Online Sales "Use Tax"?

[mrreindeer]

I don't think this has been addressed here; I checked the search. But forgive me if it has.

I just received in the mail a letter from my Accountant informing me of the California "Use Tax" for out-of-state (and therefore 'tax-free') online (or regular) purchases.

Am I living in a closet? I've never heard of this. Have you?

I thought purchases out-of-state and online were just 'tax-free'. I guess I'm just a bit naive (maybe a little stupid) but maybe I should have thought about it. However, if I buy something in Pennsylvania and they don't tax me and they ship to me in L.A., why on Earth would I pay California sales tax on that item? Yeah, it's taken revenue away from the state when I'd otherwise buy in California...oh, wait, I get it.

So now the Accountant is suggesting that we declare our online purchases on our tax return.

We don't do a lot of online purchasing out-of-state or much online purchasing, for that matter. Yet. But I know a lot of my BOTL/SOTL do.

So, will you declare your online out-of-state/out-of-country "use tax"?

[forgop]

You mean you haven’t been paying your out of state purchases for taxes like the rest of us?

Seriously, this is done on a “goodwill” basis more than anything. They don’t have the means to track it yet, but I’m sure they will one day.

[Starscream]

Hell No!:)

[dunng]

Sure... :r :r

[mrreindeer]

You mean you haven’t been paying your out of state purchases for taxes like the rest of us?

Uh....... uh....... :lv

[md4958]

yup... as soon as i finish filling out my customs declarations!

[forgop]

The only problem is that there's no getting around the tax for a car purchased out of state. Everything else is fair game as far as I'm concerned. F 'em. :D

[alley00p]

In Michigan, you are supposed to claim anything that has been purchased online and pay the state's 6% sales tax. This is pretty much universally ignored by most Michigan residents.

One of my co-workers used to order his cigarettes from indian reservations with no taxes at all (Michigan also has a .75/pack tax on cigarettes and 26% on the wholesale price of cigars and other tabacco). Our Governor, Jenny Granholm filed suit on all of the online cigarette vendors, requiring them to turn over any Michigan resident's sales records.

Shortly after this event, my co-worker received a letter from the State Treasurer, telling him that he owed the state $300 in taxes and penalties. And on top of that, they told him that he was in violation of Act something or other, and if he did this again, he would be prosecuted.

So, I waiting to see what will happen regarding all of the online sales I've made this year. But I'm not voluntarily planning to declare anything! Our local B&M's already have to charge the 26% tax along with the 6% sales tax on any cigars that are sold.

:dance::dance::dance:

[cvm4]

I'll worry about it when they can track it.

[borndead1]

Our local B&M's already have to charge the 26% tax along with the 6% sales tax on any cigars that are sold.

:dance::dance::dance:



My friend, it is 36%, not 26%. :fl

[jitzy]

I have seen guys that make cigarette purchases get hit but not cigars "YET'

[mrreindeer]

One of my co-workers used to order his cigarettes from indian reservations with no taxes at all (Michigan also has a .75/pack tax on cigarettes and 26% on the wholesale price of cigars and other tabacco). Our Governor, Jenny Granholm filed suit on all of the online cigarette vendors, requiring them to turn over any Michigan resident's sales records.

Shortly after this event, my co-worker received a letter from the State Treasurer, telling him that he owed the state $300 in taxes and penalties. And on top of that, they told him that he was in violation of Act something or other, and if he did this again, he would be prosecuted.

wow!

[chippewastud79]

It has been discussed before. Legally you are supposed to pay sales tax on everything you buy in the state you purchase it from. So buying hundreds of dollars of cigars from a site (try thepartysource.com :tu) you are supposed to call your state and tell them you owe XX% of sales tax. Nearly everyone does not do this, but I am sure there are some out there who do. :tu

On a similar note, if you pay more sales tax in a year than income tax you can then use that when you file taxes. My accountant told me that, but then again she is my fiance, so maybe she is a liar ;)

[Darrell]

If they take :fu as payment, sure. :D

[Jay Hemingway]

If they take :fu as payment, sure. :D

:r

[Resipsa]

Starting with the last two posters, thanks for posting your intentions so publicly and thanks for the heads up.....

your respective states appreciate it.........they'll be in touch :r:r

[Jay Hemingway]

hey what i say?

