Buying on Web to avoid sales taxes could end

[sweeps]

Shopping online can be a way to find bargains while steering clear of crowds — and sales taxes. But those tax breaks are starting to erode. With the recession pummeling states' budgets, their governments increasingly want to fill the gaps by collecting taxes on Internet sales, which are growing even as the economy shudders.

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[Joan.of.the.Arch]

My state and city missed out on $16 in sales tax this morning. I suppose I've always thought they'd eventually catch up on these kinds of potential tax gains. I did buy from a company with no presence in my state, and the state does not own any part of the internet, so how can they expect to collect on transactions mine this morning?

[disneysteve]

I've thought for years that it was just a matter of time until the online sales tax exemption disappeared. It is true, though, that keeping track of the thousands of jurisdictions and different tax laws around the country would be a nightmare. If they can come up with a universal set of rules used across the country, that would make it a whole lot easier.

I sell on ebay and collect sales tax on sales within NJ but not from any other state. I would hate to have to start collecting on every sale (and submitting the payments).

[backtaxpro]

It is ending in many states. Many states are even going after affiliates with online tax law changes in California, Connecticut, New York, North Carolina and more because government continues to grow with out respect for human nature or the free market.

[MonkeyMama]

California has never allowed "tax-free internet sales." Most people just don't comply.

The state has been awfully aggressive this year, that is for sure. They've been auditing ALL our little clients (what a waste of time) BUT have been asking for names of vendors who did not charge sales tax appropriately. There's the gold mine for them.

[irmanator]

I don't understand how people think you are saving money from not paying tax on internet purchases. If you have to pay shipping it is pretty much a wash. In Ny they put it right on your income tax form. They assume if you earn xxx dollars that you spent enough for them to charge you xxx tax. You can opt out but then you get the warning that if you opt out too often you are more likely to be audited. This is on taxact.com where I do mine.

[wincrasher]

I thought this was controlled by the Federal Gov't, not states. Interstate commerce and all that. Don't they vote every so often to reinstate the exemption??

Usually on web sites you pay taxes only in the states where the merchant has a physical presence - be it a storefront or an office.

Like everything else though, the rules are probably murky and conflict with each other and federal law.

My state actually has a line on the income tax form where you can volunteer to declare how much of out-of-state and online purchases you have made and can send in the unpaid sales tax. Hilarious!

[disneysteve]

Originally Posted by irmanator

I don't understand how people think you are saving money from not paying tax on internet purchases. If you have to pay shipping it is pretty much a wash.

You must not do much shopping online. This statement isn't true at all.

Many online merchants offer prices that are significantly lower than bricks and mortar stores. Even if you have to pay for shipping, you can still save a bundle shopping online. Many onine merchants also offer free shipping. Amazon, for example, gives free shipping on orders of $25 or more. Let's say you are buying a $50 item (perhaps a small appliance or electronics item or a couple of DVDs). If the item/s would be $50 at Target plus 7% sales tax, that's $53.50. If the same items on Amazon are 10% cheaper, free shipping and no sales tax, that's $45.00, a savings of $8.50. Plus, you don't have to drive to Target and find what you're looking for. You can just log on, click and buy and have it delivered to your door.

What if you do have to pay for shipping? My wife is a knitter. A while ago, she wanted some better quality knitting needles. Local craft stores (AC Moore, Michaels, etc.) charged $18/pair. I found them brand new on ebay for $11/pair. I ordered 5 pairs for her. The seller combined items for shipping so total shipping only came to about $5. So buying locally would have cost $96.30. Buying online, including paying for shipping, came to about $60, saving us over $36.00.

I've said many times that anybody who buys locally without first searching online for the same item is wasting hundreds of dollars per year if not more. Virtually everything you can find in a local store is available cheaper on the internet, even after you factor in shipping costs.

[irmanator]

in reference to disney steve, ya know I started to reply wanting to debate you but after I thought about it harder your right. lol

[disneysteve]

Originally Posted by irmanator

in reference to disney steve, ya know I started to reply wanting to debate you but after I thought about it harder your right. lol

To be honest, as a customer, I really don't care if online merchants charge sales tax or not. Since the purchase price is lower, I'd be saving money either way. If you add sales tax to the examples I gave above, the online purchases still would have been cheaper.

The problem comes on the merchant end. As an ebay seller, I can't imagine having to collect sales tax on every sale I make. There are 50 states, which is tough enough (though a couple have no sales tax) but then there are multiple sales tax rates within a state. I don't know how I would track that or how I'd report it and submit the tax collected. I do collect and submit sales tax in NJ and that's enough of a pain. To do that hundreds of times to cover every jurisdiction I sell in would be insane.

[irmanator]

yea that would be a pita. Someone told me around here if you have more than 3 yardsales a year they would make you claim it as taxable income. That is BS. I don't know about everyone but if I am selling something at a yard sale, pretty much i am getting less than i paid for it orignally so thats not really income.

[disneysteve]

Originally Posted by irmanator

yea that would be a pita. Someone told me around here if you have more than 3 yardsales a year they would make you claim it as taxable income. That is BS. I don't know about everyone but if I am selling something at a yard sale, pretty much i am getting less than i paid for it orignally so thats not really income.

Even if you had to report it, you wouldn't owe any tax on it because you would deduct the cost of the merchandise sold. Since the cost would exceed the sale price, their would be no net profit to be taxed.