Are You Reporting Your Internet Purchases?

theodp writes "Over the next week, taxpayers in 19 states will be confronting new sections on state returns that ask them to fork over unpaid sales taxes for items purchased out of state, including Internet transactions. A NY Daily News editorial characterized the addition of use tax to state returns as a rip-off and advised taxpayers to fill in a zero on the line, although an accountant suggests doing so may even be worse than just leaving it blank and put you on the line for tax fraud."

Comments

Re:Yeah, I can see this working. *cough*

[setzman]

Alabama is one of them, though it doesn't apply it to only internet purchases. It applies to any thing that you bought out of state and brought back home.

Re:Yeah, I can see this working. *cough*

[fiannaFailMan]

the honor system doesn't work

Doesn't it?

There are people out there who say that there is no legal requirement to pay income tax to the federal government. I read last night about a guy that used to work for the IRS who resigned after doing his own research and coming to the conclusion that these people actually have a case. He hasn't filed a return since 1999.

How these people propose to fund the building of the roads that they will march on in protest is unclear, but it's an interesting case they put forward from a legal point of view.

Re:North Carolina

[mschiller]

So what if I'm a Taxachusetts's resident, who typically pays 5% sales tax. I visit California, see a great buy on a laptop at Fry's and pay the 8.5% sales tax.. Do I get a credit for the 3.5% of say $2000? (I want my $70!) I doubt it...

Re:Unconstitutional

[jonman_d]

You can't use that justification (see my comment here), but you can cite section ten:

Article I, Section Ten:
Section 10. No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility.

No state shall, without the consent of the Congress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing it's inspection laws: and the net produce of all duties and imposts, laid by any state on imports or exports, shall be for the use of the treasury of the United States; and all such laws shall be subject to the revision and control of the Congress.

So yes, it is unconstitutional - but not for the reason you cite.

List of States that Collect Tax

[Sailsa]

I am an accountant who is currently preparing tax returns for several states and has had to deal with this. Here is a list of the states that collect sales taxes for out-of-state purchases through income tax forms.

1. Alabama, California, Connecticut, Idaho, Indiana, Kentucky, Louisiana, Maine, Massachusetts, Michigan, New Jersey, New York, North Carolina, Ohio, Oklahoma, Rhode Island, South Carolina, Utah, Vermont, Virginia, Wisconsin

However, even though all these states have places to report this tax, in almost every case my firm just puts in a zero. Granted this policy may change if states become more active with enforcement, but that is our current policy. Just don't blame me if you put 0 and get audited.

Where is the Line Drawn?

[SeinJunkie]

It's tough to say how much you are supposed to pay, even if you *had* kept track of your Internet purchases.

I moved from a Maryland to Michigan in December 2003. If I were to count all of my Internet purchases for 2003 on my MI taxes (which requires the use tax) then, I would be paying for mostly MD purchases (which, to my knowledge, does not). So, just divide it up before and after, right?

Not that simple. Around the time I was moving, I was purchasing a lot of last minute things on the Internet. Many of which, I ordered in MD, but received in MI. Or, the transaction was initiated in MD, but by the time the money was transferred, I had already moved.

Don't taxes frustrate people enough without introducing state taxes like this?

Good Luck, New York

[AnalogDiehard]

Once a year I drive four hours to Pennsylvania to buy clothes where there is no sales tax on clothing. I pay a couple hundred in cash so there is no auditing trace.

Not only that, NYS has agents that check the plates in these out-of-state clothing outlets and they leave leaflets on the windshields pressuring citizens that they are evading sales tax. How's that for heavy handed tactics?

NYS has done a great job of taxing citizens and jobs out of the state and I am moving away once I am in a position too, because I have just become unemployed and there are no jobs here. Good riddance NYS, and to hell with your Gestapo tactics and your broken tax system!