States trying to collect sales tax / Internet Purchases

[yeahiknowiam]

clarkhoward.com: clarkhoward


Purchases you make on the Internet are tax free, right? Wrong! The states are at it again trying to find new sources of tax revenue as we stare down a recession. They've now turned to trying to get the word out that you're legally required to pay sales tax on Internet purchases -- unless, of course, you live in a tax-free state. That's news to most people.

The courts have decided that web merchants are not responsible for collecting taxes unless they have a domicile in the state where the purchaser lives. But you still owe the tax. North Carolina has been aggressive about trying to collect. Some states are even participating in cooperative efforts where they'll rat you out to other states. We're not talking about something you buy for $12 on Amazon; we're talking about something you might buy for $12K online. 25 states now have a line on their income tax forms to collect sales tax on Internet purchases you've made over the past year. Consumers are expected to keep a log of all their e-commerce transactions and then report them!

[CertifiedCC]

WTF

[Amarao]

HA! Screw that. Tell me why are people OK with their local and federal govt taking more of their money?

If you want something, pay for it. I don't see why people with children get a $1000 tax break, they should be paying more taxes because the kid now has to go to school. The $700 I paid to register my car this year? Went to maintaining roads right? Nope, right to the school district.

And to add insult to injury the county is no longer going to do paving operations due to the cost of gas. So they'll just oil and gravel the roads now.

[25psi_Elise_Killer]

A lot of states already try to collect taxes on "out of state" purchases. Just look at your state's tax forms. I can't think of anyone who actually puts in a number in this section though, unless its a big ticket item.

[JoshS]

Originally Posted by yeahiknowiam

clarkhoward.com: clarkhoward


Purchases you make on the Internet are tax free, right? !

Wrong! They never have been, it's not called a sales tax when its out of state, it's a "use" tax, it's been on the books forever and a day. Legally the states can't go after or require an out of state company to collect it (unless they have an employee (or wholesale sales rep) in their own state). They can go after you, but how do they find you when there's no copy of the transaction within the state unless its a boat or a car.

[PhlypSide]

I thought interstate tax was illegal.

If they're going to do that, then do away with all income tax (I heard it was illegal anyway) and just shift to a national sales tax.

[25psi_Elise_Killer]

For those in Kalifornia:
In an effort to assist taxpayers with
their use tax reporting requirements,
the Franchise Tax Board has included a
“use tax” line on the personal income
tax return (Form 540). This allows
each taxpayer the option to report their
use tax on their individual return for
out-of-state purchases. In addition,
the instructions to the California Form
540 include a use tax worksheet and
use tax rates to assist in computing
the proper use tax liability. The other
option available for taxpayers is to file
a use tax return with the California
Board of Equalization (BOE). The
use tax return is included in BOE
Publication 79-B, California Use Tax.


I think most of us forgot to read this section
http://www.ftb.ca.gov/forms/misc/988.pdf

[JoshS]

Originally Posted by PhlypSide

I thought interstate tax was illegal.

all income tax (I heard it was illegal anyway) .

Yes, all tax is illegal. Let's all stop paying it, and show the gov't. We don't need you're stinkin' roads, or water or sewage systems, or schools or street lights, or police or health departments, or an army to defend us. You go and figure out how to do all that without a dime of all this illegal taxes you've been collecting.

[Brennon]

Originally Posted by JoshS

Yes, all tax is illegal. Let's all stop paying it, and show the gov't. We don't need you're stinkin' roads, or water or sewage systems, or schools or street lights, or police or health departments, or an army to defend us. You go and figure out how to do all that without a dime of all this illegal taxes you've been collecting.

(yes, I realize you were being sarcastic, which is why I'm so perplexed)

[Amarao]

Originally Posted by JoshS

Yes, all tax is illegal. Let's all stop paying it, and show the gov't. We don't need you're stinkin' roads, or water or sewage systems, or schools or street lights, or police or health departments, or an army to defend us. You go and figure out how to do all that without a dime of all this illegal taxes you've been collecting.

I'm sure most people wouldn't mind paying for the necessities, but with all the frivolous spending going on I can understand why people are pissed.

[Randy Chase]

Purchases you make on the Internet are tax free, right? Wrong! The states are at it again trying to find new sources of tax revenue as we stare down a recession. They've now turned to trying to get the word out that you're legally required to pay sales tax on Internet purchases -- unless, of course, you live in a tax-free state. That's news to most people.

This is not new and really not related to online or not transactions. The same rules apply for orders placed by phone or mail.

Businesses have always had to deal with use tax. A business must pay Calif the sales tax on their own purchases not for resale. Regardless of where you bought it from.

A business must collect sales tax in a state that has sales tax and where they have a corporate presence. Sometimes this is the one state you are incorporated in, but it will also include where your brick and mortar building is located.

[RoadDad]

Originally Posted by Amarao

I don't see why people with children get a $1000 tax break, they should be paying more taxes because the kid now has to go to school. The $700 I paid to register my car this year? Went to maintaining roads right? Nope, right to the school district.

