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      Chip MacGregor

      When he was in first grade, Chip hurried home one day and announced to his mother, “When I grow up, I’m going to be a book guy!” He clearly could see the future —from high school literary magazine editor to writing bestselling books, from speaking at writing and publishing conferences to representing renowned writers, Chip MacGregor is a book guy.

      January 15, 2014

      Taxes for Writers

      by

      BY GUEST DANICA FAVORITE

      mainDanica Favorite works as an online moderator for a major publisher where she connects readers and writers with new fiction releases. Having spent time in the corporate world teaching tax law and preparing taxes, she much prefers fiction to numbers. Her first book with Love Inspired Historical will be available in late 2014.

       

       

      As some of you know, I spent about five years preparing taxes and I
      teach on the topic of taxes for writers. I took a class with the
      Colorado Department of Revenue about a year ago on the very topic of
      sales tax. I had heard a number of things about sales tax and was
      concerned that at some point, I would need to know this information for
      my business, plus, I was working on something I wanted to do that might
      have tax implications.

      Here are a few VITAL things to know:

      1. Sales tax is an extremely complex topic. Not only does it vary by
      state, but it varies by locality. You must make absolutely sure that you
      are following both the laws of your state as well as any laws of the
      states in which you are selling to- this includes when you sell a book
      online!! Everything I am telling you is based on COLORADO law. If you
      are not in Colorado, please be sure to check your state’s guidelines.
      That said, it may not be enough to look it up on your state’s website.
      Colorado law is so complex that I, as someone tax-trained, could not
      figure out what I needed to know based on the website, so I took a
      day-long class. Yup – an entire day. And it barely scratched the surface.
      Please, please, please get advice on sales tax from someone who is
      very familiar with sales tax law in the area in which you are selling
      your books!

      2. Here is the gist of Colorado sales tax law: Sales tax is based on the
      location where your product is delivered, not where you live. So, if I
      live in Denver, but sell a book in Colorado Springs, I am responsible
      for paying sales tax based on Colorado Springs tax rates. If I live in
      Denver, and someone from Colorado Springs comes to Denver and buys a
      book from me, the sales tax rate is based on Denver tax rates. If I live
      in Denver and go to Texas to sell books, I am responsible for finding
      out the sales tax rules for the locality in which I am selling the books
      and take care of the sales tax there. Depending on where in Colorado you
      are, there may be sales tax for the city, special taxing areas, as well
      as the state. It varies from locality to locality. Depending on the
      locality, you may need a special tax license to collect sales tax.
      Depending on the locality, you may need to remit tax to the locality,
      the state, or some other entity. It is UP TO YOU to find out the
      locality’s taxing rules. If you do not follow the rules, you are subject
      to the tax plus penalties and interest. AND, if you are not a Colorado
      resident, you may be subject to Colorado income tax (you’d have to sell
      a lot, though).

      3. Saying, “I just won’t mess with it by not charging people tax” is not
      legal. Even if you don’t charge sales tax, you are still responsible for
      remitting the sales tax to the taxing authority, which means it will
      come out of your own pocket. If you do not remit the sales tax and the
      taxing authority finds out, you will be responsible for penalties and
      interest. Granted, they will probably not find out about a $10 book or
      two. But I’m telling you what the law is, and many localities want their
      share of that $10.
      4. Some venues, like large conferences, will get a special sales tax
      permit, which collects and remits the tax for you. If you are at a group
      event, always be sure to find out how sales tax is being handled. Again,
      this is YOUR responsibility. Don’t assume that the venue is taking care
      of it for you.

      I hope that helps you. Like I said, sales tax is extremely
      complex, especially if you are going from state to state, or, in
      Colorado’s case, locality to locality. The person teaching the tax class
      was from the Colorado Department of Revenue, and part of why they
      offered this class is that Colorado is cracking down on people not doing
      sales tax correctly. Some of you may remember the big to-do between the
      State of Colorado and Amazon — it was a fight over sales tax and taxing
      jurisdiction. Obviously Colorado has a lot more to gain by going after
      Amazon as opposed to individuals, but it doesn’t mean they won’t. And
      they do. So be prepared by finding out the sales tax laws in your own state.

      You can connect with Danica Favorite at www.danicafavorite.com
      Twitter: https://twitter.com/danicafavorite
      Facebook: https://www.facebook.com/DanicaFavoriteAuthor

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