Online retailers will now have to collect sales tax in the US

[Zodiark1593]

28 minutes ago, dizmo said:

If you're spending $2,500 on a PC, and can't afford to spend an extra $250, you shouldn't be spending that much on a PC.

This aside, isn't the tax owed anyway, legally speaking, whether the retailer collects it or the consumer reports it themself? Meaning legally speaking, the builder would be out the $250 regardless?

[avg123]

Why wasn't there taxes on online sales in first place?

[dizmo]

27 minutes ago, Zodiark1593 said:

This aside, isn't the tax owed anyway, legally speaking, whether the retailer collects it or the consumer reports it themself? Meaning legally speaking, the builder would be out the $250 regardless?

In some states yes, in others I have no idea. I don't really know anything about US tax law, aside from the bits I've read here and there about this issue.

Canada has a much easier to understand system. GST (Federal), and PST (Provincial). Or HST (Combination of the two).

[Razor Blade]

TL:DR

 

Get used to paying taxes kids. It is unavoidable. I end up paying tax to my state anyway at the end of the year even if I don't pay tax upfront... at least when online retailers collect tax I don't have to report that.

 

Speaking of tax... what I think is dumb is being forced to pay sales tax on private sales of something used...especially a car which could be sold many times during it's useful life. The sales tax was already paid when it was bought for the first time. But just because an item changes ownership and money changed hands the state wants to have their hands down your pants yet again. I'm sure if state gooberment could find a way to audit garage sales, they would...

 

 

Edit: That's what I get for not reading page 1 first....  @dalekphalm already said the same thing about having to pay tax anyway.

Edited June 22, 2018 by Razor Blade

[rmac52]

1 hour ago, dizmo said:

In some states yes, in others I have no idea. I don't really know anything about US tax law, aside from the bits I've read here and there about this issue.

Canada has a much easier to understand system. GST (Federal), and PST (Provincial). Or HST (Combination of the two).

My state has collected sales tax from amazon for the last 3 or so years.  Luckily I live 20 minutes from a no sales tax state.  

I think online ordering will take a hit.  If i can get something in store for the same price I'll just do that.  One of the major selling points of online shopping was no sales tax.  At least for me.

[Crazzygamer]

13 hours ago, AluminiumTech said:

Is sales tax in the US the equivalent of VAT?

Yes it is.

[dizmo]

19 minutes ago, rmac52 said:

My state has collected sales tax from amazon for the last 3 or so years.  Luckily I live 20 minutes from a no sales tax state.  

I think online ordering will take a hit.  If i can get something in store for the same price I'll just do that.  One of the major selling points of online shopping was no sales tax.  At least for me.

I only see that being useful for large purchases, like an automobile or perhaps a very expensive PC if you get all the parts in one place. Otherwise the rest of the stuff isn't really worth hassling over a few dollars here and there. Generally online prices are a lot lower than simply sales tax.

[imreloadin]

1 hour ago, avg123 said:

Why wasn't there taxes on online sales in first place?

There were, you just had to be the one to actually pay it when you filed your income tax every year.

Previously only states that had laws requiring online retailers to include tax in their final purchases did it because it's somewhat difficult sometimes to put all of the tax rates in there and they didn't because it gave them a leg up against local businesses as they know people don't ever report that tax. All the states are doing now is forcing online retailers to calculate and charge the tax for online purchases and making it the vendor's responsibility to collect it versus leaving it to the individual citizen's responsibility to report it.

[Mooshi]

14 hours ago, dalekphalm said:

I'm 100% in favour of doing this. I support South Dakota's efforts to force online retailers to collect tax owed.

 

Why? Because you still had to pay that tax anyway. You just had to pay it during tax season, when you did your taxes.

 

Anyone who didn't pay those taxes manually during tax season was breaking the law - intentionally or unintentionally. It would be actual tax fraud if you intentionally shopped at an online retailer you knew didn't collect sales tax, so that you could "save some money".

 

I get it - I like to save money too. But don't break the law to do so. Buy used, or find other methods of being frugal, if you need that extra money that would otherwise go to tax.

Doesn't make sense on digital purchases like subscriptions where there is no physical product or address to deliver to.

[John Ellmaker]

While vat is supposed to be equivalent there’s rampant vat fraud and has been forever.  Sales tax is easier, do the calculation one time when the consumer obtains the product, not ten times with a bunch of different tax ministries 

[dalekphalm]

6 hours ago, Mooshi said:

Doesn't make sense on digital purchases like subscriptions where there is no physical product or address to deliver to.

