Out of state company charging sales tax. Is this even legal?

[ARCHIVED THREAD] - Out of state company charging sales tax. Is this even legal?

Posted: 10/13/2005 11:43:37 AM EDT

So i start to do an order on this site and as I am checking out I notice $2 and change added on as tax on a roughly $50 order. I know if it was a NY state store it would be around $4.25 tax so I shot them an email inquiring as to why I was charged sales tax from a company that is down in VA?
Ill post the response below but after reading it, it sounds like they are pocketing the money because they are a new company.

Tom,

We had it initially set up like this on the webstore settings, because we are based in VA, and are subsequently charged for VA sales tax.
It was an option given to us to charge the VA tax on all orders, and we thought it would be a prudent move in our fist 6 months. We are looking to change that shortly.

Hope this answers your questions,

what do you guys think?

Posted: 10/13/2005 11:45:24 AM EDT

[#1]

I'd tell them that you may consider ordering from them in six months when they quit adding on unnecessary charges.

Posted: 10/13/2005 11:46:17 AM EDT

[#2]

Bollocks!

Posted: 10/13/2005 11:47:03 AM EDT

[#3]

They can charge you whatever they think they can get away with and call it whatever they want, but there's no way they are going to remit that "tax" money to the state of VA.

Posted: 10/13/2005 11:48:22 AM EDT

[#4]

Quoted:
They can charge you whatever they think they can get away with and call it whatever they want, but there's no way they are going to remit that "tax" money to the state of VA.

that what I figured. falsely charging me sales tax and not reporting it to the state sounds like some sort of Fraud.

Posted: 10/13/2005 11:48:45 AM EDT

[#5]

Unless they have a tax certificate for your state, what they are doing is illegal.

Posted: 10/13/2005 11:48:59 AM EDT

[#6]

Quoted:
I'd tell them that you may consider ordering from them in six months when they quit adding on unnecessary charges.

I didnt complete the order after seeing this charge, as miniscule as it was. I think i will wait 6 months because of that email reply.

Posted: 10/13/2005 11:50:33 AM EDT

[#7]

Quoted:
Quoted:
I'd tell them that you may consider ordering from them in six months when they quit adding on unnecessary charges.
I didnt complete the order after seeing this charge, as miniscule as it was. I think i will wait 6 months because of that email reply.

Just be sure to let them know it.

Posted: 10/13/2005 11:53:44 AM EDT

[#8]

NY now asks that you report any out of state purchases on your tax return so you can be charged NY sales taxes on them!!!

Posted: 10/13/2005 12:01:34 PM EDT

[#9]

Quoted:
NY now asks that you report any out of state purchases on your tax return so you can be charged NY ~~sales~~use taxes on them!!!

Use tax is sales tax's evil twin.
Weird. They're assuming that the nexus/point of sale for the transaction is in their state rather than the customers.
That company should only be charging NY sales to you if they have a NY tax certificate. It should also be at the high 8% or so NY S/T rate, not the 5% VA sales tax rate. They would then remit the sales tax to NY, removing your obligation to remit use tax personally. Of course since NY assumes that you cheat them, they charge you a de minimus use tax on your yearly tax return.

Why did I leave NY again. Oh yes, now I remember!

Posted: 10/13/2005 12:02:06 PM EDT

[#10]

Columbia House DVD club does that, so I quit buying from them. If they collect out of state sales tax they have to have some type of agreement with the state they're charging on their behalf. If they're collecting it and not sending it to the state then that's illegal. Dunno how'd you find that out, maybe your state revenue web site for starters

Posted: 10/13/2005 12:02:44 PM EDT

[#11]

IF a company maintains a registered business address in your state, they can charge sales tax...in fact, they must.

Say ABC company is based in Georgia and you're in Florida. No sales tax for sales to you, UNLESS
ABC company maintains a business office in Florida. Then they have to charge the tax.

CJ

Posted: 10/13/2005 12:08:07 PM EDT

[#12]

Quoted:
IF a company maintains a registered business address in your state, they can charge sales tax...in fact, they must.

