Buying online: sales tax

[recran]

Lots of people are pro-online shopping in general because you don''t pay state sales taxes on what you buy if the site doesn''t have a store in your state. I live in NC - no WF here, so no sales tax for me. BUT I remember getting a question about whether we''d made any online purchases on which we did not pay sales tax when filling out our taxes last year. So what is the deal with this?

 

[diamondsrock]

I bought something out of state last year and had it shipped to my house. The jeweler explained that they wouldn''t charge me sales tax but it was up to me to claim this purchase on my yearly taxes to the state I live in (which I did.) I asked my accountant and she recommended paying the tax as part of my yearly state tax return. I thought it was required by law to pay taxes on these things, even though it''s tax free at time of purchase. Hopefully someone else can chime in. I don''t know each state''s individual tax laws.

 

[DiamondExpert]

diamondsrock is correct - paying state and local sales taxes on a non-taxed purchase is the responsibility of the purchaser unless the seller has a presence in that state. End of year is a good time to do that. Not doing it is tax evasion, and while few states are seriously pursuing the ave. person, they are beginning to wake up to broader enforcement.

 

[recran]

That''s what I thought! I just read several messages in which people mentioned saving money on diamonds by avoiding sales tax though!

 

[denverappraiser]

Date: 11/15/2005 9:40:34 PM
Author: recran
That''s what I thought! I just read several messages in which people mentioned saving money on diamonds by avoiding sales tax though!

Cheating on taxes is very popular. Here''s what the North Carolina Department of Revenue has to say about the matter.

Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver

 

[glamgirl]

The benefit of not immediately paying taxes, is that you can "buy your stone" right away, as opposed to having to pay the total cost upfront. I (may be wrong) but believe this also may apply to ebay purchases diamond rings? I dont know if this is true for private parties, and non-business sellers. Does anyone know?

 

[kenny]

recran wrote: " 

Lots of people are pro-online shopping in general because you don't pay state sales taxes on what you buy if the site doesn't have a store in your state.  I live in NC - no WF here, so no sales tax for me.  BUT I remember getting a question about whether we'd made any online purchases on which we did not pay sales tax when filling out our taxes last year.  So what is the deal with this?"

I gather you are not kidding.
Okay.
Here goes.
Almost everyone lies and does not report these sales and pay their taxes on them.
They don't even see it as a crime anymore.
In fact I'm sure they are thinking bad thoughts about me right now for pointing this out.

You don't have to lie.
You can be one of the few honest ones.
You can report and pay the tax at the end of the year when you file your taxes.

 

[fire&ice]

Date: 11/15/2005 11:02:09 PM
Author: denverappraiser

Date: 11/15/2005 9:40:34 PM
Author: recran
That''s what I thought! I just read several messages in which people mentioned saving money on diamonds by avoiding sales tax though!

Cheating on taxes is very popular. Here''s what the North Carolina Department of Revenue has to say about the matter.

Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver

North Carolina & VA have a bit of a fued going on. A few years ago, the VA D of Taxation supeonaed the receipts of some of the NC "outlet" furniture companies. VA went after VA residents that did not pay the tax in VA even though NC shipped the furniture to "out of state". The people had to pay the sales tax & a penalty.

One thing I don''t know is that say your sales tax is 8% in YOUR state. In the state in which you are purchasing, the sales tax is 4%. Can you opt to pay the lower sales tax?

I don''t think many people pay the use tax. Many fail to know. Many fail to pay.

 

[WinkHPD]

Date: 11/16/2005 11:16:40 AM
Author: fire&ice

One thing I don''t know is that say your sales tax is 8% in YOUR state. In the state in which you are purchasing, the sales tax is 4%. Can you opt to pay the lower sales tax?

Some states allow you to deduct the amount of sales tax you paid in another state so you will still owe the 8% total, but you can deduct the 4% that you already paid.

I do not think it is too many years away when retailers will receive requests for the records of sales made out of state so that the appropriate state agencies can check the tax returns of our clients against whether or not they paid the tax. I think if you make purchases from out of state with the idea that you will not have to pay taxes you will want to be very comfortable knowing that when the states come asking retailers will have no choice but to turn over those records or go to jail.

Almost no one currently pays the taxes and the states are VERY hungry for the BILLIONS of dollars that they feel are owed to them. We are very careful to declare and pay any taxes owed when we buy something for consumption here in the office, such as our new ASET tool, as the penalties and interest can be quite onerous.

Wink

 

[cinnabar]

I don''t understand why it isn''t the law that you pay the sales tax according to whichever state it was bought from, so if I buy from a vendor in my own state, I pay WA tax and if I buy from a vendor in TX I pay TX tax. If there is a difference between the two states, then I would get a bargain for buying from a state with lower tax than my own; this would promote competition in the internet/mail order age.

In Europe, you pay the tax of the vendor''s country but you can claim it back if you don''t live there. That system would work much better than the current US system as far as the authorities are concerned, because the onus is then on the buyer to claim it back and most are too lazy to do so. However, Europe doesn''t have self-assessment for tax so claiming it back involves a lot of complicated form-filling that presumably would be much simpler under the US system, so maybe people here really would claim their tax back.

 

[denverappraiser]

Making life simpler has never been a major objective of the taxing authorities.

