Buying on-line is NOT tax-free

[CDM]

In some recent FOG posts I've seen the suggestion that buying online from an out-of-state retailer is a way to get Festool products more cheaply because you don't have to pay sales tax.

I live in Illinois, and I buy Festool both online and from brick-and-mortar stores here.  When an online retailer does not collect sales tax because it doesn't have a physical presence in Illinois, I still have to pay tax.  There is a "use tax" that is the difference between any sales tax I actually paid and the sales tax I would have paid at a store in Illinois.  So the tax amount for me is the same whether I make the purchase in Illinois, online, or on a road trip to a state with lower taxes.

The problem for Illinois with the use tax is that reporting is on the honor system.  The tax isn't collected at the point of sale.  Instead, buyers are supposed to keep purchase receipts and self-report when filing annual Illinois tax returns.  As itemizing is a hassle, the state offers a straight tax alternative based on income.  Regardless, there's no way for the state to check how much people have spent at out-of-state retailers.  This means that many people who don't want to pay this tax do not pay it.

While I don't like many of the spending decisions made by the Illinois state government, I still pay my taxes.  I've really liked seeing FOG users speak up against abuse of Festool's generous return policy and for supporting Festool's manufacturing jobs in Germany.  I hope that FOG readers who may not have already will take the time to learn what their state's use tax obligations are and then do the right thing and pay the proper amounts.

 

[mastercabman]

Alright!
That's the spirit!
If you like you can pay my taxes too!

 

[waho6o9]

Taxed

Enough

Already

 

[Peter_C]

I just bought a Makita battery charger, from Ebay, out of Illinois and was quite surprised that I was charged sales tax. Some quick online reading to confirm I should be paying tax showed they were required to charge sales tax to California. Not that way for most states though.

Amazon is great in that it shows when you are going to pay sales tax or not. Of course I do not want to pay sales tax, but the reality is tax is what makes society better. The loop holes are slowly being closed as online sales are a recent trend, much like everyone owning a computer. In a few more years it won't matter where you buy something as we will be taxed. Then it comes down to driving to the local store to buy it, or have it delivered. Since I am a patient person, I like having things delivered, and it saves me hours of not shopping in stores. Plus I can search out the best deal. Festools price lock takes away any savings of buying from the internet, except sales tax for now...

 

[AlexThePalex]

then do the right thing and pay the proper amounts.

Never gonna happen.

Me, as a bystander looking at your American system from a distance, I get the idea it is designed on purpose to work this way. I mean, over here all sales taxes are already calculated into the total price you see and pay. So why not in the USA? If you're a government that really wants to collect on these taxes, the best way is to do it right at the point of sale, not later.

 

[Dogberryjr]

then do the right thing and pay the proper amounts.

Never gonna happen.

Me, as a bystander looking at your American system from a distance, I get the idea it is designed on purpose to work this way. I mean, over here all sales taxes are already calculated into the total price you see and pay. So why not in the USA? If you're a government that really wants to collect on these taxes, the best way is to do it right at the point of sale, not later.

Because here in the US, sales taxes are levied by states and localities, not nationally. 

 

[Rob Z]

Alex, for the most part, sales taxes are collected at the point-of-sale ( exceptions for those entities that have don't pay at POS, but  they pay later via a separate filing, or for various tax-exempt entities such as churches, charities, government agencies), but only  in the jurisdiction where the sale tax is applicable. 

So, for a sale in Virginia, Virginia sales tax (and any local add-on) is collected .... but only for transactions conducted in Virginia.    Virginia (and by extension, the retailer/vendor/supplier,  as the "required agent for Virginia") only has the authority to collect sales tax for transactions within Virginia.  If someone from Iowa buys something online from a vendor in Virginia, the laws in Iowa don't apply to the vendor here in Virginia.  And the laws here in Virginia don't allow for the vendor to collect sales tax from the resident of Iowa and then to remit it to Virginia.

 

[greg mann]

then do the right thing and pay the proper amounts.

Never gonna happen.

Me, as a bystander looking at your American system from a distance, I get the idea it is designed on purpose to work this way. I mean, over here all sales taxes are already calculated into the total price you see and pay. So why not in the USA? If you're a government that really wants to collect on these taxes, the best way is to do it right at the point of sale, not later.

