This is a wide open question and I truly do want to hear from as many people in my blog community as possible because changes in the law are impacting what I can do online. (More on that below.) Ideally, I would love it if people would answer in the comments so people can build on and respond to what other people say.
In June 2018, the Supreme Court ruled in South Dakota vs Wayfair that states can require online businesses to collect sales tax, even if the product is digital. To make a very long story short, someone who sells digital goods online (such as myself) must now make sure he/she is in compliance with the laws in all 50 states.
- Every state has a different law.
- Every state has different expectations regarding what creates a nexus or a requirement to collect and remit sales tax.
- Some require you to pay a fee and register.
- Some calculate qualifying transactions on a calendar year basis and some on a rolling twelve month basis.
- Some require monthly payments, some quarterly, and some yearly.
- Some will charge penalties if you don’t register according to deadlines so putting it off to wait and see what happens is a gamble.
So everyone who sells on Teachers Pay Teachers (and/or their own site) is now required to keep track of everything and remit payments for all 50 states as needed.
In short, it’s a total nightmare and mess.
So this impacts the products I sell on my site and on Teachers Pay Teachers. I am having to look at everything I do online and decide what to do with all of it.
I do not sell enough product to hire someone to do this for me and the thought of dealing with this level of minutia for 50 states is absolutely depressing. I am not afraid of hard work and have worked hard since David and I became self-employed many years ago. But there is something about this tax situation that is simply soul-crushing. I don’t know how else to describe it.
So I am faced with closing my TPT store and then deciding what to do here with my shop. Some people are willing to take the gamble that everyone will get a waiver in the end and at some point a consistent law will be passed. I’m too much of a rule follower and like to sleep at night to roll the dice and hope it will all work out in the end. I don’t mess with the IRS or things related to taxes, especially when potential compounding penalties are involved. I’m not willing to run a business on a hope and a prayer.
The other option is to move toward a traffic based model on my site that is dependent on advertising. I can give away many of my products, but with the wide-spread use of ad blockers, I would have to require people to turn off their ad blocker to access my site. I would be happy to do this if I could replace the income I received from selling the items. In some ways, I would like this better because that would mean I could offer my products to people who truly can’t afford them but can “afford” to turn off their ad blocker. I know from surveys that there are many people who like my products but truly can’t afford to buy them. This would enable me to help those people.
These are the unintended consequences of making laws. People with large sites and large stores will hire professionals to help them. People with tiny stores will just close them down and move on. It’s the “middle class” of this country once again who will take the hit. The people who work hard to improve their life and the life of their family, but will pay the price due to laws made by people who have no idea what it is like to be a regular person trying to live a regular life in regular America.
So I’m sitting here and asking myself if this is all worth it. I spend a lot of time on this site. More than most people probably realize. I spend a lot of money every month to keep it running effectively. What do I do now to make it worthwhile? How do I replace this lost income that my family depends on?
So that’s why I’m asking you today…
- What do you want to see here in the coming twelve months?
- Which big topics?
- What would you like to see more of?
- What specific products could I make that would help you with your homeschooling, homemaking, faith, etc?
- If I made more of my current and future products and planners free but required you to turn off your ad blocker to access them, would you find that a worthwhile trade-off?
Thank you for any feedback you can provide.
My Essential Blogging Tools {2022}
I am a mother of an only child, and have been discerning homeschooling for years. My son is shy and reserved and does not have the greatest social skills for a variety of reasons. Socialization is the biggest factor that has held me back from homeschooling so far. I would love to see blogposts that address this topic (homeschooling an only child with social challenges).
Thank you, Claire. That is great feedback and definitely a topic worth exploring. I’ve had an only child series on my potential to do list for some time so it’s good to hear there are people who would like to hear about that topic!
Sallie
Thanks Sallie! I appreciate it and look forward to reading more. Have a wonderful Thanksgiving!
I don’t use an adblocker, I’d be fine with that option. None of your ads are problematic. I do feel a little aged-out for most of your sale materials with my 14 year old, but I really loved the 1 Cor 13 poster, more of those, please.
I wonder why TPT has not found a solution for this, won’t it kill business for them?
Love the culture posts. Would love actual unit study for that 10-14 age group, do you do those?
And posts on Christian homeschooling gifted 2e children ALWAYS welcome.
Hi Cristy,
Thanks for mentioning the 1 Cor 13 poster. I have more stuff like that I could do so that’s a great suggestion.
I have thought about unit studies and lapbooks for upper elementary and middle school. When you say “actual unit study” do you mean something printable? So different than the unit study posts I’ve started doing? More specifics about what would be most helpful to you as a homeschool mom would be great.
