Comprehensive Tax & Legal Solutions

States vary in their sales tax treatment of the sharing economy

On Behalf of | May 6, 2017 | Tax Law

Businesses can be heavily impacted by a wide range of tax laws and policies. This includes the sales tax laws and policies of the states that they operate in. States vary greatly in their sales tax rules. This includes in their rules regarding how their sales tax applies to the sharing economy.

The sharing economy, which includes things like ride-sharing and room-sharing, has introduced brand new classes of transactions to the market. These new transactions raise some unique questions regarding sales tax applicability.

Different states’ treatment of sharing economy transactions in regards to the sales tax is among the things a recent state tax survey by Bloomberg BNA looked at. The survey found that there was a good deal of variation among the states when it comes to sales taxes and the sharing economy. For example, states vary in their treatment of ride-sharing transactions, with only eight states currently making sales-tax collection mandatory for car-sharing companies.

The variation in sales tax policies among the states is among the things that can pose challenges for businesses involved in the sharing economy when it comes to tax issues. When a company ends up making an incorrect guess or assumption regarding what sales taxes apply to the company’s operations in a given state, it can lead to complicated legal problems for the company. The financial stakes for a business when it comes to such legal problems can be quite high. Skilled Ohio tax law attorneys can provide businesses with guidance on Ohio sales tax issues and can help companies navigate sales tax disputes that come up for them in the state.

Source: Accounting Today, “Wide variance seen in states’ taxation of the sharing economy,” Roger Russell, May 1, 2017