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

[Master Disaster]

This one is currently breaking, right now it's mostly on Twitter. LTT friend Jayz2cents posted the following image

Jay then followed that tweet with this one

Source is Twitter. I'll update this topic to follow guidelines as soon as more solid info is available.

 

Also this on YouTube

 

Reading through the Twitter threads some people are saying this is illegal and others are saying they have evidence that NewEgg weren't subpoenad at all but gave up the info volunterily, I guess we will find out, probably tomorrow.

 

Update

 

Jay just uploaded

 

[iRileyx]

I still get confused by taxes in the US lol, why don't you just pay them automatically(included in the price) on goods?

Like here in the UK, anything you buy the price already has the 20% tax accounted for.

 

Or am i missing the point and that's what Newegg should have been doing anyway, but they failed to do so?

[ItsMitch]

This is so fucking weird. Newegg threw every fucker under the bus to avoid being roasted by the DRS. 

[Master Disaster]

4 minutes ago, RKRiley said:

I still get confused by taxes in the US lol, why don't you just pay them automatically(included in the price) on goods?

Like here in the UK, anything you buy the price already has the 20% tax accounted for.

 

Or am i missing the point and that's what Newegg should have been doing anyway, but they failed to do so?

From what I understand (and like you I really have no idea) they're supposed to do that however they're not actually required to do that. It seems like they can sell you something tax free then the burden is on you to declare it and pay taxes for it on your tax return.

 

I agree that seems like an odd way of doing business but I imagine they have a reason for it, I just can't think what that reason would be.

[91wow]

4 minutes ago, RKRiley said:

I still get confused by taxes in the US lol, why don't you just pay them automatically(included in the price) on goods?

Like here in the UK, anything you buy the price already has the 20% tax accounted for.

 

Or am i missing the point and that's what Newegg should have been doing anyway, but they failed to do so?

Taxes are handled so differently on so many things in the US. You have state sales tax, you have federal tax, you have shipping tax, you have handling charges. So much changes and since we don't really have a federal minimum wage they can't just charge one universal fee that everyone has to pay. The quality of life changes dramatically across the different states. Like someone in Illinois can't be taxed the same as someone in California on a sale. The person in Illinois makes less per hour than someone in California. It just wouldn't be fair. So some states have sale taxes and internet sale taxes, some don't have either. But, all states have internet sale tax if the business has a footprint in the state, so if I lived in Nevada I wouldn't pay any sales taxes on ordering from Newegg, but since they are located in California I do pay those taxes. 

[yian88]

lol this should be illegal, the customer is not the one having to pay taxes on products, its the seller who includes them in the product price, i think a massive lawsuit should follow, but i know nothing about US laws so not sure what can be done

[ItsMitch]

2 minutes ago, 91wow said:

Taxes are handled so differently on so many things in the US. You have state sales tax, you have federal tax, you have shipping tax, you have handling charges. So much changes and since we don't really have a federal minimum wage they can't just charge one universal fee that everyone has to pay. The quality of life changes dramatically across the different states. Like someone in Illinois can't be taxed the same as someone in California on a sale. The person in Illinois makes less per hour than someone in California. It just wouldn't be fair. So some states have sale taxes and internet sale taxes, some don't have either. But, all states have internet sale tax if the business has a footprint in the state, so if I lived in Nevada I wouldn't pay any sales taxes on ordering from Newegg, but since they are located in California I do pay those taxes. 

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

[asus killer]

i'm a simple person, if you owe taxes you should pay those taxes. I would not expect this from the US, maybe in some 3rd world country.

[79wjd]

14 minutes ago, Master Disaster said:

From what I understand (and like you I really have no idea) they're supposed to do that however they're not actually required to do that. It seems like they can sell you something tax free then the burden is on you to declare it and pay taxes for it on your tax return.

 

I agree that seems like an odd way of doing business but I imagine they have a reason for it, I just can't think what that reason would be.

Well, Newegg only charges tax in NJ, CA, IN, and I believe one other state as that is where they have warehouses. Every other shipping destination is exempty from tax as there is no warehouse in-state. So there was probably some odd thing with CT (maybe there's a warehouse there, or maybe CT law requires taxes even without a warehouse), and they were just trying to avoid it (and breaking tax law in the process) and now just trying to shift the problem to the consumers?

[2FA]

14 minutes ago, yian88 said:

lol this should be illegal, the customer is not the one having to pay taxes on products, its the seller who includes them in the product price, i think a massive lawsuit should follow, but i know nothing about US laws so not sure what can be done

There have been many cases regarding the subject starting with Quill Corp. v. North Dakota, companies cannot be forced by states to collect state sales tax if they don't have physical presence in that state. This obviously created a sales tax loop hole initially so states created whats called a 'use tax' that is at the same rate as sales tax and is only applied to goods bought out-of-state and used in-state. When a company says there is no state sales tax for you, they are correct. There is a use tax that the consumer is responsible for though.

