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

[dalekphalm]

22 hours 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. 

You're conflating two points.

 

CT asked Newegg to start collecting tax during the checkout. They even incentivised it, by promising to throw out the previous 3 years worth of back taxes owed by CT residents, if Newegg agreed to start collecting tax.

 

But that was a request only. CT cannot legally force Newegg to collect taxes for CT, because it's a use tax, not a sales tax. This has been settled in court (I believe the SCOTUS, but I'm not deeply familiar with the details).

 

What CT did do, was pass a law that allowed them to force Newegg to provide customer sales data for CT residents. That is the only thing CT can force Newegg to do.

 

So Newegg had a few choices:

1. Agree to CT's request, and start collecting CT Use Tax during checkout voluntarily. This is a bad choice for Newegg, financially, because the additional complexity and paperwork would cost Newegg money.

2. Tell CT to "fuck off", as many people in the thread suggest. CT then takes them to court, and court costs Newegg lots of money. This is also a bad choice for Newegg, since if the risk of losing the court battle is high enough, Newegg simply won't take the chance.

3. Comply with CT's legal demand to turn over data. This costs Newegg a small amount of money, but likely far less than the other options, as it's simply a database export using specific query parameters, and then just sending that off to some CT representative/office.

 

Now, with that in mind, I agree that Newegg, at this point, should have sent a disclaimer email or letter to ALL registered CT account holders, informing them that they gave purchase information to the CT DRS.

 

But, Newegg was under no legal obligation to send such a hypothetical letter/disclaimer.

 

Furthermore, this is based on the assumption that CT didn't issue some sort of Gag Order against Newegg, preventing them from talking about it.

 

But honestly, I think due to the public fallout Newegg is getting, they will probably implement some sort of disclaimer or other PR response. We'll have to wait and see what.

[Majinhoju]

I'm not too familiar with US tax law but shouldn't Newegg be eating those costs?

[Lodmot]

17 minutes ago, dalekphalm said:

You're conflating two points.

 

CT asked Newegg to start collecting tax during the checkout. They even incentivised it, by promising to throw out the previous 3 years worth of back taxes owed by CT residents, if Newegg agreed to start collecting tax.

 

But that was a request only. CT cannot legally force Newegg to collect taxes for CT, because it's a use tax, not a sales tax. This has been settled in court (I believe the SCOTUS, but I'm not deeply familiar with the details).

 

What CT did do, was pass a law that allowed them to force Newegg to provide customer sales data for CT residents. That is the only thing CT can force Newegg to do.

 

So Newegg had a few choices:

1. Agree to CT's request, and start collecting CT Use Tax during checkout voluntarily. This is a bad choice for Newegg, financially, because the additional complexity and paperwork would cost Newegg money.

2. Tell CT to "fuck off", as many people in the thread suggest. CT then takes them to court, and court costs Newegg lots of money. This is also a bad choice for Newegg, since if the risk of losing the court battle is high enough, Newegg simply won't take the chance.

3. Comply with CT's legal demand to turn over data. This costs Newegg a small amount of money, but likely far less than the other options, as it's simply a database export using specific query parameters, and then just sending that off to some CT representative/office.

 

Now, with that in mind, I agree that Newegg, at this point, should have sent a disclaimer email or letter to ALL registered CT account holders, informing them that they gave purchase information to the CT DRS.

 

But, Newegg was under no legal obligation to send such a hypothetical letter/disclaimer.

 

Furthermore, this is based on the assumption that CT didn't issue some sort of Gag Order against Newegg, preventing them from talking about it.

 

But honestly, I think due to the public fallout Newegg is getting, they will probably implement some sort of disclaimer or other PR response. We'll have to wait and see what.

Alright, that makes sense.

 

I personally think option number 1 would've still been the most ethical route for Newegg to take. Newegg makes more than enough money from us to where they can afford the extra paperwork and process. It shows through in their actions that they clearly don't care about their customers. By choosing option number 3, Newegg has now lost new potential sales from Connecticut residents.

 

On the other hand though, Connecticut did a bad job communicating exactly what they want from online retailers. Otherwise, if they had planned ahead of time, none of this would be a concern with anybody. I'm already at odds with my home state as it is, and now this is just one more motivating factor for me to leave.

 

To sum it up though, I really feel like both companies messed up and could've handled this situation better.