Yes it does. Tax isn’t about physical goods. It’s about goods and services. Granted, those nuances will vary per country, state, etc. 

 

Take a game, for example. You’re saying it’s okay to tax a game on DVD because it’s “physical” but you shouldn’t tax the exact same game on digital? Makes no sense. It’s the same product. The only difference is a $0.15 DVD (which probably costs less than the tax you’d pay). 

 

Take Cable TV. I pay tax on my monthly subscription. Same with my mobile plan. Neither of those things are “physical”. 

[Donut417]

22 hours ago, MyInnerFred said:

This is really going to suck for the consumers who intentionally buy online for the purpose of avoiding having to pay a tax... 

You know who else didnt pay tax? Al Capone and he got 11 years. LOL. 

 

In all seriousness, in Michigan you are required by law to report any online purchases where tax was not collected on your income tax. I would venture a guess that many states have similar laws. What this does is take it out of the tax payers hands, because lets face it none of us were reporting purchases. Now they are putting it in retailers hands like it should be. This puts online retailers in the same boat as brick and mortar retailers. Its more fair for all businesses. 

[Mira Yurizaki]

9 hours ago, Mooshi said:

Doesn't make sense on digital purchases like subscriptions where there is no physical product or address to deliver to.

Why does it matter if something physically exists, or technically speaking is tangible, matter whether or not you are taxed on it?

 

Besides, taking it at face value, "sales tax" should mean just that: a tax for making a sale. i.e., if I'm charging you money for something, I'm selling that something, therefore, there's a sale of something involved.

[Brooksie359]

11 hours ago, Razor Blade said:

TL:DR

 

Get used to paying taxes kids. It is unavoidable. I end up paying tax to my state anyway at the end of the year even if I don't pay tax upfront... at least when online retailers collect tax I don't have to report that.

 

Speaking of tax... what I think is dumb is being forced to pay sales tax on private sales of something used...especially a car which could be sold many times during it's useful life. The sales tax was already paid when it was bought for the first time. But just because an item changes ownership and money changed hands the state wants to have their hands down your pants yet again. I'm sure if state gooberment could find a way to audit garage sales, they would...

 

 

Edit: That's what I get for not reading page 1 first....  @dalekphalm already said the same thing about having to pay tax anyway.

They even have gift tax and estate tax so there is no rule to say that taxes are attached to specific items and once played once it should end there. Taxes are paid on transactions. Buying a used car is a transaction, giving someone a gift is a transaction, giving someone money from an estate is a transaction, getting paid for work is a transaction there are many more examples. The bottom line is if it's a transaction their is likely a tax involved. 

[Brooksie359]

10 hours ago, Mooshi said:

Doesn't make sense on digital purchases like subscriptions where there is no physical product or address to deliver to.

Because tax has to on something physical? Taxes are based on transactions primarily not physical goods. If you don't want to pay taxes because it isn't a physical product then do pay taxes on your income. That isn't physical yet people pay taxes on it. 

[Razor Blade]

30 minutes ago, Brooksie359 said:

They even have gift tax and estate tax so there is no rule to say that taxes are attached to specific items and once played once it should end there. Taxes are paid on transactions. Buying a used car is a transaction, giving someone a gift is a transaction, giving someone money from an estate is a transaction, getting paid for work is a transaction there are many more examples. The bottom line is if it's a transaction their is likely a tax involved. 

 

This is incorrect. Estate and gift tax are not sales tax. They're income tax. Which is a whole different subject.

 

22 minutes ago, Brooksie359 said:

Because tax has to on something physical? Taxes are based on transactions primarily not physical goods. If you don't want to pay taxes because it isn't a physical product then do pay taxes on your income. That isn't physical yet people pay taxes on it. 

A paycheck is tangible. You can withdraw cash from your paycheck. digital items are not tangible goods. I believe that is their argument. Though I personally believe digital items are goods which are indeed taxable...just like software. You buy it online to download or in a box, you're still going to pay tax.

[dalekphalm]

34 minutes ago, Razor Blade said:

 

This is incorrect. Estate and gift tax are not sales tax. They're income tax. Which is a whole different subject.

