posted
There has not yet been a tax imposed by state and local governments on internet access because such taxing has been outlawed by the Federal Government. That ban expires in November unless renewed or made permanent. This ban is opposed by state and local governments who see their sales tax revenue being eroded by transactions through the net.
Actually it would be very EASY to impose a tax on any user of the internet. All they have to do is slap a large assessment on the major players on the internet backbone (20 of them) and stand back and watch how quickly that filters down to all the ISP's and ultimately you and me...just like the phone companies with their "surcharges & fees and other regulatory assessments".
BTW, I love your avatar--just too bad the little guy doesn't stay DEAD!
-------------------- John Christman| No longer do I have Satellite Internet Service—just a `po boy who uses 35/35MBBS FIOS for internet. Permanently parked as of 6/1/2012 in stick house. Posts: 407 | From: Marysville, WA | Registered: May 2004
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posted
I thought Dexter was referring to Sales Tax not being collected on most internet sales, not necessarily a use tax. If so, seems like I see a tax calculation on some things I buy on-line, so some places must be able to get away with it, ban or not.
-------------------- al Millenicom/Verizon - F1 on standby Posts: 181 | From: On the move | Registered: Apr 2007
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posted
Not really sure what Dexter was referring to, but as far as Sales Tax being or not being collected--there's no restrictions placed on States, Counties or Cities to go after whomever they can catch for not paying over any taxes due.
The BIG problem here is "catching" the offender. Proving who or what is classified as an OUT OF STATE purchase is left up to interpretation and unless the $$$ amount is large enough, the taxing agency probably just looks the other way, because of the enforcement/collection costs involved.
Really legitimate businesses that have more than just an internet presence will almost ALWAYS impose a sales tax on the purchaser. Some of the small operations that are Internet only (have no physical location that can be audited) are less likely to collect a sales tax. Doesn't make it legal, but they are much harder to catch. If they ever are caught, it's the VENDOR that will have to pony up the taxes, penalty & interest and probably will put them out of business. Now they CAN come after you years later & try to collect. There is NO STATUTE of limitations on uncollected taxes...so it is buyer BEWARE!
You may not know this, but just about every state that has an income tax has a line on their form that requests that any purchases made that no sales tax was collected, they'd like to have your money. If you do make that contribution, KEEP darn good records--because if the State ever does catch that vendor they will have your name and address & will try to collect from you AGAIN. If you can't prove what your original "contribution" was way back when, you'll be expected to pay it all over again.
-------------------- John Christman| No longer do I have Satellite Internet Service—just a `po boy who uses 35/35MBBS FIOS for internet. Permanently parked as of 6/1/2012 in stick house. Posts: 407 | From: Marysville, WA | Registered: May 2004
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posted
John, all shippers of physical goods have a physical presence somewhere, even if that presence is simply a UPS Store or similar. That does not mean that it is EVER illegal for them to not charge sales tax in any other state.
As a vendor with a presence only in California, I must and do charge California sales tax from every customer where the goods are shipped to a California address. I do not, and have no legal obligation to, charge tax to any other jurisdiction. There is no state other than California that can ever come after me, period. That may change if some of the plans of various states to form a consortium to collect each other's taxes comes into being.
Since some vendors are located only in states with no sales tax, those are able to ship to all locations legally without tax collection.
posted
Don, businesses like yours don't have a problem. It's the operator who does drop shipments that run the risk of having the problems. Besides states like California who have some really high sales tax rates are never going to run into the problem that I was describing.
You stated
quote: That may change if some of the plans of various states to form a consortium to collect each other's taxes comes into being.
That's been in existence for close to 20 years between California & Illinois and 15 years with Arizona and some 10 other states have reciprocal agreements as well. The Quill Corporation was one of the biggest offenders & it cost them close to $4 million. Check out one RV dealership (with HQ in Oregon) as well for doing the same thing.
Say you have an operation where you are only located on the internet (an RVer traveling fulltime for example) that has no physical place of business. An order comes in via the internet (or phone) and he calls one of his suppliers who is in Arizona and have them drop ship the product to (his client) with a shipping address in Oregon. The guy you bought the product from has a mailing address in Texas. Who is responsible for the sales tax? The supplier isn't. The seller is, but does he pay it to Texas or Arizona (or maybe even California as stated below)? What qualifies for Out-of-state purchase here...so no sales tax is required? And if you go one step further and find that the person who purchased the product is a resident of California--but received it via an Oregon address, things get even more stickier. This kind of scenario happens a lot more often than you might think.
-------------------- John Christman| No longer do I have Satellite Internet Service—just a `po boy who uses 35/35MBBS FIOS for internet. Permanently parked as of 6/1/2012 in stick house. Posts: 407 | From: Marysville, WA | Registered: May 2004
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posted
You used a poor example - in that example, there is no tax due, because the destination was a state without sales tax. Even if it was a California resident, it would then be the responsibility of the buyer, none of the sellers.
The Oregon RV dealership wasn't hit over sales tax non-collection, but rather for abetting illegal Oregon addresses and registration that kept the buyer from having to pay sales/use tax in their home state. The Oregon dealership was never responsible for collecting the sales tax for that home state.
Beyond that, by the definition used by virtually every state, the seller's physical presence is in Arizona (in your example), where he has an "agent" - as such he must collect sales tax from Arizona customers only, and should have an Arizona sales tax permit. Decisions from the US Supreme Court currently preclude all states from imposing tax on sellers in any state in which they are not deemed to have a physical presence.
The proposed consortium is different than what you are familiar with when you talk about reciprocal agreements. It currently includes 40 states, and if it ever gets the federal approval it needs, I as a seller would have to pay an outsourced collector set up by the states a simplified flat sales tax for any sale I make to any other member state. The collector would be responsible for distribution.
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