Say ABC company is based in Georgia and you're in Florida. No sales tax for sales to you, UNLESS
ABC company maintains a business office in Florida. Then they have to charge the tax.

CJ

+1

Say, I order from Brownells in IA, I dont have to pay any tax, BUT if Brownells has a regional warehouse or office in CA, even though the order goes to IA, I have to pay CA sales tax as they have a CA business location.

Posted: 10/13/2005 12:11:15 PM EDT

[#13]

They dont have an office in NY and dont have a NY state tax certificate. It is a small company out of Va beach. Its not one of the vendors from here or even in the firearms industry

I just came acrss this article www.washingtonpost.com/wp-dyn/content/article/2005/07/01/AR2005070101475.html If they did have some internet tax thing in their state law, they must charge me MY state's tax rate and NOT theirs. I think this company is just messed up and not out to screw me over.

Posted: 10/13/2005 12:11:30 PM EDT

[#14]

Quoted:

what do you guys think?

I think they thought wrong.

Posted: 10/13/2005 12:14:26 PM EDT

[#15]

Quoted:
NY now asks that you report any out of state purchases on your tax return so you can be charged NY sales taxes on them!!!

As does my state. I have never made any out of state purchases.

Posted: 10/13/2005 12:14:32 PM EDT

[#16]

You wanna see real robbery... buy stuff on eBay where people rape you by charging a flat rate for shipping that's about 300% over the actual cost of shipping the item.

Shop somewhere else. While you can... isn't the .gov trying to make sales tax on the net mandatory?

Posted: 10/13/2005 12:15:16 PM EDT

[#17]

Quoted:
They dont have an office in NY and dont have a NY state tax certificate. It is a small company out of Va beach. Its not one of the vendors from here or even in the firearms industry

Don't pay it. They don't know what they are doing.
Tell them that they have no nexus in NY, and they don't have to remit or collect S/T to VA for online or catalog purchases since your being out of state removes the nexus for VA.
You of course still owe NYS use tax.

Posted: 10/13/2005 12:29:17 PM EDT

[#18]

The whole tax thing is getting out of hand.

At work we now have to charge different tax rates for each order depending on what county a customer lives in if they are a Ohio resident.

Its a mess.

Posted: 10/13/2005 1:00:34 PM EDT

[#19]

It’s gotten to the point where keeping up with tax laws is pretty hard for lots of people – though these guys are going to have to get their act together if they want to stay in business.

I’d be inclined to give them a break this one time.

Posted: 10/13/2005 1:13:43 PM EDT

[#20]

Quoted:
NY now asks that you report any out of state purchases on your tax return so you can be charged NY sales taxes on them!!!

Posted: 10/13/2005 1:20:41 PM EDT

[#21]

Quoted:
IF a company maintains a registered business address in your state, they can charge sales tax...in fact, they must.

Say ABC company is based in Georgia and you're in Florida. No sales tax for sales to you, UNLESS
ABC company maintains a business office in Florida. Then they have to charge the tax.

CJ

This is 100% correct, andis refered to as nexus.

A seller's minimum level of physical presence within a state that permits the taxing authority to require the seller to register, collect and remit sales/use tax and comply with the Country's, Province's, State's and/or County's taxing statutes and regulations.

The comapny charging you does not get any benefit out of this transaction, and in fact if they didn;t charge you and they have nexus, they will be fined.

Posted: 10/13/2005 1:25:17 PM EDT

[#22]

I found this regarding the interstate sale of a casket. Looks like it applies here as I can not find anything yet that word for word aligns with my situation.

Virginia Code §58.1-608.20 provides an exemption from the tax for sales of tangible personal property in interstate or foreign commerce. Under this section, a sale is exempt from the tax if there is "[d]elivery of tangible personal property outside the Commonwealth for use or consumption outside of the Commonwealth."

Therefore, under this section, a sale of a casket (and any other separately stated tangible personal property) is exempt when no part of the services of the funeral director takes place in Virginia other than embalming the body, placing the same in a casket and delivering the same from Virginia to a point outside of Virginia. Furthermore, Virginia Regulation 630-10-51 requires that the delivery to the purchaser outside Virginia be by either the seller's vehicle, contract carrier hired by the seller, or by common carrier. If the remains are made available for the public or friends to pay their respects in Virginia, then the tax applies to the sale of the casket and any other separately stated tangible personal property sold.

