Newegg customers are receiving tax bills from the DRS because Newegg didn't charge them sales tax

[The Pikachu Mafia]

Yeah, again I believe use tax isn't something that most people are aware of. I had no idea of its intricacies or really even its existence before looking into it throughout this week. I'm not sure about other states, but in my opinion the way use tax is implemented in Connecticut is both impractical and absurd. There's a reason why the compliance rate is only 12% beyond just "willful evasion."

 

(Side note; our Governor has among the lowest approval ratings int the country below even Trump and our state has had budget issues for multiple decades now. It doesn't surprise me that they're desperate for extra revenue in the slightest.  )

[dtaflorida]

Is there any verification tho? Or do they just go through Newegg data, and send a bill to whoever is named on the invoice? Do they check the names for residency or even legitimate residence at the address before sending a tax bill? Sending a bill to whoever is resident seems a lot like the random advertisements that are mailed to Current Resident. And anything mailed to Current Resident I usually ignore.

[CoffeeBlack]

9 hours ago, Lodmot said:

Quite frankly, I'd say both Newegg and the state of Connecticut are at fault here for a couple reasons:

 

1) It is Newegg's responsibility to make sure that we are charged the appropriate amount of tax. Even if it wasn't, there's no physical way for a customer to manually specify the tax amount owed when they're buying a product from Newegg.com. So we're being penalized for something that couldn't have been avoided anyway. When you go to a grocery store, or buy gas for your car, does required tax ever get omitted from the cost? Not when I've made those kind of purchases (though admittedly I don't often go grocery shopping. XD) 

 

2) Connecticut has failed to notify Newegg customers of this matter for over 3 consecutive years, making this a liability on the state as well. Again-- not the customer.

The bolded is very incorrect. 

 

On 3/5/2018 at 6:52 PM, The Pikachu Mafia said:

You're right, it's not Newegg's responsibility to teach their consumers about taxes. But it is on them to either protect consumer data or to alert the consumer that their sales records will be handed over to the state where extra taxes (such as the use tax) may apply. Again, they had these disclaimers for CO, LA, VT, and RI but not CT or any other state. Furthermore when Newegg voluntarily handed over the data they outright lied to their consumer base about what was happening. They claimed that CT passed a new law which required them to forfeit the data, when no such law had been passed. The following is a clip from an email that I received from them:

 

 

Note that they've finally provided a disclaimer on use tax only after lying to the consumer and years after the date of purchase. Newegg is not innocent here, there is no defense for their actions.

You're now trying to argue a point with me that I conceded in my very first post. I said that Newegg should not have turned over the sales data. I said they're not innocent, you're just trying to look like you weren't proved wrong on the tax points.

 

5 hours ago, Lodmot said:

That's all fine, but you're forgetting that when you purchase something from Newegg, the transaction is between you and Newegg. You're utilizing their system to make payment towards their item(s), including any tax costs associated with it. Like I mentioned before, even if keeping track of the taxable amount IS the customer's responsibility (which ideally it shouldn't be), there's still no way to input the correct tax amount in Newegg's checkout process. So even if you had every intention of paying the correct tax amount and knew about this issue ahead of time, you're still using Newegg's flawed checkout system.

 

And as mentioned before by other people in this thread, the average consumer just looking to buy computer parts from this place isn't going to automatically think "Ooh, I better make sure I'm paying the correct use tax amount on this order." We're techies-- not accountants.

including any tax costs associated with it.     

 

NO  Thats not how USA Tax Works

 

there's still no way to input the correct tax amount in Newegg's checkout process.   

 

 Because THATS also not how it works, They dont charge tax because they are not set up with CT to  Pay them Sales tax if they were you wouldn't need to put in your own tax on the order. 

 

 

So even if you had every intention of paying the correct tax amount and knew about this issue ahead of time, you're still using Newegg's flawed checkout system.

 

When a Company of any kind  doesnt charge you tax and you have the Intention to pay this tax you would file it with your tax year and pay the tax. This is how Use Tax works. 

