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Master Disaster

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

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4 minutes ago, Evanair said:

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?

Actually CT approached Newegg first, asking them to start charging us customers taxes on their products. That's the one thing people are missing here.

The choice was to either start charging us taxes and the whole issue would've been dropped, or otherwise they would like our personal information. Unfortunately for us, Newegg chose the latter option.

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21 minutes ago, Evanair said:

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.

1) Willingness and intent are synonymous, I was being redundant for emphasis. 

 

2) Can you provide proof of this "in the small print" statement? I've been combing through their terms & agreements and privacy policies. To my knowledge no such disclaimer exists, so no I don't believe that Newegg has notified me of anything at the time of purchase.

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9 minutes ago, Evanair said:

When you purchase items from Newegg, in the small print, it tells you that you must file taxes in your state

Where? There's no kind of small print in the email confirmation Newegg sends you nor their ToS. 

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This is why I shop at B&H.


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3 hours ago, The Pikachu Mafia said:

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.

They either ignored the use tax entry on their tax forms, lied to their accountant, or live in RI then.

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24 minutes ago, Mooshi said:

This is why I shop at B&H.

won't matter where one shops.. eventually all states will be doing the same as they watch how the CT move works out. 

most shop online for the savings deal over brick & mortar and the sales tax omision.

PayPal sends me a monthly tax audit of all my purchases to infiormationalize what my tax burden(s) i might be responsible for.

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On 04/03/2018 at 11:33 PM, SC2Mitch said:

I'm so confused, why just not have one single tax? Wouldn't it be easier on your yearly tax filings? 

It would but as the saying goes in for a penny in for a pound.


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On 3/5/2018 at 3:23 PM, Thony said:

They care about where u live ? What a BS. Tax should be tied to the place you buy from... The way it is is just confusing AF. I feel sorry for all US citizens who have to calculate their tax everytime before they checkout to actually see how much they pay for something. Sad...

Let's break this down. So you're saying that if I live in Canada, and buy something online from a UK shop and have it shipped to Canada, I should be charged 20% VAT? In addition to the 13% HST tax I will pay upon delivery?

 

Governments already earn some money from businesses via the Corporate Tax rate (varies depending on state/province/country). This is the tax that the state can collect, when the retailer makes an out of state sale (a person living in another state orders something online and has it shipped to them). The state in which the business is located, is not entitled to the sales tax, as the item was not destined for in-state delivery/usage.

 

I will admit that it's annoying to see a "list price", and know that the price is actually higher because taxes will be applied at checkout, but it's really not too difficult to do mental math and ballpark the figure - or just whip out the calc app on your phone and do the math.

On 3/5/2018 at 1:56 PM, The Pikachu Mafia said:

You're working with the assumption that people are willfully evading taxes, which at least in my case is not true at all. Newegg never had a disclaimer that CT residents had to claim items bought on their site when completing taxes (despite having such a disclaimer for Colorado, Louisiana, Vermont, and Rhode Island) and I wasn't aware that they didn't collect sales tax until I received my letter. Furthermore Newegg betrayed consumer trust by handing over private sales data when they were not legally required to do so.

 

I'm not saying Newegg should pay for my taxes, and I'm more than willing to pay the principle amount that I owe, but the fact that I can't shake off the interest is ridiculous. It's just that the whole way the DRS and Newegg went about this process seems shady at best, no other state has retroactively gone after taxpayers in this manner before.

The reason why Newegg has a disclaimer for those four states, and none others, is because those four states enacted legislation forcing Newegg to put those disclaimers on their website.

 

You cannot be upset at Newegg for not putting a disclaimer up for CT when they aren't forced to (plus all the other states aside from CT that are in the same boat). If you wish Newegg to put a disclaimer up, and you live in CT (or any other state that has Use Tax that isn't one of the four states mentioned), then you should lobby your state legislators to enact a law forcing Newegg to do so.

On 3/5/2018 at 4:01 PM, The Pikachu Mafia said:

 

How does that invalid what I said? I specifically said Newegg did provide a disclaimer for those 4 states, but not CT (CT = Connecticut).

Please read above. It clearly states that the only reason those 4 states have disclaimers is that they forced Newegg through Legislation to post the disclaimers.

On 3/6/2018 at 12:09 PM, 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.

1. Incorrect. Newegg's responsibility is to collect tax in states that they operate a physical location in. Newegg is also responsible for informing residents of 4 states, not including CT, that they are still responsible for use tax.

 

Newegg is not responsible, in any way, for CT residents paying their use tax. That is entirely up to the resident.

 

I mean, seriously guys. If you know your state has Use Tax (which appears to be most/all states?) and you know the retailer you're buying from isn't collecting that tax (simple to see, based on zero tax being charged), then it should be trivial to keep track of this information.