[79wjd]

Just now, DeadEyePsycho said:

There have been many cases regarding the subject starting with Quill Corp. v. North Dakota, companies cannot be forced by states to collect state sales tax if they don't have physical presence in that state. This obviously created a sales tax loop hole initially so states created whats called a 'use tax' that is at the same rate as sales tax and are only applied to goods bought out-of-state and used in-state. When a company says there is no state sales tax for you, they are correct. There is a use tax that the consumer is responsible for though.

Is the use tax enforced regularly? Because there have definitely been numerous sites that I've ordered from and obviously not paid sales tax on as it's not applicable nor any other tax. 

[2FA]

Just now, djdwosk97 said:

Is the use tax enforced regularly? Because there have definitely been numerous sites that I've ordered from and obviously not paid sales tax on as it's not applicable nor any other tax. 

If the relevant tax enforcement agency finds out you haven't paid it, they will for sure enforce it. It's a tax that you report on your state tax return filing.

[Tieox]

A system which can be explained fairly, but is utterly designed to entrap, and punish.

 

 

[vanished]

lol wow, the wording and tone in that letter... just wow

 

anyway, pretty sure the interest and "penalty" would be newegg's responsibility, so they can go get that from newegg if they want.  customer is not going to pay for newegg's mistake lol

[79wjd]

7 minutes ago, DeadEyePsycho said:

If the relevant tax enforcement agency finds out you haven't paid it, they will for sure enforce it. It's a tax that you report on your state tax return filing.

Interesting....So why hasn't this come up many times before with Newegg? This should have been an issue for the entirety of its existence.

[Tieox]

I presume it is fair to state that NewEggs reputation is ruined.

[2FA]

3 minutes ago, djdwosk97 said:

Interesting....So why hasn't this come up many times before with Newegg? This should have been an issue for the entirety of its existence.

Well I mean it technically has been, I just don't think it was large enough for the longest time to warrant a state specifically targeting customers of it.

[themctipers]

15 minutes ago, Ryan_Vickers said:

lol wow, the wording and tone in that letter... just wow

 

anyway, pretty sure the interest and "penalty" would be newegg's responsibility, so they can go get that from newegg if they want.  customer is not going to pay for newegg's mistake lol

corporations are people

they make mistakes!

 

obviously we need to protect them, it's the CONSUMERS FAULT!

[Serin]

Strangely thanking fuck for the GST here... Bizarro that they'd seek to impose the penalty on the customer. Unless customers not paying tax on things is kinda the norm there?

[SpaceGhostC2C]

Previously, in LTT forums...

 

 

It seems it made it to the news  

 

[ItsMitch]

37 minutes ago, Kierax said:

I presume it is fair to state that NewEggs reputation is ruined.

It's kind of a shame they don't have any public IPO on NASDAQ, would be interesting to see how bad their stocks will take a small hit. Meanwhile in the AMZN court, they're looking fine and dandy.... but it's definitely recommended to switch to AMZN now. 

e: before you ask, why do investors care? when your company is in the news for fucking over customers, you may wanna jump overboard with the customers and find a better company

[Clanscorpia]

1 hour ago, SC2Mitch said:

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

Because its more expensive for certain states to function then others. So like New Yorks government is a lot more expensive to run because the roads the roads need to be plowed and stuff during the winter, while in a country like Alabama theres not much that needs to be done there so the taxes are a lot lower. 

[Tieox]

Why doesn't LTT setup their own tech supply chain? 

[Blademaster91]

58 minutes ago, SC2Mitch said:

It's kind of a shame they don't have any public IPO on NASDAQ, would be interesting to see how bad their stocks will take a small hit. Meanwhile in the AMZN court, they're looking fine and dandy.... but it's definitely recommended to switch to AMZN now. 

e: before you ask, why do investors care? when your company is in the news for fucking over customers, you may wanna jump overboard with the customers and find a better company

Newegg has been doing some shady stuff ever since they were sold to a Chinese company,would be interesting to see if their sales have been declining though.

Amazon is much better although I ordered just a motherboard once,they sent the mobo box as is with a shipping label slapped on it. Sad because Newegg used to have the advantage of better prices & fast cheap shipping with good packaging.

[TimeOmnivore]

Well, this sucks. Hopefully, this will only be a thing in CT, as the whole reason I shop at Newegg is so I can save as much money as possible since there's no tax. Probably not though, I can see other states doing this same thing, which would kinda kill Newegg.

 

At least they still have their review system over Amazon (seriously, Amazon's review structure is complete dogshit, I shouldn't be seeing reviews for completely different products when looking at any tech item).