We are a collection of states, with some taxing done at the federal, state, and even local level. Some states have sales tax, some don't, and federal sales tax is pretty much limited to highway fuels. At one time we had a federal excise tax but it has been many years removed. My opinion, our system is both a blessing and a curse, take your pick.

I do believe without spotty collection of sales tax on internet purchases Amazon and other internet marketers would not be near what they are today and a fair number of failed brick and mortar stores would still be around. Of course, retail giants like Walmart and Home Depot have had a lot to do with the demise of small retailers as well. Each of us can arrive at our own conclusions whether this is a good thing or not.

 

[AlexThePalex]

I know the because, I don't really need an explanation.

If all those different levels of governement, federal, state, county, city, wanted those taxes, they would simply adopt some legislation and they would all agree to it because it meant more money for all of them.

But they don't do that and keep the current situation as it is. They would only do that if they find it beneficial in some way. 

 

[Corwin]

I know the because, I don't really need an explanation.

If all those different levels of governement, federal, state, county, city, wanted those taxes, they would simply adopt some legislation and they would all agree to it because it meant more money for all of them.

But they don't do that and keep the current situation as it is. They would only do that if they find it beneficial in some way.

Ha, ha, ha, ha, ha. Oh, Alex, you are priceless!  [big grin] [wink]

Remember how it worked here before the internet? You know, as in mail order. Some states had agreements to collect out-of-state sales taxes and others did not. The U.S. Congress didn't do us any favors by letting people go without paying the taxes that they otherwise would have owed -- now it is far more difficult changing people's behavior...

 

[Rob Z]

Alex, there is a need for an explanation    [laughing]  The federal government isn't in the business of collecting sales taxes for the thousands of state/county/municipal taxing districts.  It doesn't have that authority.  And, the various states and other local governments of which I am not a legal resident, don't have any legal authority over me and my transactions.

 

[AlexThePalex]

Ha, ha, ha, ha, ha. Oh, Alex, you are priceless!  [big grin] [wink]

Remember how it worked here before the internet?

Corwin, I didn't even know America existed before the internet.  [wink]

 

[AlexThePalex]

Alex, there is a need for an explanation    [laughing] 

No, there realy is not. I know HOW your system works.

The federal government isn't in the business of collecting sales taxes for the thousands of state/county/municipal taxing districts.  It doesn't have that authority. 

I never said it did. But they can push for legislation if they wanted to. Or LOBBY for legislation with the states. Or the states can make agreements amongst each other without federal involvment. If they wanted to.

But really, quit thinking you're a collection of 50 states, you're in reality just one single country. The federal government has a lot more authority than most of you dare to admit.

And, the various states and other local governments of which I am not a legal resident, don't have any legal authority over me and my transactions.

If you do a transaction in another state, that state has authority over every element of that transaction. Heck, my email only passes through American servers, yet the American government thinks they can read them whenever they please.

 

[teocaf]

  I hope that FOG readers who may not have already will take the time to learn what their state's use tax obligations are and then do the right thing and pay the proper amounts.

ha ha, next time you get an audit, show the irs this thread and tell them: "not only did i pay all my taxes to the penny, BUT i also encouraged my fellow toolies to pay their full share with due diligence and accountability"...
i do think you meant well, but besides the obvious fact that you didn't listen to your momma when she told you never to stick your nose in other people's money affairs, who do you think is going to take tax advice posted by some random 'who knows who' on a tool forum.  you must be a riot at parties...

 

[teocaf]

  I didn't even know America existed before the internet.  [wink]

So now the discussion has moved from the american tax code to the dutch educational system... 
ha ha--Can't wait to see where it goes next!

perhaps the guy with the 'illegal use' opinion of paypal's friends and family option will chime in...

 

[vidkid26]

[popcorn] [popcorn] [popcorn]

 

[charley1968]

[big grin] [big grin] [big grin]

 

[charley1968]

..ceterum autem censeo Carthiginem esse delendam!

 

[AlexThePalex]

..ceterum autem censeo Carthiginem esse delendam!

Ceterum censeo nunc est bibendum.  [cool]

 

[charley1968]

...and one certainly pays tax on that as well..