You're misinterpreting what he is saying. He's not saying that Estate Tax is a sales tax. He's saying it's a tax, period. @Mooshi was arguing that tax on digital goods didn't make sense. He didn't specify sales tax, although you might imply that. But I get the feeling that if the government simply created a "digital" tax, he would not approve of that either.

 

34 minutes ago, Razor Blade said:

A paycheck is tangible. You can withdraw cash from your paycheck. digital items are not tangible goods. I believe that is their argument. Though I personally believe digital items are goods which are indeed taxable...just like software. You buy it online to download or in a box, you're still going to pay tax.

Cash is only tangible because the government issues a piece of paper that they promise is equal to the intangible value of money that they assigned it. 99% of money isn't even physical anymore.

 

If my pay cheque is deposited automatically into my bank, and I use my debit card to buy a physical item off amazon, then that entire transaction never sees a single piece of physical money.

[Razor Blade]

18 minutes ago, dalekphalm said:

You're misinterpreting what he is saying. He's not saying that Estate Tax is a sales tax. He's saying it's a tax, period. @Mooshi was arguing that tax on digital goods didn't make sense. He didn't specify sales tax, although you might imply that. But I get the feeling that if the government simply created a "digital" tax, he would not approve of that either.

 

Cash is only tangible because the government issues a piece of paper that they promise is equal to the intangible value of money that they assigned it. 99% of money isn't even physical anymore.

 

If my pay cheque is deposited automatically into my bank, and I use my debit card to buy a physical item off amazon, then that entire transaction never sees a single piece of physical money.

I misinterpreted because it was stated that estate and gift were compared to goods and services transactions which they are 2 different things. You pay income tax on money you earn then pay sales tax when you spend it. They're IMO 2 different things which are subject to a different argument all together.

 

Money is an intermediary medium. Yes it has an agreed upon value associated with it by government, however you can exchange it for goods and services anywhere that accepts it. My point was there is an option to make your paycheck tangible...unlike a digital item which can technically never become a tangible item. Even if you copy it to a disk or flash drive (which may actually violate TOS)...that still isn't the same thing.

[dalekphalm]

2 minutes ago, Razor Blade said:

I misinterpreted because it was stated that estate and gift were compared to goods and services transactions which they are 2 different things. You pay income tax on money you earn then pay sales tax when you spend it. They're IMO 2 different things which are subject to a different argument all together.

 

Money is an intermediary medium. Yes it has an agreed upon value associated with it by government, however you can exchange it for goods and services anywhere that accepts it. My point was there is an option to make your paycheck tangible...unlike a digital item which can technically never become a tangible item. Even if you copy it to a disk or flash drive (which may actually violate TOS)...that still isn't the same thing.

But if we take what you say as true, then any game, or software, or movie, or even music, is not a tangible thing.

 

A SNES cartridge is just a storage medium for the ROM data. A PS1 CD is just a storage medium for the digital game. A Blu-Ray or DVD is just a storage medium for the digital movie.

 

Even analog stuff like Cassette Tapes are just magnetic information that stores an intangible sound signature.

 

And many games that are purely digital can be copied to a physical medium without violating the TOS, for example: everything on GoG.com can be downloaded and burned to a CD/DVD or stored on a USB drive.

 

You can exchange a DVD Movie for money and tax that, but ultimately, it's no different from exchanging the same Movie at the same settings as a digital file.

 

Now, with that in mind, I agree that we should be clear about what kind of tax we are talking about, because there are nuances and differences. But taxing an intangible good, such as a digital file, is still just as valid as taxing something tangible, like a book.

[Mira Yurizaki]

15 minutes ago, dalekphalm said:

But if we take what you say as true, then any game, or software, or movie, or even music, is not a tangible thing.

 

A SNES cartridge is just a storage medium for the ROM data. A PS1 CD is just a storage medium for the digital game. A Blu-Ray or DVD is just a storage medium for the digital movie.

 

Even analog stuff like Cassette Tapes are just magnetic information that stores an intangible sound signature.

 

And many games that are purely digital can be copied to a physical medium without violating the TOS, for example: everything on GoG.com can be downloaded and burned to a CD/DVD or stored on a USB drive.

 

You can exchange a DVD Movie for money and tax that, but ultimately, it's no different from exchanging the same Movie at the same settings as a digital file.

 

Now, with that in mind, I agree that we should be clear about what kind of tax we are talking about, because there are nuances and differences. But taxing an intangible good, such as a digital file, is still just as valid as taxing something tangible, like a book.