Just open Excel and start a spreadsheet, and track your online purchases that don't charge you taxes. Every time you make a purchase? Open up the spreadsheet and pop in the values. Furthermore, if you were especially inclined, you would calculate the tax ahead of time, take that money, and set it aside for the year (bonus points if you can use an account that earns interest).

 

That way, you won't be "surprised" by having to pay the tax.


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19 hours ago, Lodmot said:

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.

No, it doesn't mean that at all.  It just means CT has decided to be proactive about what's typically an honor system.  They probably just chose Newegg because of their popularity and size.  It has nothing to do with Newegg as a company being required to do anything for CT.

19 hours ago, Lodmot said:

When I buy things on Amazon, I get charged tax on my purchases. Now what makes Amazon any different from Newegg in this regard?

If I had to guess, I'd say that Amazon has some sort of physical presence in CT.  For example, there was a (very loosely) affiliated shipping business in NE for a while that had connections to Amazon, so for a time we were being charged sales tax.  When they no longer had that affiliation, they stopped charging sales tax here.

 

Only companies with a physical presence in the state are mandated to collect and report sales tax.

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6 minutes ago, Jito463 said:

No, it doesn't mean that at all.  It just means CT has decided to be proactive about what's typically an honor system.  They probably just chose Newegg because of their popularity and size.  It has nothing to do with Newegg as a company being required to do anything for CT.

From what I heard, CT DRS sent letters to over 130 different retailers. Newegg was just one of them.


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1 hour ago, dalekphalm said:

The reason why Newegg has a disclaimer for those four states, and none others, is because those four states enacted legislation forcing Newegg to put those disclaimers on their website.

 

You cannot be upset at Newegg for not putting a disclaimer up for CT when they aren't forced to (plus all the other states aside from CT that are in the same boat). If you wish Newegg to put a disclaimer up, and you live in CT (or any other state that has Use Tax that isn't one of the four states mentioned), then you should lobby your state legislators to enact a law forcing Newegg to do so.

Again, I'm not upset at the mere lack of a disclaimer from Newegg. I'm upset at the lack of a disclaimer in conjunction with Newegg voluntarily surrenderring customer data when they were not legally required to do so. If they are going to be voluntarily giving up private data without a disclaimer alerting the consumer at the time of purchase, then it appears to be in direct violation of their privacy policy.

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52 minutes ago, Jito463 said:

If I had to guess, I'd say that Amazon has some sort of physical presence in CT.  For example, there was a (very loosely) affiliated shipping business in NE for a while that had connections to Amazon, so for a time we were being charged sales tax.  When they no longer had that affiliation, they stopped charging sales tax here.

 

Only companies with a physical presence in the state are mandated to collect and report sales tax.

Yes this is correct, there are Amazon pickup and shipping facilities in CT. If I recall correctly, Amazon didn't charge sales tax before 2013 either.

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1 hour ago, dalekphalm said:

1. Incorrect. Newegg's responsibility is to collect tax in states that they operate a physical location in. Newegg is also responsible for informing residents of 4 states, not including CT, that they are still responsible for use tax.

 

Newegg is not responsible, in any way, for CT residents paying their use tax. That is entirely up to the resident.

 

I mean, seriously guys. If you know your state has Use Tax (which appears to be most/all states?) and you know the retailer you're buying from isn't collecting that tax (simple to see, based on zero tax being charged), then it should be trivial to keep track of this information.


Just open Excel and start a spreadsheet, and track your online purchases that don't charge you taxes. Every time you make a purchase? Open up the spreadsheet and pop in the values. Furthermore, if you were especially inclined, you would calculate the tax ahead of time, take that money, and set it aside for the year (bonus points if you can use an account that earns interest).

 

That way, you won't be "surprised" by having to pay the tax.

I still don't understand why I'm incorrect with that point... If Connecticut is literally approaching Newegg and asking them to start charging us taxes on our orders (a fact that's been pointed out several times already), then they were supposed to be doing that. If Newegg was in fact not required to charge us taxes, the state wouldn't have approached them, and this thread wouldn't exist right now.

 

At this point, I am still under the firm belief that the state of CT and Newegg are both at fault. The customers weren't doing anything wrong. I'm actually going to talk to Newegg support right now about the issue. 

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28 minutes ago, Lodmot said:

I still don't understand why I'm incorrect with that point... If Connecticut is literally approaching Newegg and asking them to start charging us taxes on our orders (a fact that's been pointed out several times already), then they were supposed to be doing that. If Newegg was in fact not required to charge us taxes, the state wouldn't have approached them, and this thread wouldn't exist right now.

 

At this point, I am still under the firm belief that the state of CT and Newegg are both at fault. The customers weren't doing anything wrong. I'm actually going to talk to Newegg support right now about the issue. 

