Ticking off my local dealer

[atogrf1]

I have purchased all of my Festool items online from Bob. (No tax, free shipping.  Can't beat that).
I have a local place that I use to purchase all of my hardwood from.  This place also happens to be a Festool dealer.
Now, I spend a lot of money on hardwoods over there and got the know the salespeople quite well.  We talk about woodworking and tools and all that other stuff.  I brag about my Festools and tell them how much I love them.
Sooooo, finally, the guy puts me on the spot and says to me, "I know that you use Festool a lot.  No offense, but how come I don't recall you ever buying one here?"
I thought that was a fair question, so I told him the truth.  I told him that I would LOVE to give him my business, but living here in Chicago, I have to pay tax for the tools, and it was hard for me to justify dropping an extra $40-$75 on tax, when I can order it online and save that money for lumber.
His reply was, "I don't blame you.  We get that a lot actually.  If it wasn't for that, we could probably sell twice as many tools as we do now.".
I thought that was a crying shame.  Now, they may even consider discontinuing the line because they can't stay competitive.  And, we all know, the people that use Festool are pretty shrewd and know about the whole "tax thing".
Even my local Woodcraft store mentions that it hurts their business.

So, in relaying this story to you, I ask:
Why doesn't Festool have something like a "One Day Only" or "This Weekend Only" sale where local people can purchase Festool from their local distributor and have a coupon or something that is equivalent to the local tax rate?  This would get the people IN the stores and help the vendors and maybe buy some wood in the process, OR the other way around, people buying the wood may be temped to purchase a Festool when they can save the tax for that day/weekend only.  Sounds like it would be a win/win to me.  Especially in this economy.

Not trying to undercut the dealers out there like Bob, but there ARE people out there that like to physically put their hands on something before purchasing them and you just can't do that online.

Thoughts?

 

[Brice Burrell]

It's a nice idea but who should take the hit, Festool or the dealer?  That percentage likely represents a nice chunk of the profit. 

I think the guys that want to put there hands on the tools before they buy should be willing to pay for that convenience.   

 

[atogrf1]

I can see your argument there, and there is some validity to it and I agree with the logic.

However, people have sales and that 10% discount that one time could create a customer that will continue to buy Festool in the future once they realize how great the product actually is.  It is like the cost of doing business/advertising.  Maybe they split it.

I took a "chance" in buying the TS55 (my first Festool), but once I saw how great it was, if I need something, and Festool makes it, that's all she wrote.  That is what I am ordering.  And that was because I got hooked on the quality and believed the advertisements that the cool COULD do all that it claimed and more.

Like I said.  Just a thought.
My local hardwood supplier is really good to me and I would love to reward it with more business. (Don't get me wrong, Bob is spectacular, too).

 

[dustpup]

I hate to be the one to burst your bubble, but technically I do not think that you save money by ordering online. People often buy online (or drive to states with lower tax rates) in the mistaken belief that they can avoid sales tax. However, the law in all 50 states provides that if there is a difference between the tax you pay and the tax rate where you reside and use the equipment, you owe that difference to your state tax department. The term "sales tax" is actually incorrect; most jurisdictions call it a sales and use tax.

The law does to require online retailers to collect sales tax (unless you reside in the same tax jurisdiction as the retailer; but this does not absolve you from paying tax on those purchases. At some point the states may start cracking down on those purchases, but currently we operate on the honor system.

 

 

[DavidCBaker]

It's not quite as simple as the "honor" system.

What you have is states who are unconstitutionally attempting to tax interstate commerce. Just because they tell me something doesn't make it lawful. For example, why do you think states are NOT enforcing that? It's because they know they don't have a leg to stand on.

 

[Corwin]

Yep, Dustpup is correct.  Furthermore, the honor system's days are numbered as all of our local economies tank. 