 

 

And as mentioned before by other people in this thread, the average consumer just looking to buy computer parts from this place isn't going to automatically think "Ooh, I better make sure I'm paying the correct use tax amount on this order." We're techies-- not accountants

 

This Excuse is BS for anyone who Files there yearly Taxes. you clearly have to check a box saying you didn't buy anything without getting taxed on it this year and dont need to pay taxes on any Untaxed goods.  If you dont personally file your taxes and pay a person to do it and they dont ask you this question you should hire another tax professional  ( Any kid or person whos never had a job i can see this excuse to some degree Though .) 

 

 

only Place newegg is in the wrong is in the Fact they didnt Give customers a heads up that there sending the data over to CT.  If they were the ones not legally collecting taxes CT would be going after them not you. But there following current laws and you are not so CT is going after the Consumer. 

 

 

For years people have purpoesly buying online to avoid this tax loop hole and then not filing the taxes to pay it correctly. CT is just the first to Actively go after this problem 

 

5 hours ago, Lurick said:

Here's the problem. There are several places reporting that NewEgg was given a few choices, one of which was:

"Tax your customers going forward and we'll ignore the prior years, no records needed"

 

Instead they decided to screw them all over and send records in so now people get a surprise bill instead of just adding another state to their system which can add taxes into the cost.

 

 

Edit:

I did want to point out that it's not 100% confirmed but I'm hearing many places report on the above so I've a strong feeling that it might turn out to be true.

 Yeah Its not confirmed and my view would change somewhat if so.  but Like i said i dont think newegg Handled this right at all and i understand people being upset but not to the degree acting like oh no man ive been purpoesly buying untaxed shit to save money newegg should of taxed me its not my fault i owe this even though when i file taxes it asks if i bought untaxed shit i owe tax on now. 

 

I Dont know why CT would want to make that deal though im sure 3 years of back taxes is a large amount on top of the fact all future purchases from newegg will also get most likely be correctly claimed each year from now on either way. i just dont see the Positive side of CT making that deal for the goverment or at least a large enough one to offer that, 

[Lodmot]

23 minutes ago, CoffeeBlack said:

The bolded is very incorrect. 

Okay, why isn't it correct?

[The Pikachu Mafia]

32 minutes ago, CoffeeBlack said:

You're now trying to argue a point with me that I conceded in my very first post. I said that Newegg should not have turned over the sales data. I said they're not innocent, you're just trying to look like you weren't proved wrong on the tax points.

The only points I'm arguing is that Newegg didn't do their due diligence in informing, being honest with, or protecting their customers. It is their responsibility to have proper disclaimers on their site when applicable and they can be held legally accountable. In a very similar fashion to how Coffee shops have to have a "caution: hot" warning on their cups, Newegg ought to have had a "caution, use tax applies" disclaimer. We're not necessarily in disagreement, and any other inference on your side is misguided.

[Lodmot]

23 minutes ago, The Pikachu Mafia said:

The only points I'm arguing is that Newegg didn't do their due diligence in informing, being honest with, or protecting their customers. It is their responsibility to have proper disclaimers on their site when applicable and they can be held legally accountable. In a very similar fashion to how Coffee shops have to have a "caution: hot" warning on their cups, Newegg ought to have had a "caution, use tax applies" disclaimer. We're not necessarily in disagreement, and any other inference on your side is misguided.

100% agreed. I'd also like to add that if the disclaimer was written for other states other than the four mentioned, I would expect it to have entries for those other states as well.

[michaelocarroll007]

2 hours ago, Lodmot said:

Okay, why isn't it correct?

Thats how the Tax Laws Work. newegg has no business buildings in CT and many other states so They do not have to charge you sales tax and pay the state for this reason. They by choice could set  up charging sales tax in CT but most online retailers Do not. do this  IT is your responsibility to File your taxes at the end of the year and pay taxes on product you bought without tax on them which is obvious newegg doesnt charge tax when checking out.  this includeds online sales.  Anyone claiming oh no i didint know either shouldn't be Doing there own taxes or they should be paying a better tax Consultant.  (Turbo tax asks like 3 times if you have any use tax to claim and explains what exactly it is..... The exact law varies state by state you should know your own but thats an example of how it mainly works. 

 

Many people have been ordering off sites like newegg and many many others for the purpose of saving taxes its tax evasion ( not a very serious one) 

 

Newegg should of sent a email out to customers letting them know that all purchase history was sent to CT Though. and been more on top of the PR on this. 