Actually, from my research I found that there was a 1992 Supreme Court case (Quill Corp vs. North Dakota) in which the court ruled to "effectively prevented states from collecting any sales tax from retail purchases made over the Internet or other e-Commerce route unless the seller had a physical presence in the state."

 

In other words, the State of Connecticut could not force Newegg to either collect sales taxes or to hand over user data, and any new law forcing them to do so would have been a violation of the court ruling. Newegg was under no legal obligation to collect taxes, and in the words of Stephan Kranz regarding possible responses that Newegg could have had to the State's request:

Quote

If you want to go tell Connecticut to pound sand, we can do that.

 

That's why Newegg's actions are so egregious, they had every option and every obligation to protect their consumer's data but chose not to, and in doing so violated their own privacy policies. What's even worse is that Newegg lied to their customers about it after the fact in an email. Of course, that's not to say that it wasn't a dick move on the State's part to even request the data, but there could not be anything legally binding about what the State did or requested. If there was anything legally binding about what the state did, then they would be equally to blame.

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10 minutes ago, The Pikachu Mafia said:

Actually, from my research I found that there was a 1992 Supreme Court case (Quill Corp vs. North Dakota) in which the court ruled to "effectively prevented states from collecting any sales tax from retail purchases made over the Internet or other e-Commerce route unless the seller had a physical presence in the state."

 

In other words, the State of Connecticut could not force Newegg to either collect sales taxes or to hand over user data, and any new law forcing them to do so would have been a violation of the court ruling. Newegg was under no legal obligation to collect taxes, and in the words of Stephan Kranz regarding possible responses that Newegg could have had to the State's request:

 

That's why Newegg's actions are so egregious, they had every option and every obligation to protect their consumer's data but chose not to, and in doing so violated their own privacy policies. What's even worse is that Newegg lied to their customers about it after the fact in an email. Of course, that's not to say that it wasn't a dick move on the State's part to even request the data, but there could not be anything legally binding about what the State did or requested. If there was anything legally binding about what the state did, then they would be equally to blame.

 

That's interesting-- that's exactly what the Newegg rep told me during our conversation just now. It sounds to me like one of two things is occurring here:

 

A) Newegg is under the impression that they're not required to charge Connecticut residents use tax, but Connecticut actually wants them to, and at the same time, didn't adequately communicate that requirement to the company until now.

 

B) Newegg really ISN'T required to charge us use tax, and Connecticut is misinterpreting what should be going on in regards to online purchases.

 

In either case, it sounds like both the state and the company of Newegg are confused. Honestly though I think Connecticut is the source of what happened. Our state is really unreasonable and illogical on more than a few issues (this being one of them), and it's part of the reason why I plan on moving outta here. This is something Connecticut should've tackled back in 2014/2015 before more unpaid use tax amounts got placed on customers' shoulders.

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I've spoken to Newegg representatives twice now over this, both times they claimed that Connecticut passed a new law. When I told them that there was no such law and asked them to cite the specific provision which required them to hand over private sales data, the only useful information they gave me was that someone in upper management told them to say it was a new law.

 

(Also not to side track, but yeah CT is in the dumpster, I plan on moving out after graduation myself. :P)

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1 minute ago, The Pikachu Mafia said:

I've spoken to Newegg representatives twice now over this, both times they claimed that Connecticut passed a new law. When I told them that there was no such law and asked them to cite the specific provision which required them to hand over private sales data, the only useful information they gave me was that someone in upper management told them to say it was a new law.

 

(Also not to side track, but yeah CT is in the dumpster, I plan on moving out after graduation myself. :P)

Yeah, I didn't think to ask him about the law Connecticut passed. What he did say though was this:

 

"We will not collect sales tax on behalf of the state and we currently do not provide tax exemption for Connecticut customers. We will send an follow up email once we have more information about this. Per state laws, we had to supply information on the orders that were placed, but had not supplied the state with any of the customer’s personal or sensitive information."

 

I guess they're going to send a follow-up email on this then it sounds like? I don't know..... I just hope I don't get bit in the butt about this later because I actually had just finished a major gaming build, and I bought over $1000 worth of parts from Newegg. Lol.

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Next they'll get Amazon's sales records, Amazon charges state taxes, but not 3rd parties selling on Amazon's platform. 


 

 

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18 hours ago, The Pikachu Mafia said:

I've spoken to Newegg representatives twice now over this, both times they claimed that Connecticut passed a new law. When I told them that there was no such law and asked them to cite the specific provision which required them to hand over private sales data, the only useful information they gave me was that someone in upper management told them to say it was a new law.