Sales Tax in the United States
Tax-free Shopping

So, no, there is no need for Festool or their dealers to offer any kind of sale that levels the playing field.  Even Congress is getting involved; Democrats Push for New Internet Sales Taxes

 

[DavidCBaker]

This is from the second source you cite:

To step up the opportunity for collection of use taxes, several US states have been working to implement a "streamlined" interstate use tax agreement. To effectuate this multilateral interstate compact, many states have enacted, or are considering enacting, statutory changes that require residents to disclose, under penalty of perjury, their annual use tax liability for out-of-state purchases. The focus on use tax collection has increased because the U.S. Supreme Court has placed significant hurdles in the path of state efforts to collect sales taxes on transactions in other no-tax or lower-tax jurisdictions. In National Bellas Hess, Inc. v. Department of Revenue of the State of Illinois and Quill Corp. v. North Dakota, the Court concluded that the Commerce Clause and Due Process Clause of the U.S. Constitution require that there be a nexus between the taxing state and the vendor of goods or services, in the form of a physical presence. This has been interpreted to apply to both catalog sales and out of state sales over the Internet. States are thus prohibited from collecting sales taxes on so-called remote transactions because to do so would unconstitutionally burden interstate commerce. The Streamlined sales tax project is the states' response, by which they are seeking to collect use taxes on remote Internet and catalog sales in lieu of sales taxes.

That reads to me like the states are doing their best but have had little luck with the "use" tax idea and would find themselves outgunned in a real showdown. I would venture to say that very few people pay a "use" tax, and I find it odd that states don't seem too eager to fight that battle.

 

[Kevin D.]

I just plunked down another hefty sum on some more Festool to avoid the HST coming into effect July the 1st, Canada Day of all days, they had to pick.

What is the HST for those of you living south of the border?  The Harmonized Sales Tax is essentially the amalgamation of two taxes.  The Provincial Sales tax, and the Federal "GST" Goods and Services tax.  There are a few eastern provinces that have had an HST tax for many years, but now both Ontario and British Columbia have now gone the HST route.  And, similar to you guys, by ordering out of province, at least I was avoiding the Provincial Sales Tax in my province, which in Ontario is 8%.  Now the new HST will be 13%, ouch!  And also here, we would be expected to voluntarily claim the provincial sales, which to my knowledge, I've never heard of anyone ever doing.  That would be like standing up on stage and singing out loud how you like to wear women's clothing....hey that sounds familiar....hmmm!!!

 

[GPowers]

Political Leader always think the best solution is to just TAX us more.

I is hard to believe you are being taxed 13% on a purchase. That is just nuts.

It is high time the Political Leaders wise up and let me keep the money I work hard for. Keep your hands out of my pockets.

 

[tenfingers]

When I bought my Festools last year I did the opposite. I bought at the local family owned tool store to try and support them in this economy. Yes, it hurt, b/c I bought the CT22, TS55, MFT/3, OF 1400, Domino, guide rails, etc..... and with sales tax at 7% i think it was about $250 in taxes. I confess to having seriously considered online ordering to save that in taxes. Of note, you are supposed to report purchasing items and not paying sales tax, but hardly anyone does. My small business bought a couple of cheap computers online one year and didnt pay sales tax and the next year in a random audit, the state saw it and hit us for the $50 sales tax and a $200 penalty. Needless to say, i just buy from places online that have a presence in my state so that sales tax is included so we avoid that problem again......

 

[joraft]

I think the guys that want to put their hands on the tools before they buy should be willing to pay for that convenience.   

I agree, Brice, any time I get a demo of a Festool product (or even just look at it) in a store, that's where I buy it, tax be damned.

Of course, if I'm willing to just trust online reviews, then I'm free to buy where I please.  [big grin]

 

[WarnerConstCo.]

The big issue for me is that my local dealer does not stock much product in the Festool line.
What they have, I have.  So why order from them and wait longer then I would if I ordered on-line.

I could care less about paying sales tax on tools or what not.
The issue for me is availability.

 

[nickao]

Chicago is a unique city. They have the highest sales tax in the United States(and this is after a roll back!) and all one needs go is drive out of the city and even more saving if you get out of Cook county.  For some that is a 10 minute drive out of the city. I know other than restaurants I try not to by anything from within the City at all. It is not the buyers fault, it is Chicago's fault for approving these taxes. I think  many businesses(of course) and the city will lose money(less sales, less taxes) in the long run because of this. The city is broke, but this high tax is not the answer.

http://www.suntimes.com/news/2435666,CST-NWS-salestax27.article

I venture to say the people that still live within the city do a lot of Amazon and internet shopping and as more find out how to purchase on the internet the more the local businesses and indirectly the city are going to lose out.