[Lodmot]

25 minutes ago, michaelocarroll007 said:

Thats how the Tax Laws Work. newegg has no business buildings in CT and many other states so They do not have to charge you sales tax and pay the state for this reason. They by choice could set  up charging sales tax in CT but most online retailers Do not. do this  IT is your responsibility to File your taxes at the end of the year and pay taxes on product you bought without tax on them which is obvious newegg doesnt charge tax when checking out.  this includeds online sales.  Anyone claiming oh no i didint know either shouldn't be Doing there own taxes or they should be paying a better tax Consultant.  (Turbo tax asks like 3 times if you have any use tax to claim and explains what exactly it is..... The exact law varies state by state you should know your own but thats an example of how it mainly works. 

 

Many people have been ordering off sites like newegg and many many others for the purpose of saving taxes its tax evasion ( not a very serious one) 

 

Newegg should of sent a email out to customers letting them know that all purchase history was sent to CT Though. and been more on top of the PR on this. 

That's all fine, but you're forgetting that when you purchase something from Newegg, the transaction is between you and Newegg. You're utilizing their system to make payment towards their item(s), including any tax costs associated with it. Like I mentioned before, even if keeping track of the taxable amount IS the customer's responsibility (which ideally it shouldn't be), there's still no way to input the correct tax amount in Newegg's checkout process. So even if you had every intention of paying the correct tax amount and knew about this issue ahead of time, you're still using Newegg's flawed checkout system (and therefore being unfairly penalized for it). It's their responsibility to make sure their website is either:

 

A) Properly charging the customer the correct tax amount according to his or her state of residence from the billing address specified

 

OR

 

B) Require the customer to fill in the appropriate tax amount for their state.

 

And as mentioned before by other people in this thread, the average consumer just looking to buy computer parts from this place isn't going to automatically think "Ooh, I better make sure I'm paying the correct use tax amount on this order." We're techies-- not accountants.

[Lurick]

37 minutes ago, michaelocarroll007 said:

Newegg should of sent a email out to customers letting them know that all purchase history was sent to CT Though. and been more on top of the PR on this. 

Here's the problem. There are several places reporting that NewEgg was given a few choices, one of which was:

"Tax your customers going forward and we'll ignore the prior years, no records needed"

 

Instead they decided to screw them all over and send records in so now people get a surprise bill instead of just adding another state to their system which can add taxes into the cost.

 

 

Edit:

I did want to point out that it's not 100% confirmed but I'm hearing many places report on the above so I've a strong feeling that it might turn out to be true.

[laminutederire]

11 minutes ago, Lodmot said:

 

And as mentioned before by other people in this thread, the average consumer just looking to buy computer parts from this place isn't going to automatically think "Ooh, I better make sure I'm paying the correct use tax amount on this order." We're techies-- not accountants.

Especially when it could be that they did it just to lower the pricetag artificially

[CoffeeBlack]

7 hours ago, The Pikachu Mafia said:

The only points I'm arguing is that Newegg didn't do their due diligence in informing, being honest with, or protecting their customers. It is their responsibility to have proper disclaimers on their site when applicable and they can be held legally accountable. In a very similar fashion to how Coffee shops have to have a "caution: hot" warning on their cups, Newegg ought to have had a "caution, use tax applies" disclaimer. We're not necessarily in disagreement, and any other inference on your side is misguided.

So not Newegg, but every single online retailer without a presence in your state? Because no online retailer does this and are not responsible for it. If they should be responsible for it, legislation needs to make it so. It's 100% not their job to inform you of your state's tax laws when they do not have an office or any employees in your state. 

 

7 hours ago, Lodmot said:

100% agreed. I'd also like to add that if the disclaimer was written for other states other than the four mentioned, I would expect it to have entries for those other states as well.

The four states that they mention, and only those four, have legislation in place that make Newegg have that disclaimer.

 

8 hours ago, Lodmot said:

Okay, why isn't it correct?

Because they are not responsible for state sales tax in a state that they have no presence in. They don't even have a system in place where Newegg could pay that sales tax if they wanted to, it's just not an option with how state sales tax works. 

