@082 CHAP ZZ 旼컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴� � MAIL ORDER SALES: FTC REGULATIONS � 읕컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴� Any business that is involved in selling goods by mail order needs to be aware of a regulation of the Federal Trade Com- mission that deals with mail order sales, called Rule 435.1. @IF153xx]Since your business is engaged primarily in mail order sales, @IF153xx]it is crucial that you understand the rules discussed below, @IF153xx]to avoid possible customer complaints that could result in a @IF153xx]run-in with the FTC for @NAME. This federal regulation requires any business soliciting mail order sales to be prepared to ship the merchandise 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 solici- tation 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 consent 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 un- derstand, 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 authori- tative information on the mail order laws of the U.S. and all 50 states, you should obtain the "Mail Order Legal Man- ual," by Erwin J. Keup, Esq. It is available from the pub- lisher of this program, at the address given on the sign- off screen. @CODE: LS In @STATE, mail fraud is protected by law. @CODE:OF 旼컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴� � MAIL ORDER SALES: SALES & USE TAX � 읕컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴� Note that if you sell across state lines to customers in states where you have no offices, employees or other pres- ence, the sale is usually not subject to sales tax in eith- er state, since it is an interstate sale. However, techni- cally, 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 al- most 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 retailers who advertise in the local media or send substantial amounts of direct mail/catalog solicitations into the state to register as retailers sub- ject to sales or use tax in the state, and treating such direct sales as taxable. Some states are aggressively en- forcing 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 uncon- stitutional, 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 restric- tions. The bill as it currently stands would provide ex- ceptions for small businesses, since having to file and pay sales or use taxes to all 50 states would be extremely ex- pensive and onerous for small firms, and would effectively 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.) 旼컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴� 쿍OTTOM LINE: Don't assume that interstate sales are� 퀂till "sales tax-free," at least in many states. If� 쿾roposed federal legislation passes, you will prob-� 쿪bly be required to collect and pay over sales or� 퀅se tax in all states fairly soon after any such� 쿯ederal law is enacted--if that should ever happen.� 읕컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴컴� RECENT TAX DEVELOPMENTS: ------------------------ Recently, the U.S. Supreme Court 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, constitutional- ly 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, under intense lobby- ing pressure from state governments that are also grasping at any means possible to raise their tax revenues....