New York sales taxes.

[denverappraiser]

New York state just passed a budget requiring out-of-state merchants to collect and remit sales taxes on sales to NY customers, reportedly backed by both civil and criminal charges against scofflaws who refuse to comply. This seems to be aimed at amazon.com but there are fairly severe repercussions to the diamond industry if this stands up to constitutional muster. Amazon has already filed suit in New York State Court. There's gobs of money and a major rewrite of the way business is conducted at stake here so this is surely heading for the Supreme Court no matter who wins.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Jewelry Appraisals in Denver

 

[erica k]

is it true that''s we''re supposed to pay taxes on purchases made out-of-state? i seem to remember a PS''er mentioning this on a different thread.

i used to work at a department store in seattle and we didn''t charge sales tax for oregon residents who showed us their driver''s license. all of this is very very confusing!

what if we lived in NYC decided to go to portland, OR to buy a ring at Tiffany & Co.? the store wouldn''t charge us sales tax, but would we still have to pay taxes to NY state? would this budget apply to both online and b&m retailers? hmmm...

 

[zerj]

Most states with a sales tax also have a ''use'' tax. Any purchase where you dont pay sales tax you should be paying a use tax when you file your tax returns. So theoretically we should already be paying sales tax (at least those of us i a state with a sales tax). Realistically most people dont correctly pay the use tax and the state has no way of knowing as they don''t get a copy of all your online purchase reciepts.

So yeah if you bought a diamond in Portland and brought it back to NYC you probably should be paying taxes on it.

 

[whatmeworry]

It will be interesting if New York can make it stick. Look at the makeup of the Supreme Court.

 

[erica k]

''use tax''--good to know. thanks for clarifying!

does this mean i have to pay a ''use tax'' on every thing i bought out of state and ''used''? massachusetts doesn''t charge sales tax on clothing less than $150 or so, but otherwise, i''m assuming i would theoretically have to pay taxes on large and small purchases. hmmm....theoretically yes, but i''ve never heard of anyone actually doing this. i guess if it were for a really big purchase, i would pay taxes. what a headache, though, for all of those little things that i buy online! i guess that means i won''t be flying out to portland any time soon (what with the fare hikes!).

 

[denverappraiser]

*ALL* states with a sales tax have an identical use tax. What’s different here is not that New Yorkers owe a tax, which the vast majority neglect to pay, it's that they are trying to require out-of-state merchants to collect it for them. Currently, a merchant located in different state wouldn't be permitted to charge you sales tax even if they wanted to unless they have a ‘substantial presence’ in your state. New York is arguing that website ‘affiliates’ located in New York qualify as a substantial presence. Amazon has tens of thousands of these affiliates and theoretically all it takes in one anywhere in NY to open up this new can of whoop ass and a juicy new revenue stream for Albany. All they have to do is audit Amazon instead of a hundred thousand of their customers. If it flies, you can be sure that every other state with sales tax will follow.

Here’s what the state of Massachusetts says about use tax for their residents:
http://www.mass.gov/Ador/docs/dor/Publ/PDFS/usetax.pdf

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Jewelry Appraisals in Denver

 

[erica k]

this is really helpful, thanks neil!

 

[lesco]

Neil,

Yes, there have been several pieces of legislature and talks regarding this area since the "boom" of internet commerce but in my opinion I find it difficult to stick due to intrastate commerce laws. Bottom line, I don''t think there is a reason to panic just yet.

 

[anemone]

On the NY state tax return, there is a section where you pay sales tax on the items you bought out of state and didn''t pay tax on. You can choose to pay this tax or pay based on your income.

 

[whatmeworry]

Looks like Amazon is starting to collect taxes. Overstock is filing suit. Interesting how this will shake out and may have a ripple effet to other states.

http://bits.blogs.nytimes.com/2008/06/02/let-the-tax-collection-begin/index.html?hp

 

[diamondseeker2006]

Date: 5/14/2008 6:53:38 PM
Author: erica k
is it true that's we're supposed to pay taxes on purchases made out-of-state? i seem to remember a PS'er mentioning this on a different thread.

i used to work at a department store in seattle and we didn't charge sales tax for oregon residents who showed us their driver's license. all of this is very very confusing!

what if we lived in NYC decided to go to portland, OR to buy a ring at Tiffany & Co.? the store wouldn't charge us sales tax, but would we still have to pay taxes to NY state? would this budget apply to both online and b&m retailers? hmmm...