Sallie
Sorry, not sure how the “actual” wound up in there, unit study is what I meant.
Re: the TPT aspect…
This is my personal opinion with the limited information available.
TPT says they cannot be the seller of record and collect all the taxes to remit. On the other hand, another direct competitor site has stated that they WILL handle all of the sales tax for the sellers. So somewhere something isn’t right in one place or the other.
I think TPT’s lawyers have told them they have to do it this way for – insert reason here – which TPT will not state publicly. I’ve said this same thing in the TPT forum and never gotten a response. Because TPT is a privately held company, they don’t have to disclose anything they don’t want to. The Teacher-Authors aren’t employees and they aren’t shareholders. They basically have no legal standing with TPT at all. The entire model is built on the teachers trusting the TPT leadership. Seriously.
I think it won’t really hurt TPT in the long-run. The big sellers will hire out the tax stuff because they can afford it. The small stores either won’t sell enough to trigger a nexus or they will just close down. A lot of middle-sized stores will close. Ultimately TPT won’t lose out because the sales that would have gone to the middle-sized sellers will just go to the big sellers now. TPT will still get the sales.
This is what kinds of numbers we’re talking about in order for someone to hire out the filing. These are on top of the monthly fee to use the service. Most medium sized sellers can’t afford these numbers.
https://www.taxjar.com/autofile/
Sallie
This entire situation is ridiculous. What if you only sell to states that have reasonable tax laws? Or ones you are willing to work with? Do you have stats on where you’re making the most sales, and focus on those?
I can’t even fully answer your questions because the entire thing is so convoluted. Apparently (if I’m understanding correctly) each seller must determine whether or not she will have a nexus in each state. We have to figure this out on our own or “consult with a tax specialist” on our own. We will opt-in for TPT to collect taxes for those states. TPT will then send us the collected taxes to submit to the state.
(This is for thousands of sellers, keep in mind.)
But what if we don’t actually reach a nexus in that state we thought we would and TPT has collected the taxes? Where does the money go? TPT isn’t going to remit it to the state. The teacher doesn’t want it if she’s not legally required to submit it. You can’t just collect sales tax and not send it in. What happens next?
And then imagine when someone goes in to TPT during a sale and buys ten items from four different sellers, all of whom have different nexus requirements set up in the TPT system. So some sellers are collecting taxes and some aren’t.
AND some states have deadlines for signing up that have already passed. So if we now register and submit taxes we can be penalized for not meeting the deadline. But we don’t have any taxes to submit because TPT hasn’t been collecting them. Some sellers have been paying sales tax OUT OF THEIR OWN POCKET in order to comply with the state they live in.
It’s insane. It really is.
And I believe it was said in the forum that we will not be able to opt out of selling in certain states. They won’t be giving us that option.
I can, however, block people from buying on my site on a state by state basis with a particular Woo Commerce plugin. I did something similar with the VAT thing in the EU. I don’t sell to anyone in an EU country because I’m not going to mess with VAT.
So, in theory, I could track my sales every day/week to each state and once I get close to a nexus in a state, stop selling to people in that state by blocking sales to that state address until the next nexus round opens up.
And any states that require a fee I would just block. But you start eliminating a lot of sales once you start blocking this state and that state.
Sallie
Sounds like fun /sarcasm.
So … where else can you sell, would be my next Q. I get you can do it from your own website, but doesn’t solve the tax question, right? Would selling to the larger TPT shops solve this, and have them deal with the headache, rather than you? And when does this all happen? Is it now?
And what if you went to a membership model, like Notebooking Pages .com? She’s not under that tax system, is she? It’s not material you buy, but a membership in the site … one time deal?
What a nightmare with sales taxes! My husband is trying to figure out what to do about it too.
Here is information on MN:
http://www.revenue.state.mn.us/businesses/sut/Pages/Business-Guide/Registration-Requirements.aspx
Basically, for nexus in MN you need 100 or more sales in the previous 12 months into Minnesota (or 10 or more sales that add up to $100k or more). Digital products are subject to sales tax. Remote sellers with nexus were supposed to register with the state before Oct. 1 this year.
Newspapers and publications regularly issued to the public at least every three months are not taxed–this may be something for you to consider, but it appears they still require the filing of an exemption certificate, if you are also selling taxable items here.
