Internet Tax

[Brian Luce]

I won't lie, I like avoiding sales tax when I can. Is there a new internet tax taking effect soon?

[Dave Blackhurst]

I believe I read where New York was trying to impose something on any entity with a physical presence in NY, they already did something, resulting in a backlash from some online companies.

It's a mixed bag, you want to save $$, but the Government "needs" your money to spend... HMMM. And when tax rates in one area go up, it gives people the incentive to drive a bit to shop elsewhere (like online), if the option is there. Thus "the man" doesn't like easy online tax free commerce - it's just a matter of time before they'll find a way to impose a tax - it's not "if", but "when".

[Ervin Farkas]

That's been like that for years. I bought a few Dell computers 3-4 years ago and I was surprised to see the tax charge when checking out (online). I called customer support and they told me, it's the law: if a company has phisycal presence in a state, they MUST charge tax.

[Garrett Low]

Hey guys, the "Man" already has a mechanism to asses and collect taxes for purchases made out of state. It's called a Use Tax. In layman terms you are suppose to asses a Use Tax for products, goods and services which you received "Use" from for which sales taxes were not already collected.

Almost nobody that I know reports or pays this tax. There is actually a line item on most state's tax return forms for Use Tax. As my father (who is an accountant) tells me with a very noticeable wink, you are suppose to report and pay these taxes each year.

As a business owner who has a resale license and has to fill out the forms to report and then pay the sales taxes I collect, it is a major pain and can get really confusing because you anyone can ask to be taxed at the rate of where they live. And with all of the special tax assessments in place (1/2 cent to 1 cent special taxes measures) I have a three page list of the different tax rates I'm suppose to be collecting for just here in CA.

Gotta love how the government makes things easy for the small business owner..LOL

[Boyd Ostroff]

Originally Posted by Ervin Farkas

That's been like that for years.

The New York situation is a little different, and much has been written about it. Many people think this is the beginning of the end of the free ride for mail order sales: Amazon to collect N.Y. sales tax; Overstock drops out | News Blog - CNET News

New York's new law directly implicate Amazon, Overstock, and other companies that operate "affiliate" programs, which, in the e-tailers' cases, means they offer commissions to external Web site owners who link to their products and prompt sales. Amazon has hundreds of thousands of such affiliates

And Garrett is correct about "use tax". Go to your state's department of taxation and do a search. You will learn that you are supposed to pay state tax on any out of state purchases for which no sales tax was collected. They say that just because no tax was collected does not mean no tax is due. And even if you did pay sales tax to the out-of-state entity, if the tax rate in your location is higher than you paid, they will expect for you to pay the difference.

I think you are going to see this become a big issue now, considering the economy. For example, in NJ we have a 7% sales tax. So if I purchase from out of state and don't pay any tax, that is like a 7% price advantage over local businesses. As much as I hate taxes, I actually have mixed feelings about this. Now that CompUSA and Circuit City are gone, if I need something right away, or just want to browse through gadgets, Best Buy is just about the only option. I think this tax-dodge has surely contributed to the demise of local electronics/computer/video stores and I'm not entirely sure that it's a good thing in the end.

[Blake Cavett]

Alabama has a 'consumer use tax.' So anything I purchase out of state (B&H for example), I'm supposed to pay 5.5% in the consumer use tax.

WHEN (or IF) I pay it, it gets passed on to the clients in the form of a higher fee.

It's kind of a joke that you have to pay a 'sales tax' (if you want to call it that) on something you didn't purchase in your state.

What a bummer, huh?

[Dave Blackhurst]

And what if I buy most of my gear "lightly used" from out of state...

I know taxes are supposed to help the "local economy", but it becomes a bit outrageous - as noted, there are so many DIFFERENT sales tax rates in CA, you need to hire an accountant/geographer to sort it out - and you can't tell me a city that has a tax 1% higher than one a couple miles away (and it happens out here) doesn't lose sales... people can drive, walk, or mail order, and they DO. Maybe not for "the small stuff", but big ticket items, you'd be silly not to.