The official answer to the question is that sales and use taxes are taxes imposed upon consumers, not on merchants. When a NC customers orders something from a merchant in TX, the taxing authorities are in NC. The tax collectors require the local merchants to collect it on their behalf because they can. They don't require out-of-state merchants to do the same because they can't. Doing business in the state requires a license wherein they have agreed to collect and submit sales taxes. An out-of-state merchant has made no such agreement.

This is also the reason that prices in stores are described as '$99 plus tax' instead of just having the merchant figure out how much it's really going to cost and put it on the price tag. It would be much less confusing if they just said up front that it's going to be $107.56, rather like they do with gasoline taxes. As Wink pointed out above, this is all likely to change fairly soon. there is big money involved.

Why do it this way? Ask your congressman.

Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver

 

[AGBF]

Date: 11/15/2005 9:40:34 PM
Author: recran
That''s what I thought! I just read several messages in which people mentioned saving money on diamonds by avoiding sales tax though!

Well, guess what? That''s what I thought the law was! That''s why I thought Congress was trying to change the law: to protect states from losing sales tax! Maybe the law change was meant to keep people from evading sales tax. One merchant told me there was no tax when I bought from him! The same is true when one buys on eBay. Sellers post that there is sales tax due when one buys within the same state as the seller. I guess the real rule is: one should pay the seller the tax if one lives in the same state as the seller, but pay the state directly if one lives in another state!

I happen to be very honest. In fact yesterday my honesty really hurt me! I couldn''t figure out what to enter for Asian apple-pears at a self-checkout at a grocery store. They weren''t on the menu. There was no number on them, so I couldn''t key it in. A worker came to help me and entered the code for Golden Delicious apples. I said that they weren''t Golden delicious, that they were Asian apple-pears and more expensive! So she found out the correct amount and charged me...then put down the apple pears somewhere. I left the store without them and didn''t realize until I was home, busy, and far from the store. I paid the higher price and didn''t get my fruit!

No good deed goes unpunished!

Deb

 

[WinkHPD]

Karma my dear friend is worth much more than the price of the pears that you lost.

Yours seems to be good and there is a reason for it and this old man is betting that if you went back to the store in the next day or two the pears would be forthcoming. This old man is also betting that were the equal conditions to repeat themselves that you would again insist on paying the correct price. Of course you would also now remember to make sure the pears were placed in the bag!

Wink

 

[perry]

Ahh, the old issue. About a year ago I generally got chastised for pointing out that most people owe their state sales taxes on internet and catalog sales.

I know that my home state has done test computer runs on people who have not paid any "out of state" sales tax on their annual income tax forms and the people who do internet shop. They have already estimated how much they can collect via a "mass action" against many people.

They are also starting to ask people during an audit - and if they find this they got you for fraud on the opening which allows them to fully audit many years of tax returns and and assess many fines. Not been used much, but they are at least testing the waters. What is your defense when they can get your credit card records (which are not yours - they are the credit companies) and prove that you lied up front. How do you then fight any other claim?

In Wisconsin, and I believe most states. Collection of sales tax for out of state taxes is waived if you actually purchased and took posession of the item in the other state - and paid that local state''s sales taxes. Thus a trip to NiceIce in oregon - where their is no sales taxes - to "buy" your diamond would be worth it just on the tax savings for a major ring.

The states are working on a uniform process for collection of sales taxes for all purchases. I expect that it won''t be too long and every internet and catalog vendor will have to collect sales taxes on all purchases and remit them (through a clearing house) to the states. The game will soon be over folks. I suspect that many internet vendors will fold; and only the solid ones will survive that shakeout.

Perry

 

[DiamondExpert]

"I expect that it won''t be too long and every internet and catalog vendor will have to collect sales taxes on all purchases and remit them (through a clearing house) to the states. The game will soon be over folks. I suspect that many internet vendors will fold;"
___________________________________________________________________________________________________

If, or when, this happens, many small inet businesses will go broke just from the paperwork load - there are thousands of state and local tax domains!!

 

[AGBF]

Date: 11/16/2005 10:57:14 PM
Author: perry
The states are working on a uniform process for collection of sales taxes for all purchases. I expect that it won''t be too long and every internet and catalog vendor will have to collect sales taxes on all purchases and remit them (through a clearing house) to the states. The game will soon be over folks. I suspect that many internet vendors will fold; and only the solid ones will survive that shakeout.

Well, in my opinion, this will be a blessing. And until this is done, no one should expect people to volunteer to pay taxes they do not know exist. There is a reason that highway toll have toll gates. It is a gentle reminder to PAY! One knows his income tax is reported to the IRS. One pays his sales tax right in the store. It is ludicrous to expect people to jump through hoops in order to figure out if there is a tax on something and how to pay it if there is!

Deborah

 

[mrssalvo]

I can't count the number of times I've been told by a vendor (not just jewelry) that there is no sales tax when purchasing out of state. Until this thread I always assumed this was true and thought it an added benefit to puchasing though a PS vendor who is in a different state.


However, when I purchase online from The Gap, Old Navy etc. they do enter in a sales tax in the total. I have no idea if it makes it make to my state but I do pay a sales tax on clothing purchases from these companies. I just checked and Amazon receipt and I paid a tax there too..


and I agree Deb, it would no be fair to expect someone to pay a tax they didn't know existed.