Based upon the facts presented in your letter, the sale of the casket would be exempt from the tax.

Section 58.1-603 imposes the sales tax upon persons who (1) engage in the business of selling at retail or distributing tangible personal property in Virginia, (2) rent or furnish any of the things or services taxable under the Act, (3) store any items of tangible personal property as that term is defined in the Act, or (4) lease or rent such property in Virginia. The tax is levied as a percentage of the consideration for the taxable goods or services. A sale is a prerequisite to imposition of the tax because the tax is based on a percentage of the consideration given (sales price or cost price). See § 58.1-603; United States v. Forst, 442 F.Supp. 920, 924 (W.D. Va. 1977), aff'd 569 F.2d 811 (4th Cir. 1978).

Under the Act, a "sale" is defined as "any transfer of title or possession . . . in any manner or by any means whatsoever, of tangible personal property . . . for a consideration . . . ." § 58.1-602(16). A transfer of title or possession for purposes of a sale in interstate commerce is defined by regulation. Virginia Sales and Use Tax Regulation § 630-10-51(A)(3) (1985) (" Regulation") states that the tax does not apply to "[t]he sale of tangible personal property delivered by the seller to a common carrier . . . for delivery to the purchaser outside of the state."

The use tax applies (1) to tangible personal property purchased outside Virginia for use or consumption in Virginia and (2) to purchases made in Virginia where the sales tax was not paid at the time the property was purchased. § 58.1-604;

Posted: 10/13/2005 1:30:44 PM EDT

[#23]

Nexus is important. So is the concept of use tax.

Someone has the right to tax the transaction. For the most part, except in rare circumstances, use taxes on indivduals were greatly ignored - they were too small for any given individual for the state to track them down and enforce pmnt. Rare exceptions on high dollar items did happen (Tiffiany's comes to mind).

More and more, states are presuring online merchants to collect the use tax upfront. I do not know the means they are using, but am aware it is happening. I suspect it is happening to avoid sales records from being legal requested as part of tons of individual lawsuites.

Small merchants are still staying under the radar - but the big guys have bullseyes on them. Avoiding used tax may well be a thing of the past.

Posted: 10/13/2005 1:32:55 PM EDT

[#24]

IF they have an outlet in your state, then YES, they have to charge the sales tax (Walmart, Sears, etc....)

Even if they don't charge tax, technically most states require a "use tax" that you are supposed to pay on your year tax return.

Posted: 10/13/2005 1:34:19 PM EDT

[#25]

They have no ny tax certificate are charging me a VA tax and not the NY one which would be appropriate here. they are also charging tax on top of the shipping cost which is not allowed by VA tax law (tax on handling is allowed).
this is a very small company and not some big name like Best buy where I have been charged NY tax on internet orders legitimately.

Quoted:
Nexus is important. So is the concept of use tax.

Someone has the right to tax the transaction. For the most part, except in rare circumstances, use taxes on indivduals were greatly ignored - they were too small for any given individual for the state to track them down and enforce pmnt. Rare exceptions on high dollar items did happen (Tiffiany's comes to mind).

More and more, states are presuring online merchants to collect the use tax upfront. I do not know the means they are using, but am aware it is happening. I suspect it is happening to avoid sales records from being legal requested as part of tons of individual lawsuites.

Small merchants are still staying under the radar - but the big guys have bullseyes on them. Avoiding used tax may well be a thing of the past.

Posted: 10/13/2005 1:38:51 PM EDT

[#26]

Some companies do charge you sales tax. What is fishy though, is that they charged you VA tax whilst you live in NY. The reputable co.'s that charge sales tax generally charge you tax of your state. This will probably become more prevailent as states want their share of the $$$, and not too many buyers actually give the state the sales tax they are supposed to.

[ARCHIVED THREAD] - Out of state company charging sales tax. Is this even legal?

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