[SteveGrabowski0]

20 minutes ago, dalekphalm said:

Now, with that in mind, I agree that Newegg, at this point, should have sent a disclaimer email or letter to ALL registered CT account holders, informing them that they gave purchase information to the CT DRS.

 

But, Newegg was under no legal obligation to send such a hypothetical letter/disclaimer.

 

Furthermore, this is based on the assumption that CT didn't issue some sort of Gag Order against Newegg, preventing them from talking about it.

That would have been the fourth option. There was no gag order since it was just a request. Instead of telling their customers what happened the cocksuckers let them be blindsided by collection letters from the CT DRS. People thought this was a scam at first because newegg never told anyone they were doing it. Pulling such a chickenshit move has killed newegg to me, and after 15 years of buying my PC shit almost exclusively from them I'm going to amazon.

[SteveGrabowski0]

4 minutes ago, Lodmot said:

Alright, that makes sense.

 

I personally think option number 1 would've still been the most ethical route for Newegg to take. Newegg makes more than enough money from us to where they can afford the extra paperwork and process. It shows through in their actions that they clearly don't care about their customers. By choosing option number 3, Newegg has now lost new potential sales from Connecticut residents.

The only reason to buy from newegg ever since they got bought out was to not pay tax. Their shipping is terrible, especially how poorly they pack things. I had to stop ordering OEM hard drives from them a few years ago because they were packed with almost no padding and every single one would die in a year or two, and I'm talking high end Western Digital Blacks, not cheap crap. Meanwhile my crappy WD Blues and Seagate Barracudas I bought from Best Buy are still kicking years later. They also pissed me off when I ordered a cpu from them and paid for two day shipping, then ordered an extra stick of RAM for my HTPC in a separate order with free shipping later that day. So of course they put my cpu in with the RAM to ship via garbage Fedex SmartPost and it took two weeks to get my cpu when I paid for 2 day shipping on it.

 

If I'm paying sales tax there is no reason to not go with amazon and have my packages sooner and packed by someone with an above room temperature IQ.

[Jito463]

2 hours ago, Majinhoju said:

I'm not too familiar with US tax law but shouldn't Newegg be eating those costs?

What costs?  The taxes?  That would be a big negatory.  As a California company with no physical presence in Connecticut, they have zero obligation to collect sales tax for any other states than the ones they physically operate in.

[Armieramortalis]

Built 4 computers between 2014 and now, got hit with a 340 dollar bill. Feelsbadman

[dalekphalm]

Just now, Armieramortalis said:

Built 4 computers between 2014 and now, got hit with a 340 dollar bill. Feelsbadman

Very unfortunate. I definitely sympathize. But on the other hand, legally you should have already paid that $340 to the CT DRS, when filling out your tax returns each year.

 

This entire story and situation is terrible. But it mostly highlights deep flaws in the US tax system. I'm not opposed to the Use Tax in the slightest - I think it's 100% perfectly fair to implement a use tax (at the same rate as sales tax), when you are unable to put a sales tax on due to the store being out of state.

 

But it really needs to be simplified so that the state government can collect their legally valid tax dues, but the resident (consumer) doesn't have to keep track of things manually.

 

if that means the Federal Government implements some sort of "multi-state" online payment rule, where all US companies that operate online must now collect Use Tax in addition to Sales Tax? That could work, but I think there's a next to zero chance it'll actually happen.

 

In the end? It'll simply be up to CT residents to carefully track their online purchases.

[Armieramortalis]

4 minutes ago, dalekphalm said:

Very unfortunate. I definitely sympathize. But on the other hand, legally you should have already paid that $340 to the CT DRS, when filling out your tax returns each year.

 

This entire story and situation is terrible. But it mostly highlights deep flaws in the US tax system. I'm not opposed to the Use Tax in the slightest - I think it's 100% perfectly fair to implement a use tax (at the same rate as sales tax), when you are unable to put a sales tax on due to the store being out of state.

 

But it really needs to be simplified so that the state government can collect their legally valid tax dues, but the resident (consumer) doesn't have to keep track of things manually.

 

if that means the Federal Government implements some sort of "multi-state" online payment rule, where all US companies that operate online must now collect Use Tax in addition to Sales Tax? That could work, but I think there's a next to zero chance it'll actually happen.