MN sales tax rate is 6.875%, but there is also a very messy patchwork of local sales taxes. The state gives a couple of tools for figuring these, but they are based on knowing the purchasers’ 9-digit ZIP codes, links about halfway down this page:
http://www.revenue.state.mn.us/businesses/sut/Pages/Business-Guide/Taxes-Rates.aspx
Filing can be done annually, if your sales tax liability is less than $100/month. If $100-$500/month, then quarterly filing; if above $500/month, then monthly filing:
http://www.revenue.state.mn.us/businesses/sut/Pages/Business-Guide/Filing-Returns.aspx
Filing deadline is February 5 for annual filing, other dates here:
http://www.revenue.state.mn.us/businesses/sut/Pages/Filing_Due_Dates.aspx
Minnesota is a member of the “Streamlined Sales Tax Governing Board”, which provides streamlined tax registration (supposedly, one SSTRS registration to set you up with all the member states at once), and looks like it includes 21 or 22 states at the moment:
http://www.streamlinedsalestax.org/
Lovely how the workings of government are so convoluted that they require yet another layer of government to help people to deal with it.
Anyway, they have a table of where to start looking on each state’s website for sales tax information for sellers:
https://www.streamlinedsalestax.org/index.php?page=State-Websites
To me the SSTRS itself looks like a whole new level of nightmare: “If you use one of our Certified Service Providers to file your sales taxes, you won’t have to worry when a state audits you! The CSP will handle it all!”
Hi Peggy,
The entire thing is INSANE. Truly. You nailed it here:
“Lovely how the workings of government are so convoluted that they require yet another layer of government to help people to deal with it.”
I’m small enough that I can probably not reach a nexus in any one state for quite some time into 2019. Minnesota and Massachusetts have the lowest thresholds (100 transactions), but they haven’t traditionally been states that I’ve sold a lot to.
I think one thing I will be forced to do is remove all of my products that are only a dollar or two (or else raise the price as is feasible). Some I’ll make free and trust the ad revenue on here will make up for the lost sales. But I’m not selling things for a $1 (after which I receive sometimes 65 cents after TPT takes their 20% and there is a 15 cent charge if the total order is under $3) if that takes one of my transaction allotments for a state. It’s not worth it.
I think I can opt out of TPT collecting taxes on my behalf for now and keep an eye on my total transactions in each state both on there and here. As soon as I approach a nexus, I’ll have to shut down my TPT store and block people from that particular state from buying off my site. Depending on the state, they could have a calendar year nexus or a rolling twelve month nexus. I’ll wait until that nexus window resets and then re-open my store.
Lather, rinse, repeat.
At least that’s the way I understand it at this point.
It’s hard to fathom the amount of human potential that is wasted on soul sucking bureaucracy every day in this country.
Sallie
Sallie. I have enjoyed all of your posts on cozy living and reflections on politics. I do not home school and have a daughter in college and another who is a senior in high school. I would be willing to turn off my computers ad blocker to access your website. I am so sorry about these regulations….simply ridiculous. Although I am not self employed, I work as a nurse and the health care industry is a regulatory nightmare. You are such a gifted writer and critical thinker. May God bless you and guide you throughout this process. Thank you for all of your hard work on your website.
Hi Kathryn,
Thank you for your kind and encouraging words. 🙂
I put all the political posts on private last week while I was trying to sort out if I should keep writing them. I also unfollowed almost everyone political that I followed on Twitter. I needed a break. LOL! Thank you for telling me that you enjoyed the political posts. I still believe we need places to discuss these things. I’m trying to sort out if my website should be one of them or not. I don’t like alienating people who want to escape it.
I can imagine how difficult it is to work in nursing and anything health-related. That’s another huge mess of bureaucracy. It’s insane as well.
Have a good day!
Sallie
I am sure our politicians don’t THINK about consequences. I’m in the UK and right now our politicos are in the mire about Brexit. No one actually THOUGHT the sheeple would vote for it so no one had a coherent plan about what would happen when the vote went for rather than against. You guys have the same issue – operating 50 different tax laws sounds like a way to kill entrepreneurship stone dead whilst still allowing the big guns to get away with paying less than they should.
I enjoy your posts. I love your Pinterest, especially the books section. I have discovered some books I was not aware of and will be looking into purchasing some. I would love to see some book reviews concerning books for all ages young and old. Wishing you and yours a Blessed Christmas and a Happy,Healthy, Peaceful 2019.
Marilyn
Hi Marilyn,
Thank you for the feedback. It is truly appreciated. I’m glad you enjoy the book posts. I thoroughly enjoy writing about books and will try to include more of those in the months ahead.
Merry Christmas and Happy New Year to you as well!
Sallie