[Ace$nyper]

From my reading unless you are going nuts with it or what really irks the irs if you resell things, you are pretty much a ok.

Not that it's not a moral and legal grey area.

[shilala]

I talked to half a dozen folks who got tax bills for cigarettes they were buying from the reservations in New York.
One girl owed $1200.
The rest owed $200 to $800. It's crazy.

[ucla695]

I've heard of it and, of course, I would notify the state of it if I made out of state purchases. I've heard/read stories of states coming after residents kinda like O FAC after US buyers.

[tzaddi]

This was one of the questions on the 2007 California Tax Returns…

http://gallery.me.com/tzaddi/100343/CATAX/web.jpg

To quote H.I. McDunnough from "Raising Arizona"

"There's what's right, and there's what's right, and never the twain shall meet."

[shilala]

This may be one of those things specific to California.
It's not a secret that California is having some money problems. Rather than seeking so many new ways to tax, maybe they thought it would make sense to chase what they should already have coming to them?
In my way of thinking, they'll end up spending thousands to collect hundreds.
Maybe they're just putting the word out as best they can through the avenues already available in order to gather up a few bucks?

[forgop]

I think this applies in virtually all states. The problem is with being able to enforce it though from the IRS perspective. The IRS is a governmental agency, so don't put anything past them to spend more than what they'd collect.

[webjunkie]

Brain fried at the moment, so I'm using that as my excuse for confusion but this is a question I'm still wondering about.

I know that physically I'm in CO, so I pay taxes here. I'm still confused as to why they get to tax a purchase I make online from a store in say CA. I mean I generally agree with the idea of taxes. Good for roads, schools, etc, but sometimes it just feels like I'm being taxed twice. Unless I'm buying cigars, then it feels like I'm being taxed four or five times.

[Cigary]

Render unto Caeser the things that are Caesers,,,,glad the sumbich died along time ago so I don't have to pay another tax. By the time I get thru paying all of my taxes that you see here: Ask me again if I call the State and tell them I missed a Users Tax!!
Capital Gains Tax
CDL License Tax
Court Fines (indirect taxes)
Dog License Tax
Federal Income Tax
Federal Unemployment Tax (FUTA)
Fishing License Tax
Gasoline Tax (42 cents per gallon)
Inheritance Tax
Interest Expense (tax on the money)
IRS Penalties (tax on top of tax)
Liquor Tax
Local Income Tax
Luxury Taxes
Medicare Tax
Property Tax
Real Estate Tax
Recreational Vehicle Tax
Road Toll Booth Taxes
Sales Taxes
School Tax
Service Charge Taxes
Social Security Tax
State Income Tax
State Unemployment Tax (SUTA)
Telephone Federal Excise Tax
Telephone Federal, State and Local Surcharge Taxes
Telephone Federal Universal Service Fee Tax
Telephone Minimum Usage Surcharge Tax
Telephone Recurring and Nonrecurring Charges Tax
Telephone State and Local Tax
Telephone Usage Charge Tax
Toll Bridge Taxes Toll
Tunnel Taxes
Tax Utility Taxes
Vehicle License Registration Tax
Vehicle Sales Tax
Workers’ Compensation Tax

[jquirit]

I just received in the mail a letter from my Accountant informing me of the California "Use Tax" for out-of-state (and therefore 'tax-free') online (or regular) purchases.

Am I living in a closet? I've never heard of this. Have you?


When I did live in California (about 4 years ago) I remember the little insert in the tax booklet that would ask you to state this. I tossed it out. Enforcement of this would be tough (for a state) to do and it's more of those with a "guilty conscience" to come clean.

The current on-line retail of "tax-free" exchange was one of the things Congress was attempting to "fix" this year, allowing for states to charge for sales tax even though you didn't reside in the same state (or you'd pay taxes for the state you do reside in). A good question is I wanted to ask is: like for a state like California that has different sales taxes depending on what part of the state you're in, which sales tax do you pay?

[skyhigh340]

I guess they should go ahead and TRY to collect it. Most states can't afford to try and go after this type of tax. I would make sure that any business that turns over purchase records would be splashed all over the web. I think most businesses would rather lose these records than report them.