[The Pikachu Mafia]

1 minute ago, CoffeeBlack said:

So not Newegg, but every single online retailer without a presence in your state? Because no online retailer does this and are not responsible for it. If they should be responsible for it, legislation needs to make it so. It's 100% not their job to inform you of your state's tax laws when they do not have an office or any employees in your state. 

That's not what I'm saying at all. This is what I'm saying:

 

If Newegg doesn't want to charge sales tax, that's okay.

If Newegg doesn't want a disclaimer on their site but will protect consumer data, that's okay.

If Newegg was forced by the State to hand over data, That's okay.

 

If Newegg isn't going to charge sales tax and then voluntarily hands over customer data to the government without a disclaimer, that that is very much not okay. If Newegg is going to share data voluntarily with the government for the sole purpose of the government hunting down consumers, then they need to disclose that information to the consumer at the time of purchase. They consciously chose to compromise their client's information, and It's absolutely their responsibility to inform the consumer.

 

And yes, this applies to every out of state online retailer, but Newegg is the only one that's actually exposed private sales data in this manner.

[CoffeeBlack]

3 minutes ago, The Pikachu Mafia said:

That's not what I'm saying at all. This is what I'm saying:

 

If Newegg doesn't want to charge sales tax, that's okay.

If Newegg doesn't want a disclaimer on their site but will protect consumer data, that's okay.

If Newegg was forced by the State to hand over data, That's okay.

 

If Newegg isn't going to charge sales tax and then voluntarily hands over customer data to the government without a disclaimer, that that is very much not okay. If Newegg is going to share data voluntarily with the government for the sole purpose of the government hunting down consumers, then they need to disclose that information to the consumer at the time of purchase. They consciously chose to compromise their client's information, and It's absolutely their responsibility to inform the consumer.

 

And yes, this applies to every out of state online retailer, but Newegg is the only one that's actually exposed private sales data in this manner.

We agree on half of this.

 

Newegg cannot charge sales tax for CT. It's just not how state sales tax works with an out-of-state entity. They are not responsible to know state sales tax in CT and wouldn't be able to pay it if they wanted to. It's not a matter of them not wanting to, it's a matter of what they can't do. They would need to create a physical location in CT with CT employees to do this. 

 

They should not have passed on the information without federal court order, not a CT court order, but a federal court order. 

[The Pikachu Mafia]

I want to add that the reason they need to have a disclaimer when voluntarily sharing data is because an action otherwise is in violation of their own privacy policy. The section that deals with government reads:

 

Quote

We reserve the right to disclose your personally identifiable information as required by law, and when we believe that disclosure is necessary to protect our rights and/or comply with a judicial proceeding, court order, or legal process served on our website.

Except their rights were never at risk, it was not required by law, there was no legal process, and there was no judicial proceeding. Newegg lied to their consumers saying that there was a law requiring them to share data so they could be in line with their privacy policy. 

[michaelocarroll007]

5 minutes ago, The Pikachu Mafia said:

That's not what I'm saying at all. This is what I'm saying:

 

If Newegg doesn't want to charge sales tax, that's okay.

If Newegg doesn't want a disclaimer on their site but will protect consumer data, that's okay.

If Newegg was forced by the State to hand over data, That's okay.

 

If Newegg isn't going to charge sales tax and then voluntarily hands over customer data to the government without a disclaimer, that that is very much not okay. If Newegg is going to share data voluntarily with the government for the sole purpose of the government hunting down consumers, then they need to disclose that information to the consumer at the time of purchase. They consciously chose to compromise their client's information, and It's absolutely their responsibility to inform the consumer.

 

And yes, this applies to every out of state online retailer, but Newegg is the only one that's actually exposed private sales data in this manner.

 

 You do realize Neweggs plan in 2015 was not to in 3.5 years to just hand this info over to CT. they cant tell the Future when CT would Ask them for this info.

 

BUT

Going foward it should be listed on there site like some of the other states that they send  info. They cant predict the future.

They also should of sent an email out to everyone explaining that sales info was sent to CT as its the right thing to do. They knew they wouldnt win the sales tax argument so they handed it over. it was happening anyway. Im sure they passed this notice to a Lawyer who gets paid a large sum of money from them to give advice who also understands the law 1000% better then anyone on here. Thats what most companies do even smaller ones. 