Erica, if you go to any state and buy an item there in person, you pay that state's sales tax. It is when the item is purchased by someone who lives out-of-state and is shipped to them in another state that the vendor does not usually have to collect sales tax. If you take possession in the state that you buy it, you have to pay the tax regardless of where you are from.

 

[strmrdr]

Date: 6/2/2008 8:56:24 PM
Author: diamondseeker2006

Date: 5/14/2008 6:53:38 PM

Author: erica k

is it true that''s we''re supposed to pay taxes on purchases made out-of-state? i seem to remember a PS''er mentioning this on a different thread.


i used to work at a department store in seattle and we didn''t charge sales tax for oregon residents who showed us their driver''s license. all of this is very very confusing!


what if we lived in NYC decided to go to portland, OR to buy a ring at Tiffany & Co.? the store wouldn''t charge us sales tax, but would we still have to pay taxes to NY state? would this budget apply to both online and b&m retailers? hmmm...

Erica, if you go to any state and buy an item there in person, you pay that state''s sales tax. It is when the item is purchased by someone who lives out-of-state and is shipped to them in another state that the vendor does not usually have to collect sales tax. If you take possession in the state that you buy it, you have to pay the tax regardless of where you are from.

Washington state has an exception to that rule for Oregon residents as Oregon doesn''t have a sales tax and it was costing Washington stores a lot of sales.
That is where the confusion is coming from.

 

[neatfreak]

Date: 5/14/2008 7:47:16 PM
Author: erica k
''use tax''--good to know. thanks for clarifying!


does this mean i have to pay a ''use tax'' on every thing i bought out of state and ''used''? massachusetts doesn''t charge sales tax on clothing less than $150 or so, but otherwise, i''m assuming i would theoretically have to pay taxes on large and small purchases. hmmm....theoretically yes, but i''ve never heard of anyone actually doing this. i guess if it were for a really big purchase, i would pay taxes. what a headache, though, for all of those little things that i buy online! i guess that means i won''t be flying out to portland any time soon (what with the fare hikes!).

Yes. You are *supposed* to pay sales taxes on anything you buy out of state and bring into MA to use.

 

[diamondseeker2006]

Date: 6/2/2008 9:43:45 PM
Author: strmrdr

Date: 6/2/2008 8:56:24 PM
Author: diamondseeker2006

Date: 5/14/2008 6:53:38 PM

Author: erica k

is it true that''s we''re supposed to pay taxes on purchases made out-of-state? i seem to remember a PS''er mentioning this on a different thread.


i used to work at a department store in seattle and we didn''t charge sales tax for oregon residents who showed us their driver''s license. all of this is very very confusing!


what if we lived in NYC decided to go to portland, OR to buy a ring at Tiffany & Co.? the store wouldn''t charge us sales tax, but would we still have to pay taxes to NY state? would this budget apply to both online and b&m retailers? hmmm...

Erica, if you go to any state and buy an item there in person, you pay that state''s sales tax. It is when the item is purchased by someone who lives out-of-state and is shipped to them in another state that the vendor does not usually have to collect sales tax. If you take possession in the state that you buy it, you have to pay the tax regardless of where you are from.

Washington state has an exception to that rule for Oregon residents as Oregon doesn''t have a sales tax and it was costing Washington stores a lot of sales.
That is where the confusion is coming from.

Gotcha, thanks for the clarification, Storm!

 

[lesco]

I think I might be able to clarify this one, since I'm a Corporate Tax Auditor. Although this is not my forte ( I mostly deal with international issues) here is my shot at it:

The issue here is that the State of NY is attempting to force companies, which do not have any substantial presence in the state ( a.k.a Nexus) to comply with NYS requirements. This overexertion could be unconstitutional as it discriminates against intrastate commerce laws, one of the oldest laws in this country. This is why this is being challenged by the courts.

Most Internet based companies are affected by this as they do not operate as a regular retailer i.e no physical stores, inventory in several states and so on. So, they are put in an unfair position as they will need to comply with requirements from states in which they don't have any physical presence.

How is this different from the regular B&M stores? Most conventional retail operations have nexus in different states as they have a store, employees, inventory in several places.

What are the implications to consumers in the overall ... not much in my opinion. Some states require that we pay "use" tax for any out-of -state untaxed Internet and catalog purchases anyway. ETA I know some of us , including myself - guilty as charged - might overlook this little detail.

I should note that most internet retailers are currently witholding taxes on behalf of NY residents as a cautionary measure. You know, A state says "audit" vendors run for the hills.