I have 5 children and get $0 tax credit/break for all 5 combined. I got $0 "stimulus check" from the Feds. I couldn't take a tax deduction for my student loan interest, at all. I get only a partial tax deduction for my mortgage interest and charitable contributions (i.e., can deduct only ~53%). It costs me more money to accept and treat a government insured (medicaid/medicare) patient than I get reimbursed (as in I pay to see and treat them). I pay just over 47% of my income in taxes. Obama wants me to pay more in taxes, because I don't already contribute more than my fair share.

I must get to drive on special roads only for tax payers that have no potholes. My kids must go to special schools only for tax payers. Right...

Having said all that I have always paid my state "usage tax" on out of state purchases through catalogs, mail, internet, etc.

Taxes suck.

[Amarao]

Originally Posted by Randy Chase

This is not new and really not related to online or not transactions. The same rules apply for orders placed by phone or mail.

Businesses have always had to deal with use tax. A business must pay Calif the sales tax on purchases not for resale. Regardless of where you bought it.

Out-of-state businesses (remote sellers)
that sell to Colorado residents solely
through the Internet, telephone, or
mail-order catalogs and that have no
physical presence in Colorado or otherwise
do business in this state are protected
by National Bellas Hess, Inc. v. Department of Revenue Illinois, 386 U.S.
753 (reaffirmed by the recent Quill decision).
These United States Supreme Court
rulings protect mail-order catalog sales
businesses from having to collect state
sales taxes from purchasers in states
where the remote-seller has no physical
presence itself or through an agent.

Taken from: http://www.revenue.state.co.us/fyi/pdf/sales05.pdf

[Randy Chase]

Originally Posted by Amarao

Out-of-state businesses (remote sellers)
that sell to Colorado residents solely
through the Internet, telephone, or
mail-order catalogs and that have no
physical presence in Colorado or otherwise
do business in this state are protected
by National Bellas Hess, Inc. v. Department of Revenue Illinois, 386 U.S.
753 (reaffirmed by the recent Quill decision).
These United States Supreme Court
rulings protect mail-order catalog sales
businesses from having to collect state
sales taxes from purchasers in states
where the remote-seller has no physical
presence itself or through an agent.

Taken from: http://www.revenue.state.co.us/fyi/pdf/sales05.pdf

That is what I said.

Where you might have thought I said something else, it is where (at least here in Calif) the business IN THE STATE, itself has to pay sales tax on its own purchases.

In other words, if ChaseCam buys a toner cartridge for the office from some Internet store not in California, and they don't charge me sales tax (which they should not), I still have to claim it as USE and pay tax on it.

The point has nothing to do with individuals who don't file with the State Board or Equalization, though it has always been a gray area and pretty much unenforceable for the states, unless they get together... which is the real concern.

[Amarao]

Originally Posted by RoadDad

I pay just over 47% of my income in taxes.
Taxes suck.

If you count FICA I'm right at 45% tax rate and I don't get any tax breaks(still looking for a house). Progressive tax pisses me off, not only do I pay more because 15% of $100k is more than 15% of $40k, but the percentage goes up. Thanks Uncle Sam!

[Amarao]

Originally Posted by Randy Chase

That is what I said.

Where you might have thought I said something else, it is where (at least here in Calif) the business IN THE STATE, itself has to pay sales tax on its own purchases.

I must have misread your second line. :X

[Randy Chase]

Poorly worded. We deal with the state board a lot, and since I have an e-commerce business that retails millions, I have to make sure I dot the T and cross the I's.

I hear the penalty for being wrong with the board is death by stoning or something close to that.

[RoadDad]

Originally Posted by Amarao

If you count FICA I'm right at 45% tax rate and I don't get any tax breaks(still looking for a house). Progressive tax pisses me off, not only do I pay more because 15% of $100k is more than 15% of $40k, but the percentage goes up. Thanks Uncle Sam!

I wasn't including FICA. I don't want to go there . I try to keep the crud in the pit of my stomach feel isolated mostly in April.

If you think about all the layers of taxes that the state and federal government collect it can be nauseating.

[Harponian]

Originally Posted by RoadDad

I have 5 children and get $0 tax credit/break for all 5 combined. I got $0 "stimulus check" from the Feds. I couldn't take a tax deduction for my student loan interest, at all. I get only a partial tax deduction for my mortgage interest and charitable contributions (i.e., can deduct only ~53%). It costs me more money to accept and treat a government insured (medicaid/medicare) patient than I get reimbursed (as in I pay to see and treat them). I pay just over 47% of my income in taxes. Obama wants me to pay more in taxes, because I don't already contribute more than my fair share.

I must get to drive on special roads only for tax payers that have no potholes. My kids must go to special schools only for tax payers. Right...

Having said all that I have always paid my state "usage tax" on out of state purchases through catalogs, mail, internet, etc.

Taxes suck.

AMT sucks the worst. TAXES stick it in, but AMT breaks it off!

[ezmoney]

Originally Posted by Harponian

AMT sucks the worst. TAXES stick it in, but AMT breaks it off!

+1 Now add the 'death tax' (estate tax) to that.