 

 

[The Pikachu Mafia]

54 minutes ago, michaelocarroll007 said:

 

 You do realize Neweggs plan in 2015 was not to in 3.5 years to just hand this info over to CT. they cant tell the Future when CT would Ask them for this info.

 

BUT

Going foward it should be listed on there site like some of the other states that they send  info. They cant predict the future.

They also should of sent an email out to everyone explaining that sales info was sent to CT as its the right thing to do. They knew they wouldnt win the sales tax argument so they handed it over. it was happening anyway. Im sure they passed this notice to a Lawyer who gets paid a large sum of money from them to give advice who also understands the law 1000% better then anyone on here. Thats what most companies do even smaller ones. 

 

 

I'm aware that they don't maliciously make plans to mess with their consumers years in advance. However it is still a violation of their privacy policy if they were not legally required to hand over the information. If they had a disclaimer saying "We will be handing over your data to the government for yearly tax review, use tax may apply" then that would be fine, but they don't have that disclaimer and so violated their own privacy policy. 

 

I reiterate, there was no threat of legal action, court order, or law that required Newegg to compromised consumer data. Handing it over anyways without a disclaimer is a violation of their own policies.

[Jito463]

20 minutes ago, CoffeeBlack said:

We agree on half of this.

 

Newegg cannot charge sales tax for CT. It's just not how state sales tax works with an out-of-state entity. They are not responsible to know state sales tax in CT and wouldn't be able to pay it if they wanted to. It's not a matter of them not wanting to, it's a matter of what they can't do. They would need to create a physical location in CT with CT employees to do this.

That's not entirely accurate.  Newegg could collect sales tax and then pay it through the revenue services website.  It would actually be quite simple.

 

However, Newegg (and any other e-tailer) is under no legal obligation to do so.  And that's without getting into the added cost of business to do this for every state.

[Lodmot]

Quote

NO  Thats not how USA Tax Works

Then the system in the US is pretty flawed I'd say. Not really surprising honestly though. I'm in the middle of making serious long-term plans/considerations about moving to Canada (not even just about this nonsense either, but for other reasons unrelated to this topic)

 

Quote

"Because THATS also not how it works, They dont charge tax because they are not set up with CT to  Pay them Sales tax if they were you wouldn't need to put in your own tax on the order. "

This goes right back to the other point-- is the average computer techie going to know that Newegg isn't set up with Connecticut to pay them sales tax? And quite frankly, your statement there is incorrect anyway... As  Lurick stated before, CT basically told Newegg to "Tax your customers going forward and we'll ignore the prior years, no records needed". To me that sounds like Newegg is....... well...... being required to tax its customers.

 

Quote

When a Company of any kind  doesnt charge you tax and you have the Intention to pay this tax you would file it with your tax year and pay the tax. This is how Use Tax works. 

 

Going back to my other examples-- when you go to the grocery store, or buy something at Walmart, you normally don't need to WORRY about them including tax on the total price of the item. If you want to talk about companies outside Connecticut, the same concept should apply. Like I mentioned above, if Connecticut is approaching Newegg about the issue, then CLEARLY Newegg was supposed to be charging us Use Tax and they WEREN'T. When I buy things on Amazon, I get charged tax on my purchases. Now what makes Amazon any different from Newegg in this regard?

 

Quote

This Excuse is BS for anyone who Files there yearly Taxes. you clearly have to check a box saying you didn't buy anything without getting taxed on it this year and dont need to pay taxes on any Untaxed goods.  If you dont personally file your taxes and pay a person to do it and they dont ask you this question you should hire another tax professional  ( Any kid or person whos never had a job i can see this excuse to some degree Though .) 

 

It's actually not a BS excuse, because unless you are EXTREMELY meticulous and have detailed records of every online purchase you made throughout the year, you're bound to make a mistake or two on your tax returns. Like I said before, there are other online retailers that I've used which DID tax me for items I bought. Nobody is going to sit down and read a bunch of terms and conditions regarding billing transactions before they purchase something online. If people are indeed not paying what they need to pay the state, then better regulations need to be put in place that cover online transactions.

 

Quote

 

only Place newegg is in the wrong is in the Fact they didnt Give customers a heads up that there sending the data over to CT.  If they were the ones not legally collecting taxes CT would be going after them not you. But there following current laws and you are not so CT is going after the Consumer. 

