Online Retailers That Have a Physical Presence Within a State

question 8

Multiple Choice

Online retailers that have a physical presence within a state must collect state taxes on any Web sales made to residents of that state. Sell2U.com Inc., an online retailer based in California, pays Tracker Web Services, which is located within New York, to direct traffic to Sell2U.com's site. If Sell2U.com must collect and remit taxes on its sales to New York residents, it is most likely because

• A)Sell2U.com's deal with Tracker falls within New York's definition of physical presence.
• B)Congress has explicitly chosen to tax Internet sales.
• C)the United States Supreme Court has ruled that a state can compel an out-of-state business to collect and remit state taxes.
• D)New York requires its residents to self-report their purchases and pay use taxes to the state.

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Definitions:

Price Sensitivity

The degree to which the demand for a product changes in response to a change in its price.

Marketing Mix

The combination of factors that can be controlled by a company to influence consumers to purchase its products, typically including product, price, place, and promotion.

Variable Costs

Expenses that vary directly with the level of production or output, such as materials and labor.

Fixed Costs

Expenses that do not change in proportion to the activity of a business, such as rent, salaries, and equipment maintenance costs.