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Post by es80ac on Aug 27, 2021 18:28:21 GMT -8
Following up on a previous thread about the unhappy circumstance of modeltrainstuff.com withholding sales tax, noticed that Scaletrains.com is also doing the same. Did anyone notice this as well? Not wanting to get into a discussion over the right and wrong of sales tax, but it still sucks that this expensive hobby is getting more costly.
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Post by riogrande on Aug 27, 2021 18:50:28 GMT -8
MB Klein just started too on my last two orders. Yeah, it sucks paying shipping and tax both. Gov has to pay for all those social programs ya know.
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Post by dti406 on Aug 27, 2021 19:15:07 GMT -8
I don’t know if you have noticed since they are collecting more sales tax the states have been lowering the income taxes on the top10% rather than lowering the sales tax rate.
Rick Jesionowski
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Post by bnsf971 on Aug 28, 2021 3:13:48 GMT -8
The use tax collection is going to become more and more prevalent, especially starting next year.
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Post by riogrande on Aug 28, 2021 3:59:35 GMT -8
Something to look forward to.
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Post by santafe49 on Aug 28, 2021 6:49:40 GMT -8
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Post by SOMECALLMETIM on Aug 28, 2021 7:44:19 GMT -8
My state enacted online sales tax in July. The bad news is that large retailers like Amazon, eBay, etc. use a 3rd sales software to calculate the tax. The software hasn’t been updated to define specific tax requirements for my rural location. It has been charging me a city sales than that I am not subject to. I notify the online company after each transaction asking for a refund for the tax which the company provides. It’s a PITA having to email for each and every transaction. I am told it’s being worked on/corrected, but nothing so far. The state says it’s to level the playing field for in-state retailers, but if the in-state guys can’t provide what I want, especially for my rural location, then there is no benefit. It was enacted by the Republican controlled state legislature. Contacted my representative and he said sorry for your luck. The worst part for me is that it also taxes the shipping and handling. So it also taxes anything shipped by the USPS which doesn’t make any sense to me.
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Post by edwardsutorik on Aug 28, 2021 11:11:51 GMT -8
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Post by valenciajim on Aug 29, 2021 21:26:01 GMT -8
Based on the professional reading I do as a tax practitioner, the states are getting extremely aggressive in pursuing use tax collections after the Wayfield decision. As SOMECALLMETIM stated, many on-line stores (particularly smaller stores) are using third party vendors to deal with use tax collection. Many of those vendors either do not have the capability to drill down to local levels, or it is too expensive to do so.
In response to Ed's comment about charging use tax on shipping, most states follow California's lead. Under California law, use tax is not charged on shipping if the vendor charges the actual cost to ship the merchandise. However, most vendors have a flat shipping charge, or a graduated shipping charge based on the dollar amount of the purchase. In those instances, shipping charges are subject to use tax. I went through this with a client several years ago and the client concluded that it was too much trouble to charge actual shipping costs. The map in the eBay link that Ed posted is misleading because, even if a state does not charge sales tax on shipping costs, they often consider a flat rate shipping charge to be additional consideration paid to the shipper. In other words, they contend that the shipping costs are built into the purchase price and are born by the seller rather than the buyer. I am not saying that I agree with this, but I am merely saying that is how the law works. As a California resident, I can tell you that I get charged sales/use tax on shipping charges all the time.
After the Wayfair Supreme Court decision, the warehouse location is becoming irrelevant. Prior to Wayfair, use tax was controlled by whether the store had Nexus (i.e., a physical presence in the state) and the location of a warehouse was an important factor. The Wayfair case rewrote the rules and now the location of the customer and the volume of sales to customers in a particular state can be controlling in determining whether sales to customers in that state are subject to sales/use tax on online purchases. States are all in the process of conforming their use tax rules to conform to the Wayfair decision.
Without intending to get political, all states, regardless of which party controls the state legislature, are facing more intense budget issues, so don't be surprised if you live in a red state and see an expansion of the applicability of use tax. Politically, use tax is much easier to impose than an income tax or other type of tax where voters have to write a check to a tax authority. In response to Rick's comment, according to the Tax Foundation, ten states have reduced income tax rates without reducing sales and use tax rates. Again, politically it is more popular to reduce taxes where a check is written to tax authorities and replace it with indirect taxes such as a use tax. By the way, one of those states, Wisconsin, did not lower the tax rate for the top bracket.
The states' latest new revenue source is to tax on-line advertising. This has not caught on yet, but several states (most notably Maryland) are looking onto this. That would increase the on-line retailers' cost of doing business which will likely be passed onto the online customers.
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Deleted Member
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Post by Deleted on Aug 31, 2021 7:52:03 GMT -8
My local hobby stores were always about 5%-10% more expensive. With online sales tax, they're both competitive if not cheaper once you factor in shipping. This is one tax I'm ok with, as it actually does level the playing field a bit.
