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View Diary: Senate takes up bill to close the online sales tax loophole (131 comments)

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  •  California requires online tax now (5+ / 0-)

    Going from memory here, so I'll take any needed corrections. California passed a law in the last session (?) requiring the major online retailers to collect state sales tax. I know that Amazon is now collecting CA tax.

    There is a way around that right now, however. When you buy something from Amazon, in addition to the direct purchase from Amazon, there is also a link that says something to the extent of: Also available from $xxx at 15 other retailers.

    Click on that "other" link and you'll see a list of other sellers offering that item.

    They'll be sorted by price, and will also indicate if they charge tax or shipping costs. So, you can play with that to find your best price. Somebody may sell the item cheaper, for example, but add on tax and shipping.

    The next guy might be slightly higher in cost, but collects no sales tax and will ship for free.

    It pays to do your research.

    And that, in a nutshell, is what this proposed law will prevent.

    •  CA has always required Use taxes be paid (6+ / 0-)

      on items purchased out of state and brought into CA for use by residents.  
        That Amazon and certain other retailers failed to collect sales tax did not relieve the customer from paying taxes to CA themselves.  IT's just that the state has limited resources to go after the little guys who only buy only small amounts of goods online.

      My Karma just ran over your Dogma

      by FoundingFatherDAR on Mon Apr 22, 2013 at 02:57:07 PM PDT

      [ Parent ]

      •  Yes, of course (2+ / 0-)
        Recommended by:
        cassandracarolina, viral
      •  New York now collects sales tax on income tax form (0+ / 0-)

        A few years ago, New York State added a line on income tax forms to collect sales tax on out of state purchases.

        Compared with this, I'd almost welcome having out of state taxes collected by merchants at the time of sale.

        As it stands now:

        I've heard that it's a bad idea to keep reporting zero sales tax on NY income tax forms, that this may lead the state to start asking questions or demanding taxes.

        The state has a formula, based on income, that you can use to estimate your taxes due (on all purchases under $1000); you're supposed to add tax separately on all purchases over $1000 to the amount from this table.  This is a bad deal for me, because I tend to order online only those things I can't get locally (I've had too many problems with package delivery companies, and prefer to not deal with them).  So my actual tax due is usually far less than this "helpful" state estimate.  I don't like this "convenient" table that if I used it would usually leave me over-paying on sales tax.

        So I've actually have tried to add up what tax I owe to prove it's less than the state's estimate. This is a big pain. Locating receipts and figuring out which ones tax was already paid on is no fun (and adds to the time it takes me to get my taxes done).  Figuring out which purchases taxes are actually due on is also a bigger guessing game than you might think. Are things like internet subscription services, satellite subscriptions, etc. (iTunes? Netflix? XM Satellite radio) taxable? I've had other similar examples too. I think some are not.  

        Then there's another annoying problem with adding sales tax to my income tax due.  The sales tax due adds to your total tax bill, and this total is used to figure whether you've had enough withheld or not. Not enough withholding, and you can be hit with a penalty for under-withholding.  Yes, because you didn't pay 4 installments of estimated tax that cover your income, and your sales tax, you can be penalized at the end of the year.  This nearly happened to me, because I was already under-withheld on my income, and the added sales tax due very nearly pushed me over the line to owing a penalty.

        If I have to choose between this pain, and ending up paying the sales tax anyway, vs. having the merchant collect the sales tax up front, I think I'd rather have it paid up front and get rid of this headache on my income tax form.

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