected businesses and bring them into compliance,” according to a statement from the state Department of Taxation.
Nevada’s rules follow those in South Dakota, the state that bested online retailers in the Supreme Court decision, said John Buhl, spokesman for The Tax Foundation, a nonpartisan, Washington, D.C.-based think tank.
Poole said that even with the revised sales tax, she still fears competition from antique marketplaces on social media websites where sellers ignore taxes.
For Tom Clark of North Las Vegas, shopping online is a necessity.
E-commerce is sometimes easier than brick-and-mortar stores for Clark, a military veteran who gets around using a wheelchair and his service dog, Magnum.
He said he is now more likely to look on social media websites for private sellers, avoid the tax and pay the lowest price he can find. But he understands why governments want to tax online sales.
“Death and taxes,” Clark said. “You can’t get around either one of them.”
Contact Wade Tyler Millward at 702-383-4602 or wmillward@reviewjournal.com. Follow @wademillward on Twitter.
Sales Tax
Affected companies must start collecting sales tax the first day of the month that is 30 days after the company’s sales in Nevada total over $100,000, or the company makes 200 or more separate transactions for delivery into the state.
Companies that met the threshold Oct. 1, for example, have until Nov. 1 to register with the state and collect sales tax.
The companies must find out if they meet the requirements based on previous sales activity. If the Nevada Department of Taxation finds out the company didn’t do the calculations and should have been collecting sales tax, the department would ass
If a company makes its 200th transaction for delivery into Nevada on Jan. 15, the company has until March 1 to register and collect sales tax.