 

 

 

 

I'll agree with you that Newegg should've given customers a heads-up about sending their information to CT. However, Connecticut did approach Newegg, so your point here is flawed. They went to Newegg and said "Please start charging people taxes on their purchases or give us their personal information".
 

Quote

 

For years people have purpoesly buying online to avoid this tax loop hole and then not filing the taxes to pay it correctly. CT is just the first to Actively go after this problem 

 

That could be true, yes. But there's many other people that resort to online shopping simply because they need certain parts for PC builds that they can't find locally otherwise. I would love it if I was able to get everything I needed for my gaming rig at my local Best Buy, but the fact remains that I do a lot of my shopping online quite simply because there's a better selection of components online. I don't have malevolent intentions against my state, and not all online shoppers do either.

[Evanair]

It's really not that difficult. 

 

1. In year 2017 I purchased X amount of items offline with no tax. It's based on where you purchased, so you don't need to keep track of where it came from, only how much you paid.
2. Put X amount in tax forms
3. Taxes are calculated based on zip code.
4. Done.

[Lodmot]

11 minutes ago, Evanair said:

It's really not that difficult. 

 

1. In year 2017 I purchased X amount of items offline with no tax. It's based on where you purchased, so you don't need to keep track of where it came from, only how much you paid.
2. Put X amount in tax forms
3. Taxes are calculated based on zip code.
4. Done.

 

The issue isn't really exactly whether it's difficult or not. It's more-so a matter of Newegg's decision to mistreat its customers after Connecticut gave the company the golden opportunity not to. And now we're disgruntled because we're paying not only for Newegg's flawed transaction system on their website, but their decision to screw us over.

[AresKrieger]

I find the idea of sales taxes to be quite absurd, but that is likely in part because I don't have to pay any, nor do I have to pay state income taxes.

[Evanair]

Just now, Lodmot said:

And now we're disgruntled because we're paying not only for Newegg's flawed transaction system on their website

This is BS.  They aren't required to charge taxes in areas they don't operate, like 99% of online businesses out there.

 

You getting pissed at Newegg for turning over your (lets face is) Tax Fraud is like getting pissed at someone for turning you in for theft (which is what it is).

[Blademaster91]

9 minutes ago, Evanair said:

This is BS.  They aren't required to charge taxes in areas they don't operate, like 99% of online businesses out there.

 

You getting pissed at Newegg for turning over your (lets face is) Tax Fraud is like getting pissed at someone for turning you in for theft (which is what it is).

As they should be pissed,Newegg violated their own privacy policy instead of choosing to tax customers in the future while disregarding the 3 years of past taxes. Use tax based on a trust system isn't fraud though, I doubt most people were going to newegg to purposely avoid taxes.

[The Pikachu Mafia]

3 hours ago, Evanair said:

This is BS.  They aren't required to charge taxes in areas they don't operate, like 99% of online businesses out there.

 

You getting pissed at Newegg for turning over your (lets face is) Tax Fraud is like getting pissed at someone for turning you in for theft (which is what it is).

That's definitely stretching it, you have to prove intent and willingness for it to constitute tax fraud. For an honor system such as Use Tax, intention can almost never be proven, so you can't say it's tax fraud.

 

Evading taxes, even if intentional, is also not theft in any way shape or form. What and from whom are you stealing, your own money from the government? I've often heard the phrase "taxation is theft" but I've yet to hear in any capacity "avoiding taxation is theft."

[Evanair]

8 minutes ago, The Pikachu Mafia said:

you have to prove intent and willingness for it to constitute tax fraud. 

You don't have to prove intent, just willingness.  When you purchase items from Newegg, in the small print, it tells you that you must file taxes in your state, if required, when you don't pay sales tax.

 

They have notified you. Your ignorance is no excuse to violate the law.  "I didn't know" doesn't stand up in court because you were informed at time of purchase.  Theft is from the government and tax payers.  You're refusing to pay (by ignorance) for something and keeping it.  Still theft.

 

Newegg COULD have told CT no, then been taken to court and forced to give these records, which would cost them money. 

 

Why should they "protect" the information, which they are not legally bound to do, of people who are allegedly felons due to tax fraud?