Why did the company just decided to start collecting sales tax now?
The goal is to simplify our business processes and create more time for Distributors to focus on growing their business
Like the vast majority of direct selling companies, Organo decided to start charging sales tax to simplify the collection and remittance of sales taxes for its Distributors. All sales tax remittance will now become the responsibility of the company, meaning that Distributors will no longer be required to be registered or file sales tax returns in respect to their Organo sales.
Why am I being charged sales tax on the retail price and not the wholesale price?
Companies that retail products directly to the general public or as a convenience to the retail customers of their independent distributors, in addition to selling at wholesale to their independent distributors, by law, is required to collect sales tax on the suggested retail price based on the ship-to-address. The company then remits the sales tax to the locality. With this approach, the company removes the administrative burden from its distributors who are complying with local sales tax regulations. The company will also develop a better relationship with the state or locality for being compliant, avoid penalties and because it has taken on the responsibility of seeing that taxes are paid accordingly.
What is the sales tax rate that OG will charge?
OG does not decide on and impose the tax rates. They are imposed by state and local authorities and will vary depending on your state, county, city, and even zip code. For further inquiries about the percentage of sales taxes that will be imposed based on your ship-to state, please contact your nearest local tax office.
Do Distributors still charge Sales Tax to their own retail Customers?
Yes. Distributors will still charge an amount for sales tax on their customer invoices based on their selling/retail price. The Distributors will keep the amount shown as sales taxes as reimbursement for the sales taxes that they paid to Organo at the time of their purchase.
Does my retail customers who purchases from my Organo Replicating Website get charged sales tax as well?
Yes, since these are considered retails sales, your retail customers who purchases products from your personal site will be charged sales tax as well based on the “ship to” state.
Benefits of Imposing Sales Tax:
There are many benefits that a company will derive if it elects to administer all the sales taxes. These include, but are not limited to, controlling and ensuring compliance with the various sales taxes laws; reducing the compliance burden and associated costs on its independent distributors; and creating a culture of partnership between the company, its salesforce, and state and local taxing jurisdictions.
Which products/services are taxable?
Taxable products/services varies from state to state, you may refer to the chart posted in your backoffice and use it as a reference on which items are taxable in the state you are shipping the products to.
What is the effective date of the sales tax collection?
All backoffice purchases from Organo beginning June 1, 2012 will be charged applicable sales tax. Effective that date Distributors will pay the wholesale price for all Organo products, as well as the applicable sales tax based on the Suggested Retail Price (“SRP ”) of the products. This will be calculated by Organo and appear on your invoices. As indicated below, Distributors will recoup these sales taxes from their customers as part of the retail-selling price and simply keep it.
I thought that internet sales or out of state sales were tax-exempt?
US law requires direct sales and network marketing organizations to collect sales tax. MLM companies, unlike mail order companies, are liable for state sales and use taxes. Companies that do not seriously address the question of sales tax, may find themselves liable for some significant penalties by the state.
Why am I being charged sales tax?
MLM/Direct Selling Companies are required by law to collect sales tax on applicable transactions.
Why am I being charged sales tax on free products?
If an item from our regular product line is included in a promotional pack as a free product, the sales tax will still be applicable on the product as it is required by law to collect sales tax on all applicable items.
In cases that an item is NOT a regular item in our product line (not for resale items), the sales tax will NOT be applied and will it be considered as a one-time-only promotional item.