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Post by lvrr325 on Sept 1, 2021 3:57:50 GMT -8
I don’t know if you have noticed since they are collecting more sales tax the states have been lowering the income taxes on the top10% rather than lowering the sales tax rate. Rick Jesionowski Can we not make up things here? |
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Post by valenciajim on Sept 7, 2021 14:16:16 GMT -8
I don’t know if you have noticed since they are collecting more sales tax the states have been lowering the income taxes on the top10% rather than lowering the sales tax rate. Rick Jesionowski Can we not make up things here? A few years ago, my wife and I were on a cruise and we had dinner with the retiring head of the Oregon Department of Revenue. He told me that 50 years ago, 35%-40% of a typical state's tax revenue came from sales tax, which was very predictable and not subject to fluctuations during the various parts of the business cycle. Income taxes on the other hand are much more volatile. Therefore, the states are more interested in creating a stable revenue source, because their spending increases during the down part of the economic cycle, while income tax revenues decline during that part of the cycle. The arrival of the internet changed the composition of tax revenue by reducing state taxes and increased volatility which resulted in additional burdens to state governments. Also, according to the Tax Foundation, tax rates have generally been reduced across the board for all taxpayers, except for Wisconsin who reduced the rates for only the bottom 90% of taxpayers. Separately, I received three online purchases today. Two vendors charged sales tax (including on shipping), while the third (Accurail) did not charge sales tax. My guess is that Accurail's online sales are fairly minimal and they do not reach the sales volumes where the sales tax collection requirement kicks in. |
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Post by rockisland652 on Sept 24, 2021 12:09:42 GMT -8
I don’t know if you have noticed since they are collecting more sales tax the states have been lowering the income taxes on the top10% rather than lowering the sales tax rate. Rick Jesionowski Not in Illinois they didn't. |
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Post by talltim on Sept 25, 2021 17:46:46 GMT -8
Do we this tax get applied to sales from
US retailers to out of country buyers? i.e. will I get charged if I buy in the UK from a US shop?
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Post by valenciajim on Sept 25, 2021 21:17:23 GMT -8
Do we this tax get applied to sales from US retailers to out of country buyers? i.e. will I get charged if I buy in the UK from a US shop? If the merchandise is being shipped to a foreign address, generally there is no requirement to withhold sales tax. Most foreign countries to not have sales tax, instead they have a value added tax (VAT) which is similar, except the tax is embedded in the selling price. If you live in the UK, I am sure that you are very familiar with the VAT. |
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Post by valenciajim on Oct 19, 2021 8:24:28 GMT -8
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Post by kentuckysouthernrwy on Oct 20, 2021 18:33:07 GMT -8
Some sort of membership needed to read it. |
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Post by valenciajim on Oct 21, 2021 13:30:08 GMT -8
Some sort of membership needed to read it. I am sorry, I guess you have to be a licensed CPA in California to access the article. The gist of the article is that complying with the use tax mandate is proving to be administratively difficult for vendors, customers and everyone except for the tax authorities. It is anticipated that new technological solutions will be devised in the future. |
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Post by kentuckysouthernrwy on Oct 22, 2021 14:43:47 GMT -8
I did see on that link that it is an opportunity for cpas…
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Post by valenciajim on Oct 23, 2021 7:53:57 GMT -8
That's what the link to the post said, but that is not what the article said. The CPA can only make make money if (i) he assists the client with implementing the software that is needed for compliance or (ii) he has a huge practice that uses software, rather than human labor, to prepare all of the necessary forms. Companies like Intuit or Amazon are probably the only companies that will be able to generate the economies of scale needed to make this a profitable endeavor.
I think where this is headed is the Multi-state Tax Commission, an association of state tax authorities, will create a clearing house so taxpayers will only deal with the clearing house, rather than a multitude of states, irrespective of where their customers are located and the clearing house will divvy up the tax collections among the states. What will happen is, when the customer's zip code is entered at the time of sale, the system will tell the vendor how much sales tax to charge. At the end of each month, the sales by zip code and the amount of tax charged will be uploaded to the portal and the vendor will be required to make a single deposit of the sales tax charged using that portal. The vendor will have no more administrative responsibilities. I think that something like this will be first implemented commercially by a software vendor, such as Intuit, who will charge for the services. But that will eventually be replaced with something implemented by the government to avoid the charges. My guess is that we are ten years away from seeing this implemented.
The UK is testing a voluntary pilot program for small businesses to format their general ledger into a tax return format. At the end of the year, the general ledger is uploaded to a portal maintained by Inland Revenue (the UK's version of the IRS) who computes the income tax liability, and sends a detailed report that looks like a tax return to the taxpayer. The taxpayer has 30 days to review the report and pay the tax. If there is a disagreement over the amount of tax owed, there is a dispute resolution venue. If this program proves successful (a big IF), it will be rolled out for to a broader segment of the taxpaying community.
Incidentally, the sales tax doctrine set forth in the Wayfair case, that tax is collected based on the consumer's location (rather than the company's location) is being expanded to income tax in the EU.
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