I ShopJW is based in the United States. In the United States all sellers have a responsibility to collect & pay sales tax on items sold within the state or jurisdiction that they live in. This is called a “Sales Nexus” which is basically the “physical presence” of an online business.
It is each seller’s responsibility to identify his/her sales nexus and apply for a tax license accordingly. If a seller fails to do so they can face a penalty or serious charges from the State/Jurisdiction they live in.
Some sellers have asked us if there is a built in way to automatically collect sales tax from customers who purchase items through I Shop JW. Unfortunately due to specific laws this is not something that we can provide through our website. Here’s why:
(Scroll down to find out how to collect sales tax through your Business’ PayPal Account)
In order to automatically collect State Sales Tax or even VAT (if you live internationally) from buyers, all I Shop JW sellers would have to be registered for a permit where their sales nexus is located (for US) or your stocks are held (for Europe).
Collecting sales tax without an official permit is punishable in the eyes of law. The idea is that if you are collecting taxes using your state’s name and they have no legal records to confirm that you are registered to collect sales tax, they assume that you are keeping the money. In extreme cases, without official permits you may have to face lengthy jail times.
Registration is easy to do in most states. Here’s a list of states that includes the links to file your sales tax returns as well as sales tax filing due dates.
Because I Shop JW is a volunteer project & listing with us is free, we do not have the resources to verify that every seller is registered in the jurisdiction of their nexus.
For this reason, we do not offer built in sales tax or VAT collection site-wide and it is up to each individual seller to include sales tax manually in the cost of their listing & to comply with their local state and government laws regarding sales tax. I Shop JW is like a mall in that each shop that sells on this website is its own independent retailer.
Setting Up Sales Tax using a PayPal Business Account
Fortunately, because we process all payments on ISJW through Paypal, there is another way to collect sales tax on your own if you are registered to do so.
Paypal provides tools that will automatically collect sales tax for all payments that come into your account. You can do so Domestically or internationally depending on your needs.
How to Setup Sales Tax Collection on PayPal
Your first step is to set up sales tax collection in your PayPal store.
- Login to your PayPal account and click the following link to visit your PayPal Sales Tax page
- Under “Set Up Domestic Sales Tax Rates” click “Add New Sales Tax.”
- From there, you can decide to set up sales tax by state or by zip code. (You can find an up to date list of the average sales tax rates per U.S. state here.)
- Choose either state or zip code, and input the correct sales tax rate for that location.
- You can also decide if you want to charge sale tax on shipping charges.
- All done!
In this way, you can set up PayPal to deduct sales tax from every payment that goes into your PayPal account.