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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."
Where is there a list of states participating in this? TFA only mentions two, and a lightweight Googling didn't reveal much more. I'm a Mass/Taxachusetts resident (so I consider the chances high), but I certainly didn't see anything on my state return about grey-area sales taxes.
Speaking of which, good luck if they wanted to collect. As the article mentioned, the honor system doesn't work. Not only that, being the organized person that I am, clearly I have kept an accurate record of every internet transaction I made in 2003. In short, the only way I can see these folks having a prayer of getting my money is by making a national system of collecting these taxes that is compulsory for retailers to take part in. Otherwise, it's doomed.
Auto-reply to ACs: "Truly, you have a dizzying intellect."
Now if that wouldn't be a violation of the Commerce Clause, nothing would be.
Here in N.H. there is no sales tax. I often forget that other states even have sales tax. It seems I am only reminded when I am on vacation, and the clerk wants me to pay $10.55 for the item that is clearly marked at $10.00. Then I get this dumb look from the poor person behind the register, "Uh, sales tax?"
It makes me wonder, how our state can run without sales tax, and without state income tax. I mean, it's a wonder we survive at all! Now, look at Mass, and California, loads of taxes! Boy, those people sure are better off with all those taxes and government programs! But, I digress.
Seriously, if you live in NH, and you buy goods over the Internet, no tax, case closed, Live Free or Die!
Modest doubt is called the beacon of the wise - William Shakespeare
Article I, Section Nine:
No Tax or Duty shall be laid on Articles exported from any State.
Additionally:
No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another: nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another.
One state cannot tax a purchase made in another state. Taxes are too high as it is.
Business isn't willing to pay for products, innovation and careers, so we get brands, mortgage commercials and layoffs.
As a brick & mortar retailer, I'm sick and tired of losing businesses to cheapskates who want to shave a few pennies off
Welcome to the free market. Thanks for playing.
People's desire to believe they are right is much stronger than their desire to be right.
States with sales tax lines on their tax forms include Alabama, California, Connecticut, Idaho, Indiana, Kentucky, Louisiana, Maine, Massachusetts, Michigan, New Jersey, New York, North Carolina, Ohio, Rhode Island, South Carolina, Utah, Vermont, Virginia and Wisconsin, according to the Federation of Tax Administrators.
Read more about it here.
The IRS has a pretty comprehensive PDF online debunking most of these schemes.
4 ,1,7068670.story?coll=la-home-business
[registration required, blah blah]
http://www.irs.gov/pub/irs-utl/friv_tax.pdf
While clearly the IRS is biased, they do cite many court cases that have legal precident covering many of these loopholes or misreadings of the tax code.
There was also a related article in the LA times last week which touched on the same topics
http://www.latimes.com/business/la-fi-taxman4apr0
Anyway, my question is simple - there's this line on my state taxes that asks me how much I paid in out-of-state goods over the past year so I can fork over sales tax on the items. My answer: I have no idea. Am I supposed to?
I was rather surprised to see this on my tax forms, since I don't recall being told any time that I should be saving receipts from out-of-state purchase. And while someone probably could look up my out-of-state purchases on my credit card, I don't have instant access to those records... Even if I did, I don't know what counts and what wouldn't. For example, some things aren't taxed in Massachusetts, like clothing.
I can't see how this will possibly work. I have no way of looking up this data - is it really my responsibility to keep track of my out-of-state purchases so the state can get their $5 or whatever? I don't make many purchases out of state anyway, and I definately don't bother keeping track of which purchases were made out of state and which were not.
You are in a maze of twisty little relative jumps, all alike.
Article I, Section 8 of the US Constitution:
The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States.
Amendment 16 of the US Constitution:
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.
Sorry, but I find it hard to argue with that...
States have no right to tax interstate commerce, buying something out of state is interstate commerce and constitution clearly states that states have no right to levy tariffs or taxes on interstate commerce.
Have you ever been to a turkish prison?
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...
It's pretty common along the Washington(8+% sales tax) Oregon (no sales tax) border too. Incidentally if you live in a state that doesn't have a sales tax you are exempt from other state's sales taxes (probably true about all states, but they might come after you for the use tax if you live in a state with a salels tax). You were supposed to report the items purchased and pay the sales tax on them (mail order too). Companies are only required to collect if they have a physical presense in the state.
Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
- 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.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?
IANAL either. However, I have read the Constitution in its entirety and contemplated the meanings within, something I'm convinced many of today's lawyers have not done. I have also studied and researched Constitutional issues for my personal development and university coursework.
I feel that you're overlooking a very big checks and balances system. The members of the federal Congress, though elected from states, are largely outside the sphere of influence of the state governments. I think the 2/3 vote to send an amendment to the states for ratification would likely not occur. Fortunately, there is no method in place for the Supreme Court to mandate an amendment be sent to the states.
Beyond the amendment issue, you are reasoning that because someone can get a better deal in another state on a purchase, the deprived state has a legitimate claim. That is not the case. If a state cannot attract profitable businesses or develop a solid revenue model, they have no business taking the revenue from states that encourage commerce and have taken steps to simplify their own tax systems. The "offended" states should study the open market's behavior and find out what they are doing wrong.
Also, you are assuming that every state that is drawing these sales has no sales tax. What if they merely have less of a sales tax? To paraphrase from the Constitution, "full faith and credit" should be applied to the acts of other states. So, if your citizens have already been taxed on a purchase in another state, they have fulfilled their obligation. If the state in which the purchase was made did not require sales taxes, they have also fulfilled their requirement. Therefore, their home state has no jurisdiction. Residents of states can claim states as their home, but states can not claim residents as their property (slavery by the state?) to control at whim.
References: Article IV, Section 1; Article 1, Section 10; and Article V of the Constitution of the United States