Why do MLM Companies have to Pay Sales Tax?

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This is a long complicated story and not without ongoing legal dispute. Unlike mail order firms which are immune from sales and use tax, direct selling companies are viewed by state officials as having “nexus” (sufficient contacts in a state for sales tax purposes). Their reasoning is based on the fact that distributors of direct selling companies actually promote the product and opportunity and conduct opportunity meetings and training meetings in the states in which they live.

Consequently, their sales are not considered to be in the same category as mail order sales. Distributors must either obtain resale tax licenses or take care of the taxes themselves; or, the company will collect and remit sales and use taxes.

Read the full article here: http://mlmlegal.com/MLMBlog/?p=614

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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