Shop Online and Avoid Paying Sales Tax

Are there any states with NO sales tax?

YES! There are five of them: Alaska, Delaware, Montana, New Hampshire and Oregon.

Which stores don't collect sales tax on orders shipping to which states.

Most people aren't aware that shopping online can often net you some unexpected savings. Aside from free shipping promotions, coupon codes and online exclusive sales, you often don't have to pay sales tax on your online orders. How does this work? If the store you're shopping at does not have a "significant retail presence" in the state where the order is being shipped, the retailer does not have to collect that state's sales tax.

Why don't you have to pay sales tax for your online purchases?

The 1992 Supreme Court decision on Quill vs. North Dakota ruled that certain online purchases are not subject to the collection of sales tax. This loophole does not apply to ALL online purchases. Department stores and chain stores will usually have to collect sales tax on all orders. This savings benefit is actually rooted in the US Constitution and was put there to prevent limits on interstate commerce. In reality, the sales tax codes vary so wildly between states that it would place an unreasonable burden on small businesses to have to keep abreast of and figure each state's current sales tax rate and scale. Not requiring a collection of sales tax on purchases travelling from one state to another is the way our government deals with this problem. Take advantage of it!

Stores Not Required To Collect Sales Tax on Deliveries to the Following States

Check out Centsible's advice to which stores are not required to collect a sales tax on orders being sent to the following states to take advantage of this tax break! Visit our online shopping summaries by store to view information on each store's sales tax policy.

How is it determined whether or not a business has a "significant retail presence" or "nexus" in a state?

If a store is located in a state, it obviously has a significant presence there. A store will also be considered to have a retail presence in a state if they have a warehouse or office space located there. Until a ruling against the practice in 2001 in California, many online retailers practiced "entity isolation" where companies having significant retail presence or nexus in most of the states would declare their website to be a separate entity from their "bricks & mortar" stores. That California judgement in 2001 declared that a merchant's website is simply an online extension of their physical presence rather than a separate entity. As such "entity isolation" was no longer a viable way to avoid the collection of sales tax for online merchants. This affected major retailers like Borders Bookstore and other top US department stores. There is current debate as to whether or not an affiliate program, such as the ones funding the publication of Centsible.net through our placement of the merchant's banner advertisements, links and coupons constitute a retail presence. Our belief at Centsible is that advertisements placed on published work written by authors in a particular state do not constitute a sales force or other retail presence. If states find the placing of online advertisements by independent publishers constitute a significant retail presence in that publisher's state, many online bloggers and writers like what we have here may be forced out of business! This recently happened in New York State' 2008 "Amazon Law". Arnold Schwarzeneggar vetoed a bill like this in California in 2009, but the bill is back up for discussion in that state. Similar legislature is coming together in both Illinois and Virginia.

What is "Use Tax"?

When an out-of-state purchase is completed online, the consumer is technically required to pay tax on the item, even if the merchant is not required to collect the tax. The terminology changes at this point from being "sales tax" (collected by the merchant) to "use tax" (collected by the consumer). Collection of use taxes is problematic and complicated and usually overlooked for small-ticket items. There will likely be more strict use tax regulations on larger purchases such as boats and cars. A few states are implementing stricter policies regarding use tax and this may become the norm as states are stretched more for funding.

Disclaimer

The information regarding the online collection of sales tax for each of our featured stores is provided to you as a courtesy to assist you in shopping. Be advised though that states' individual sales tax policies (and rates) can change frequently. Additionally, as an individual store increases or decreases its retail presence, its sales tax collection responisibilities will also change. Centsible.net makes every effort to stay on top of where you will get sales tax savings while shopping online, but ultimately the actual website of the store you are purchasing from is the final source. If sales tax is applied to your order and you were not expecting this, Centsible cannot be held responsible. Be sure to verify all fees, taxes and charges when shopping online BEFORE you finalize your order!