On-line retailers and California sales taxes

[ulynch]

Does anyone know what's up? Musician's Friend, Music123, Guitar Center, Amazon sellers, all seem to have started charging sales taxes for sales in CA after about June or so. I thought CA repealed the "Amazon law" in Sept.

In an email exchange with Musicians' Friend, they claimed that a recent corporate office move to CA forced them into it. Hmmm ... color me dubious.

I have my suspicions, but does anyone actually know what's required by the law right now?

Thanks

[father of fires]

I always thought that you only paid sales tax when you lived in the state that the store was in.

[The BurgerMeister]

+1.

i think, too, that you're supposed to claim out of state online purchases on your yearly taxes so that you can be charged the applicable purchase tax that you didn't pay at the point of sale. so, maybe it's not a bad thing to just pay the taxes.

[JTE]

In Illinois the law is that if the company has a presence in the state (store, office, PO box) in the state, they're responsible for collecting the sales and use tax. If they do not have a presence, the Illinois resident is responsible for reporting the tax on their state tax filing.

I imagine California has similar law.

John

[ulynch]

Originally Posted by JTE

In Illinois the law is that if the company has a presence in the state (store, office, PO box) in the state, they're responsible for collecting the sales and use tax. If they do not have a presence, the Illinois resident is responsible for reporting the tax on their state tax filing.

I imagine California has similar law.

John

Every state is different. In June CA passed what was called the "Amazon Law", which required retailers with a "significant nexus" in the state to collect state sales tax (actually "use tax", I think, but charged at the same rate). Amazon was about to cut loose a few hundred of its partners in CA, so Gov Brown cut a deal that essentially repealed the law from June, and delayed its implementation until Sept of next year. This new law was signed last month. (This is pending federal legislation that's expected to require retailers to collect taxes for *every* state.)

So as I understand it, retailers were briefly required, then not required to collect CA taxes. They should currently NOT be required, at least until 9/12. But it looks like they still are. Most anyway. Sweetwater doesn't.

Maybe some just haven't caught up to the law? Maybe they're pocketing the difference? At any rate, I wasn't able to convince MF that they shouldn't be charging me tax. This is my "I'm not surprised" face.

[fdeck]

Originally Posted by ulynch

Every state is different. In June CA passed what was called the "Amazon Law", which required retailers with a "significant nexus" in the state to collect state sales tax (actually "use tax", I think, but charged at the same rate). Amazon was about to cut loose a few hundred of its partners in CA, so Gov Brown cut a deal that essentially repealed the law from June, and delayed its implementation until Sept of next year. This new law was signed last month. (This is pending federal legislation that's expected to require retailers to collect taxes for *every* state.)

So as I understand it, retailers were briefly required, then not required to collect CA taxes. They should currently NOT be required, at least until 9/12. But it looks like they still are. Most anyway. Sweetwater doesn't.

Maybe some just haven't caught up to the law? Maybe they're pocketing the difference? At any rate, I wasn't able to convince MF that they shouldn't be charging me tax. This is my "I'm not surprised" face.

If CA is like WI, then there are probably laws which predate the "Amazon law." Specifically, every CA business has to pay CA sales tax for all sales that are not exempt. They are exempt on sales that are shipped to customers outside of CA. That's how my business works.

So, CA retailers were always required to collect CA taxes.

But it shouldn't matter. It's the same tax, if MF collects it, or if you pay it with your state tax return.

[3506string]

In most states you are supposed to pay tax on all online purchases. It's called use tax.

[Jhengsman]

I thought Guitar Center, Musicians Friend and Music 123 were all owned by a larger holding company, Bain Capital. And since Guitar Center had actual physical stores in California taxes were always supposed to be due the government?

[fdeck]

Originally Posted by Jhengsman

I thought Guitar Center, Musicians Friend and Music 123 were all owned by a larger holding company, Bain Capital. And since Guitar Center had actual physical stores in California taxes were always supposed to be due the government?

Each is still a separate corporation. Who owns them doesn't matter.

[Munjibunga]

In California, on out-of-state purchases, you are required by law to pay "use tax" which is the same as sales tax in your municipality. This goes for used gear from individuals, too. If they catch you not paying, you'll be stuck with paying the taxes plus penalties and interest. They're pretty chill about it on first contact, but I imagine they could get very nasty if you don't pay up.

[onewebfoot]

Check out Rocketmusic.net. This is not a spam because they are a sponsored forum on this website.

Business on east coast. Drop ship from Arizona to CA (on the Genz-Benz stuff -- an important point)- one state shipping instead of 10X more miles from East Coast. No shipping cost at a good qualifying price. No sales tax (yet). And a competitive new price to boot against conventional retail. And most of ebay for what they sell (if you take the time to drill in to get your price -- you know).

I'm into these guys for well over $1K so far, while it lasts...

The online sales tax thing. Ugh. 98% of what I've spent on "bass guitar" derived from tax-free online over 5 years, including every single one of the four axes i've owned in that time. Two bought inter-state retail (that killer Zon spalted, pre-owned but retail nonetheless, they didn't know what they had, I did well enough, and the Fender MIM that kicked me off). The third was an inter-state custom shop direct (Barker qualifies). The fourth was local Craigslist. Every single one of them, and *all* of my my humble Genz-Benz stuff, tax free. After a complete redesign to online sales tax retail, venues like Craigslist and the rest of eBay could get hit. It's coming. Certain as gravity, seems to me.

[fdeck]

What difference does it make? You're paying either way, whether the retailer collects it, or you report it yourself.

Right?

[Clark Dark]

You're supposed to file the taxes you didn't pay on your return(s) either fed or state? If you are a resident of Delaware where there is no sales tax on anything (except beer which they just include in the price) is it just forgiven?

[3506string]

Delaware is one of the states that doesn't require use tax.

http://www.ecommerce-blog.org/archiv...nternet-sales/

[SLaPiNFuNK]

If a retailer has a location in the State your order is being shipped to you must pay sales tax.

It is separate from the Amazon bill...

Best Buy for example charges sales tax in just about every state if you order online because they have locations everywhere.

[ulynch]

Originally Posted by Munjibunga

In California, on out-of-state purchases, you are required by law to pay "use tax" which is the same as sales tax in your municipality. This goes for used gear from individuals, too. If they catch you not paying, you'll be stuck with paying the taxes plus penalties and interest. They're pretty chill about it on first contact, but I imagine they could get very nasty if you don't pay up.

And what I've understood is that it's completely unenforced for individuals, but businesses that buy materials or such from out of state have faced increased reporting and enforcement in the last few years.

[JTE]

The collection of use tax has generally been lax. Historically the tax revenue didn't warrant the expense of enforcement. But the internet changed the nature of retail so much that it's now enough money to justify the collection expense.

John