 

(Also not to side track, but yeah CT is in the dumpster, I plan on moving out after graduation myself. :P)

I just got off the phone with a Connecticut representative, and as it turns out, they actually DID pass that as a new law unfortunately. ><

The girl I spoke with said that it caught a lot of people off-guard, including her as well. They're hoping this will eventually cause Newegg and other online vendors to start charging use tax to customers now.

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40 minutes ago, Lodmot said:

I just got off the phone with a Connecticut representative, and as it turns out, they actually DID pass that as a new law unfortunately. ><

The girl I spoke with said that it caught a lot of people off-guard, including her as well. They're hoping this will eventually cause Newegg and other online vendors to start charging use tax to customers now.

That changes the name of the game significantly in my eyes, somewhat lessening Newegg's culpability and placing it back on the State. I think they're talking about this law that was passed in July (linked below) which is super sketchy. It basically says that CT can fine any out of state company that refuses their data requests. It's not really a request if you threaten every company that says no with heavy fines.

 

https://taxnews.ey.com/news/2017-1203-connecticut-drs-mails-notices-to-out-of-state-online-retailers-demanding-sales-records-legislature-subsequently-enacts-penalty-provisions-for-failure-to-comply

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4 minutes ago, The Pikachu Mafia said:

That changes the name of the game significantly in my eyes, somewhat lessening Newegg's culpability and placing it back on the State. I think they're talking about this law that was passed in July (linked below) which is super sketchy. It basically says that CT can fine any out of state company that refuses their data requests.

 

https://taxnews.ey.com/news/2017-1203-connecticut-drs-mails-notices-to-out-of-state-online-retailers-demanding-sales-records-legislature-subsequently-enacts-penalty-provisions-for-failure-to-comply

That definitely lines up with what she said on the phone. It definitely sounds like Connecticut is mostly to blame here now.

I'd still give partial blame to Newegg because they had the freedom to avoid this but they chose to screw us over instead.

I'll have to just use Amazon for purchases from now on rather than Newegg, and once I move out of Connecticut I might go back to Newegg, but they could always just pull something like this again, so I don't really trust them anymore.

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9 minutes ago, Lodmot said:

I'll have to just use Amazon for purchases from now

Amazon charges taxes on the order. CT charges a tax time. In the end it's all the same money out of your pocket in end. No reason to switch. If you live near the border, maybe find a friend/family on the other side and have everything shipped there if it really matters to you. If the surrounding states do the same thing... dunno what happens to the tax liability of the residents that you had your stuff shipped to... That could be interesting.


 

 

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8 minutes ago, dtaflorida said:

Amazon charges taxes on the order. CT charges a tax time. In the end it's all the same money out of your pocket in end. No reason to switch. If you live near the border, maybe find a friend/family on the other side and have everything shipped there if it really matters to you. If the surrounding states do the same thing... dunno what happens to the tax liability of the residents that you had your stuff shipped to... That could be interesting.

True, it's the same money that leaves my wallet in the end. The issue is, we have the technology where we can make it simple for people so they don't need to manually do the math or keep track of charges in excel files. Most of the time I never have to pay attention to tax. I go to a store, or Amazon, or eBay, and I check out or use PayPal to send the transaction to the seller. Now all of a sudden, I have to remember specifically that Newegg orders require me to keep track of the taxes I owe. Some people are excellent at it and it just comes naturally for them, but for me it's inconvenient and it's just another pointless thing for a disorganized guy such as myself to have to remember.

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1 hour ago, dtaflorida said:

Amazon charges taxes on the order. CT charges a tax time. In the end it's all the same money out of your pocket in end. No reason to switch. If you live near the border, maybe find a friend/family on the other side and have everything shipped there if it really matters to you. If the surrounding states do the same thing... dunno what happens to the tax liability of the residents that you had your stuff shipped to... That could be interesting.

It is all the same money, but It's not like I'm trying to avoid taxes. I would love to see the use tax abolished after this debacle since it just seems so ridiculous, but as long as It's a law I'm not going to actively try and break it. Amazon offer consumers a much more convienent system. Meanwhile Newegg, while not being entirely guilty, still chose that an increase in the cost of business wasn't worth the integrity of their consumers. Their lack of a covienent system coupled with their disregard and willful forfeiting of private data is why I will not be shopping there in the future, which is a completely valid choice on my part as a consumer. I'll vote with my wallet.

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47 minutes ago, Lodmot said:

Now all of a sudden, I have to remember specifically that Newegg orders require me to keep track of the taxes I owe. Some people are excellent at it and it just comes naturally for them, but for me it's inconvenient and it's just another pointless thing for a disorganized guy such as myself to have to remember.

Actually... Newegg you specifically don't have to keep track of now... you'll get a bill in the mail. It's all those other sites that don't charge taxes that you 'should' be tracking and filing taxes manually. So if you believe it's your civic duty to pay your taxes then this has simplified that for at least 1 more site on the web.

 


 

 

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