Cream of the Crop 1/Cream of the Crop 1.iso/BUSINESS/SBA62.ARJ/FSBA.EXE/F100.SBE

Text File | 1992-04-30 | 6KB | 110 lines

@082 CHAP ZZ

                ┌─────────────────────────────────────┐
                │ MAIL ORDER SALES:   FTC REGULATIONS │
                └─────────────────────────────────────┘

If your business involves selling goods by mail order, you need to be
aware of a regulation of the Federal Trade Commission that deals with
mail order sales, Rule 435.1.  This federal regulation requires any
business soliciting mail order sales to be prepared to ship the mer-
chandise within 30 days after an order is received, unless it has
clearly stated in its solicitation that orders will not be shipped for
a longer period, such as 60 days.  Otherwise the solicitation will be
considered as an "unfair and deceptive trade practice."

In addition, if you receive an order and for some reason you cannot
ship it within 30 days (or the period stated in your solicitation),
you must:

    . Immediately notify the customer and offer the customer the
      option to either cancel the order and receive a refund or con-
      sent to the delay in shipment;

    . Indicate when you will be able to ship or that you do not know
      when you will be able to ship the order;

    . Provide other required information to the customer, which will
      vary in content depending upon when you expect to be able to
      ship.

Rule 435.1 of the FTC is fairly complex and difficult to understand,
but you need to understand and be familiar with it if you sell goods by
mail order.  If you are going into the mail order business and want a
single source of authoritative information on the mail order laws of
the U.S. and all 50 states, you should obtain the "Mail Order Legal
Manual," by Erwin J. Keup, Esq.  It is available from the publisher
of this program, at the address given on the sign-off screen.

@CODE: LS
In @STATE, mail fraud is protected by law.

@CODE:OF
                ┌─────────────────────────────────────┐
                │ MAIL ORDER SALES:   SALES & USE TAX │
                └─────────────────────────────────────┘

Note that if you sell across state lines to customers in states where
you have no offices, employees or other presence, the sale is usually
not subject to sales tax in either state, since it is an interstate
sale.  However, technically, such sales are subject to "use tax" (which
is sort of a "shadow" of the sales tax, which applies where the sales
tax doesn't in most states) in the customer's state.  The U.S. Supreme
Court and other courts generally have not supported attempts of the
various states to force out-of-state retailers to collect use tax on
mail order or other sales made to residents of the taxing state, so
that most mail order firms tend to treat such interstate sales as
being tax-free, or tell the customers that it is up to them to report
the purchase and pay the use tax (which they never do).

Unfortunately, in just the last 2 or 3 years, many states have enacted
new and broader sales and use tax laws that require out-of-state re-
tailers who advertise in the local media or send substantial amounts
of direct mail/catalog solicitations into the state to register as
retailers subject to sales or use tax in the state, and treating such
direct sales as taxable.  Some states are aggressively enforcing these
new laws, which will definitely cramp the style of many mail order
firms if these laws stand up in court.  Even if these new state laws
are held to be unconstitutional, a bill has been working its way
through the Congress in recent years that would specifically grant
states the right to require out-of-state sellers to collect use tax
on sales made into the state, with certain restrictions.  The bill as
it currently stands would provide exceptions for small businesses,
since having to file and pay sales or use taxes to all 50 states would
be extremely expensive and onerous for small firms, and would effec-
tively put many small mail order firms out of business if they are not
exempted.  (Note that the new state laws adopted in recent years do
not generally make an exception for small firms that are sellers.)

         ┌───────────────────────────────────────────────────┐
         │BOTTOM LINE: Don't assume that interstate sales are│
         │still "sales tax-free," at least in many states. If│
         │proposed federal legislation passes, you will prob-│
         │ably be required  to collect and pay over  sales or│
         │use tax in all  states fairly soon  after any  such│
         │federal law is enacted--if that should ever happen.│
         └───────────────────────────────────────────────────┘

LATE-BREAKING DEVELOPMENTS:
---------------------------

Just as we release this latest revision of the program today, the
U.S. Supreme Court has held, on May 26, 1992, in the case of Quill
Corp. v. North Dakota, that a state may not force out-of-state mail
order retailers to collect use tax on sales to residents of the state,
where the company had no presence in the state.  The Court held that
such state laws interfere with interstate commerce, in violation of
the U.S. Constitution.  Thus, it appears that many of the broad new
mail order use tax law provisions, which have been adopted in some 34
states in recent years, and which were targeted at mail order firms,
may be invalid.

This is very good news for mail order retailers, but the bad news is
that the Court also indicated in its decision that Congress could, if
it chooses to do so, constitutionally enact legislation that would
permit the states to require use tax collection on mail order and
similar sales by out-of-state retailers.  Thus you can probably expect
Congress to pass such a law in the near future, perhaps after the
November, 1992 elections.