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Download Taxes As a Weapon Against File-Sharing
An anonymous reader writes "An examination of a new "digital downloads" taxation law in Washington State suggests that files downloaded via file sharing programs may be covered by the law — meaning that you may be expected to pay taxes based on 'the value of the digital product ... determined by the retail selling price of a similar digital product.' Thus, if you were to download music or movies and not pay the taxes, would you be liable for tax evasion charges? How much do you want to bet the RIAA will push exactly that claim?"
Tax evasion is what put Al Capone away.
If I were God, wouldn't I protect my churches from acts of me?
TFA says if the download has no purchase price, then it is taxed based on the purchase price of similar items. So if you download a track from an indie artist or public domain for free you still owe a tax as if you had purchased it for the average going rate of an mp3 on iTunes...
I'd be happy to pay them 8.25% for anything I buy. Considering that would be a bit of a break off the 9.5% rate I pay now.
That's how they got Al Capone - regardless of the legality of your income, you still need to pay taxes on it.
That being said, if the retail value of a DVD is $10, and a state has a 6% sales tax, I could download a hundred movies and owe...six whole dollars. No prosecutor in his right mind is going to prosecute for that.
Um, check your math. You'd owe $60. It'd be 60 cents for each movie.
No. According to line 33 of page 4 in the bill, computer software is not a digital good. Perhaps not the reason you were hoping for, but it does answer your question.
http://en.wikipedia.org/wiki/Use_tax
Oh, and I'm a CPA. The OP is correct.
"Extremism in the pursuit of liberty is no vice. Moderation in the pursuit of justice is no virtue." --Barry Goldwater
If someone gave you $10,000 gift card it'd be a gift. They paid the taxes when they bought it.
Go to the store. Buy X as a gift for someone. Notice the line at the bottom that says "Tax".
Only time it's tax exempt is if you're going to resell it. I had friends who bought stuff at Sams Club to sell in their small gas station, they didn't pay taxes at Sams. Their customers paid tax at their place.
In the USA, as of around 10 years ago, gifts to family members of $10,000 or less did not have to be reported and were not taxable income.
He is absolutely 100% correct. Stick your need for a citation where the citation don't shine.
Wrong. You need to pay taxes on illegally gotten money. This is clear in the law, and there is no issue at all. Al Capone was nabbed for tax evasion on the money he earned illegally. And you downloaded a song, possibly in an encrypted format. If the data you got is intended to be re-assembled into a product with a value, you acquired it.
If you don't know what you're talking about, don't.
I'm a concientious
I think that if you sell stolen goods and make tons of money then you do have to pay taxes on it or you face tax evasion charges.
Per your suggestion, I'd like to learn more about what you have to say, specifically case law where it is established that:
a) product==money
b) product==earnings
if those where the specific findings in the Capone case. Specific paragraph numbers from the ruling would be nice, but I'll take a case number.
There are 1.1... kinds of people.
You can sell it for any price you care to name. The source, on the other hand, you're required to provide for reasonable distribution costs.
"I do not agree with what you say, but I will defend to the death your right to say it"
You can give up to $12,000 (2008) or $13,000 (2009+) in gifts to any single individual through the year and not have to pay a gift tax on it. However, once you gift more than that to any one person, you are obligated by federal law to pay federal taxes on it. At least, that was my understanding when I looked it up last year. However, the person receiving the gift does not have to claim it as income, as the responsibility is placed on the giver.
Sales tax is a different beast, and yes, is applied when you use the gift card at a location. So nice when the government goes double dipping in the same pool of money.
Ref: http://www.irs.gov/businesses/small/article/0,,id=108139,00.html
While I certainly can't attempt to answer the above, I do offer IRS Publication 525: Taxable and Nontaxable Income, which offers these gems:
Bribes. If you receive a bribe, include it in your income.
Found property. If you find and keep property that does not belong to you that has been lost or abandoned (treasure-trove), it is taxable to you at its fair market value in the first year it is your undisputed possession.
Illegal activities. Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.
Kickbacks. You must include kickbacks, side commissions, push money, or similar payments you receive in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.
Stolen property. If you steal property, you must report its fair market value in your income in the year you steal it unless in the same year, you return it to its rightful owner.
Nostalgia's not what it used to be.
This was already overruled by the supreme court because of that pesky 5th amendment.
Eh, sissies. 22% on most of the stuff we buy here in Finland.
That is what this law is about. What do you mean "plan to?" This law says what they're going to try to do about it: tax it as though you had paid more than you did.
Legitimate downloads are the whole ostensible point of this law, and people are now noticing that it gives RIAA/MPAA a new angle in dealing with illegitimate downloads.
So, it's unfair. So what? No politician ever lost re-election votes for creating unfair laws. Voters love this kind of stuff and reward it ever chance they get.
"Believe me!" -- Donald Trump
The Post Office doesn't sell those any more. They moved it to the local police stations. Just ask the officer at the front counter for the drug stamps.
Iceland here, 24.5 %
But we have health care for all - and a decent school system, how about those 8.5 %?
New Zealand: 12.5% Sales Tax, + 25-45% Income tax.
Woo!
(also health care for all and an OK school system. And loans from the govt. for university)
Are you referring to the Tax Act of '37? That was repealed in 1970 as part of the Controlled Substances Act, since the CSA did outright what the Tax Act could only do indirectly: make marijuana illegal*, only the CSA was far more sweeping.
*for those unfamiliar with the history of weed law, the Marijuana Tax Act levied a moderate tax on anybody dealing commercially in weed but in order to pay the tax you had to first prove that you hadn't been paying the tax and were thus in breach of the law, and it levied heavy penalties on people thus incriminated. The courts eventually ruled that the requirements were a breach of the 5th Amendment but not until 1969.
My guess is that downloads of linux distributions would be taxed based on msWindows retail sale value. After all, msWindows is the dominant computer operating system.
Yeah, except that we do too :P
Well... the existing bridge fell down, so maybe they figure one they build themselves can't do so much worse that it's worth being totally cut off for two years?
"Gets by fine" is an overstatement. Washington is facing somewhat of a budget crisis, nothing like California but still worrisome, and people have been tossing around the idea of an income tax to continue paying for services.
Visual IRC: Fast. Powerful. Free.
TFA is wrong. TFB (the fucking bill) says there is no tax on digital goods an end user receives for free