 

In the end? It'll simply be up to CT residents to carefully track their online purchases.

I was 15-17 years old in 2014-2016, didn't have a clue how taxes worked back then.

[dalekphalm]

8 minutes ago, Sampsy said:

How is the interest rate set? And is charging interest and applying a penalty to customers legal if it was Newegg's fault? I highly doubt it. 

Newegg's fault?

 

No. Newegg is not legally at fault in anything at all here, regarding the tax.

 

Newegg is not legally responsible for collecting Use Tax. Use Tax is "Sales" tax, on online purchases made out of state (Eg: The business is in California. You are in CT. You buy something from their online store, and they ship it from Cali to CT).

 

It is entirely the responsibility of CT residents to keep track of, and pay, their use tax, every year, during tax season. When they fill out their tax forms, there's a specific field for Use Tax purchases. If people failed to claim those purchases, then technically it's tax fraud (though we can agree that in many cases, it's unintentional, since many CT residents don't seem to know how to file taxes, or much about their tax laws - no doubt this is common throughout all places, not just CT).

 

So the interest and the penalty charges are no doubt perfectly legal. With that in mind, I am going to make the assumption that the interest and late fee are scare tactics simply designed to get you to pay up. If you call the DRS, you can almost certainly get both interest and fees waived.

 

As for how they set the interest rate? I assume it's based on the US Prime Interest rate, with maybe 1 or 2% added on top. It would be entirely up to them to choose the interest rate they want - though no doubt it has to be posted publicly somewhere for it to be legally binding.

 

7 minutes ago, Armieramortalis said:

I was 15-17 years old in 2014-2016, didn't have a clue how taxes worked back then.

As I said, very unfortunate. In a situation where you were underage, your parent or legal guardian should have known to ask you about Online Purchases for the purpose of Use Tax claims, when they did their own taxes.

 

Furthermore, did you not work a job between 15 and 17? If you did, you should have been filing taxes anyway.

 

They SHOULD teach kids how to file taxes in school (I think grade 9, with a grade 10 refresher, since that's when most kids seem to get jobs). But since they don't, it's up to your parents to teach you these things.

[The Pikachu Mafia]

On 3/10/2018 at 12:43 PM, dalekphalm said:

So the interest and the penalty charges are no doubt perfectly legal. With that in mind, I am going to make the assumption that the interest and late fee are scare tactics simply designed to get you to pay up. If you call the DRS, you can almost certainly get both interest and fees waived.

 

Unfortunately the interest cannot be removed, and you can only get the late fee waived if you submit a payment within a certain time frame (they give you around a 2 week grace period to pay up, which is highly unfortunate for people who don't have to cash on hand to pay the DRS immediately).

[dalekphalm]

15 minutes ago, The Pikachu Mafia said:

Unfortunately the interest cannot be removed, and you can only get the late fee waived if you submit a payment within a certain time frame (they give you around a 2 week grace period to pay up, which is highly unfortunate for people who don't have to cash on hand to pay the DRS immediately).

Well, if you are a CT resident and are affected by this, I would suggest contacting the DRS, telling them you cannot afford to pay the bill in full, and try to negotiate a payment plan with the interest and late fees removed.

 

The interest is no doubt listed in the Tax Law information, and is probably the standard interest fee charged for any late tax payments (Eg: if you failed to file your Income Tax).

 

It ultimately comes down to how much of a dick they want to be about it.

[Nowak]

On 3/8/2018 at 12:56 PM, Lodmot said:

I still wish Connecticut approached the issue differently with Newegg though. I'm still very disgruntled at our state and plan to move to Canada in two years or so.

Massachusetts doesn't do this, js

[Lodmot]

On ‎3‎/‎12‎/‎2018 at 6:14 PM, Daring said:

Massachusetts doesn't do this, js

Actually Massachusetts was one of my other choices of places to move. I'm sorta waiting to see what my Canadian girlfriend wants to do, because she might decide to move here. LDR's for the win. Lol. But yeah, anywhere besides Connecticut would be nice.

[Nowak]

7 minutes ago, Lodmot said:

Actually Massachusetts was one of my other choices of places to move. I'm sorta waiting to see what my Canadian girlfriend wants to do, because she might decide to move here. LDR's for the win. Lol. But yeah, anywhere besides Connecticut would be nice.

I don't blame you, Connecticut is a bad state