 

[peter halle]

For those in business in the US who buy expensive items, or more than $600 dollars worth of stuff from a supplier in a year - look what the future holds.  This is a step to making sure that taxes will be paid.  Please notice that I am not saying that this is wrong or right - just that this is coming.  There will be an impact on overhead and administrative costs.

Hidden in the health care bill

Once the IRS has this information, the states will have this information.  

Peter

 

[nickao]

And when the next administration repeals the health bill it won't be an issue.  

 

[tjbnwi]

For any of you who have a local or state sales tax there is a much more major issue.

When you file your taxes, the state tax form (here for certain) asks the question;

Did you purchase any items from the internet or out of state?

If you answered "no" to the question and the answer was truthfully "yes", you have just falsified/lied on a legal document.

When you sign the document either by pen or electronically, it states;

"Under the penalty of perjury the answers are true and correct"

By your answers you have now committed perjury and fraud. If you're audited and make a mistake it is one thing, if you committed fraud it is another. Getting away with the tax is one thing, getting prosecuted for fraud is another. All it takes is the luck of the draw to be audited.  

I know this because I run my purchases through my business, and was audited. I have always been very carefully about this. So I had no problem.

Think about all the prosecutions today that are not for the crime but for making false statements under oath.

That is how they just convicted a former police officer in Chicago. They could not prosecute for the crime, but they got him for making 2 false statements on a document from the year 2000.

atogrf1

Is the lumber yard near the Lincoln Park neighborhood?

You think all my suppliers are going to like getting 1099's from me. All the large box stores will be inundated.

Sorry to be the bearer of such news, passing along my experience.

Tom

 

[Skylar]

Hi all. Interesting topic. I've purchased all my Festool from my local dealers. Living in Oregon, we have no sales tax. $500 for a ts55 is $500 period! I guess I've taken it for granted!  To make it even better, we don't even pump our own gas! [smile]

 

[Corwin]

Hi all. Interesting topic. I've purchased all my Festool from my local dealers. Living in Oregon, we have no sales tax. $500 for a ts55 is $500 period! I guess I've taken it for granted!  To make it even better, we don't even pump our own gas! [smile]

Oh, sure!  Rub it in.    [sad]

 

[Rob-GB]

Oregon... lots of forests, lumberjacks, service stations with the onus on service and low taxation.....
Right! How do I get to move there? And can I bring my own toys tools? [big grin]

 

[Redfox]

Living in Denmark, the tax situation is somewhat different. We have 25% tax on everything sold. If you have your own company, you can deduct that. Private no-go.
Buying items within the EC is taxfree, and from outside you are to declare it yourself. Random picking is being made, with bills being send afterwards together with a fee.
Supporting the local dealer is for sure a good thing to me at least. Both from a servicestandpoint, local supply standpoint and ethic ditto. I very seldom buy over the net, as there are shipping costs that sums up to the price of the local dealer. Anyway I cannot debate the price/rebate/further items thrown in the deal, on the net, but I can do that with a local dealer. When we support small local dealers, they also experience further willingness to store more stuff not so often sold - bigger stock.
The big local dealers are not like that, and I've had my fair share of bad experience with them. I now only buy tools etc. from small local dealers. And when the huge local store is closed after 3 pm, on weekends etc, the small local is open just when I need that extra little thing. They always wellcome you, know your name, take good time to show you how to or smalltalk on anything else. Or maybe they will show you how to take another approach on doing a specific task. I like that, and I like to get my hands on the item, before making a purchase. Like others said, there's no substitute for that.
Some people go local, try it out, and then buy online. And after a few years, they suddenly find the local store closed, to their big surprise or regret. Well, noone can live from loking only. If I choose to buy online from abroad, I slowly kill my local (small) dealers, and the tax does not go to my own country, but somewhere abroad.
This is in no way meant as a negative way to internet trade og trading abroad, but just how it happens. Some things cannot be ordered here any more, as companies are closing some of their national sale in other countries, and in that case I have to buy from other countries, which I do.
Actually we don't have such nice dealers like Bob, Tom et al around here, and that makes it easier too.

Cheers,
Jacques.