And then there's the argument of taxing a service, which is also intangible.

 

Though I haven't really paid attention to see if there's any taxes on service providers. I see on my telecoms bills I'm paying some sort of tax, but I'm pretty sure that's a tax for something else and they're just lumping it on me to pay for it.

[dalekphalm]

1 hour ago, M.Yurizaki said:

And then there's the argument of taxing a service, which is also intangible.

 

Though I haven't really paid attention to see if there's any taxes on service providers. I see on my telecoms bills I'm paying some sort of tax, but I'm pretty sure that's a tax for something else and they're just lumping it on me to pay for it.

It certainly my vary per state, and definitely per country. In Ontario, you pay tax on most goods and services, including Telecom, Cable TV, Internet, etc. A service not getting taxed is the exception, not the rule here.

[Razor Blade]

2 hours ago, dalekphalm said:

But if we take what you say as true, then any game, or software, or movie, or even music, is not a tangible thing.

 

A SNES cartridge is just a storage medium for the ROM data. A PS1 CD is just a storage medium for the digital game. A Blu-Ray or DVD is just a storage medium for the digital movie.

 

Even analog stuff like Cassette Tapes are just magnetic information that stores an intangible sound signature.

 

And many games that are purely digital can be copied to a physical medium without violating the TOS, for example: everything on GoG.com can be downloaded and burned to a CD/DVD or stored on a USB drive.

 

You can exchange a DVD Movie for money and tax that, but ultimately, it's no different from exchanging the same Movie at the same settings as a digital file.

 

Now, with that in mind, I agree that we should be clear about what kind of tax we are talking about, because there are nuances and differences. But taxing an intangible good, such as a digital file, is still just as valid as taxing something tangible, like a book.

Yup you're right media as a whole is technically intangible. I'm still of the mindset that those items would fall into that category. However I'd imagine you aren't really able to trade or sell digital goods legally unless there is some sort of means to do so on a platform controlled by invasive DRM or something. But I understand why tangible and intangible goods and services are taxable. That isn't what I'm arguing...it is the sales tax on private resale of goods that I'm saying is wrong for the simple fact that the state got their tax money already but because I didn't need my car anymore the guy I sold it to has to pay sales tax on it again. Then the guy he sells it to has to pay sales tax on it again. Then the lady he sells it to has to pay sales tax on it again. This horrific cycle happens all the way to the scrap yard.

[dalekphalm]

6 hours ago, Razor Blade said:

Yup you're right media as a whole is technically intangible. I'm still of the mindset that those items would fall into that category. However I'd imagine you aren't really able to trade or sell digital goods legally unless there is some sort of means to do so on a platform controlled by invasive DRM or something. But I understand why tangible and intangible goods and services are taxable. That isn't what I'm arguing...it is the sales tax on private resale of goods that I'm saying is wrong for the simple fact that the state got their tax money already but because I didn't need my car anymore the guy I sold it to has to pay sales tax on it again. Then the guy he sells it to has to pay sales tax on it again. Then the lady he sells it to has to pay sales tax on it again. This horrific cycle happens all the way to the scrap yard.

Cars are one of the few exceptions in which the private sale of used goods are liable for tax. This is the exception, not the rule.

 

In most other cases, private sale of used goods are sales tax exempt.

 

However, if you run a business selling used items (whether they are cars, computers - anything), then in most cases, these items are taxable.

 

And I'm totally okay with that.

 

Cars are taxable, likely simply because of the large value attached to them, and the fact that used car sales are easy to track because they need to be registered, etc. But again, cars are the exception.

6 hours ago, valdyrgramr said:

Well, not every state has taxes, to begin with, at least not the last time I checked.  In my state, there's still a conflicting argument between the Governor and others of what can be taxed online.  But, the begging of online taxes started with him hence why it's still in debate.  There are also constantly changed and new rules.

Yes of course, some states might decide to not have sales taxes entirely.

 

That's not really relevant to this discussion though, aside from noting that yes, some places don't charge tax - so of course those places wouldn't collect tax online because there is no tax to begin with.

[Dionyz]

I am not understanding this rule completely. So does it mean that online retailers will charge tax based on its region? Or the consumer's region?

 

If it's based on retailer region then if we purchase from china we are free from taxes? Or do we pay china tax as well?  

[Andreas Lilja]

Why are we taxing consumption again*, it's extremely regressive.

 

*excluding sin taxes