Not a big fan of sales tax at the best of times. When it gets applied to internet commerce, it’s pretty discouraging. Amazon at least has ways of getting free shipping, but when I’m paying shipping and tax and waiting on my item it stops feeling like such a bargain. Which may be the desired effect.
(I’m a big fan of other, fairer sorts of taxes. Hell, my job is paid for by taxes. But sales taxes are regressive as all hell.)
Yes, I do.
That’s incredibly irresponsible for them to not ask. I’d be furious at them for not even bringing it up.
I was curious so I did a bit of research. Apparently in Hawaii it’s completely separate from your annual income tax. They expect you to fill out a form within a month of order something online. It sounds like they’ve pretty much given up on collecting it from individual shoppers.
From their brochure:
I am an individual who is not in business and only
would have to pay use tax once or twice a year when I go
on an out-of-State trip or order from a catalog or on the
Internet. Must I go through the trouble of applying for a
use tax number and filing use tax returns?
No, you do not.
Instead of registering for your own registration number and filing
Form G-26, the Department will permit individuals who are not in
business to merely submit a letter with a check for the use tax
due.
The letter must contain: 1 ) your name, 2) your social security
number, 3) the date you imported the property, services, or contracting,
4) the landed value of the property, or the value of the
services and contracting, and 5) the amount of use tax due.
I suppose I can weigh in on this since state tax systems are pretty much my life.
A few things to understand:
What people often refer to as sales tax is actually sales & use tax just about everywhere. The “use” portion is rarely understood so most people ignore it.
You do not owe sales tax to businesses. You owe it to the government. Much like how payroll withholding is used to enforce compliance for income tax, the government found the easiest way to ensure they get their due was to go after the sellers (which is a small pool of registered businesses) instead of the buyers (which is everybody). Sales tax laws are written to grant states the authority to put the burden of collecting the tax on the sellers with rules that allow legal action to be taken to enforce compliance. Use tax rules are normally thrown in simply as a way to go after businesses attempting to evade taxes (such as buying wholesale and then “using” the goods yourself in an attempt to avoid taxation, hence “use tax”).
States only have jurisdiction to enforce their laws within their borders. There isn’t much NC, or any state really, could actually do to force any out-of-state retailer to collect and remit taxes on their behalf. Only the feds could step in since they have the power to regulate interstate commerce.
Back in 1992 the Supreme Court issued a ruling in Quill v North Dakota that defined a business as only being subject to state sales tax laws if that business had nexus within the state. It defined nexus as having a substantial physical presence within the state borders. Without this ruling being overturned it’s pretty open and shut on the side of e-tailers, which is why you see the focus shifting towards the taxpayers of the states themselves.
In practice, states would love to collect all the use tax but have no realistic way to go about doing so. States do enforce use tax, but this typically is when the go after the purchase and import of large goods (RVs, cars, boats) that have registrations and paper trails coming in from other states because A) it’s easy to prove what taxes were and weren’t paid and B) the amount of tax is substantial and worth their time.
As to whether following every state, county, and city’s sales tax laws and filing and paying is a substantial burden, I would say hell yes it is. There are thousands upon thousands of bizarre quirks, exemptions, and rates to be followed, along with hundreds of returns to be filed with different frequencies and due dates everywhere (typically weekly, bi-weekly, monthly, bi-monthly - you name it and it exists somewhere). When you pay your sales tax at the local store and it seems very simple, believe me when I tell you that you really do not fathom how complicated it can be for the businesses who get tasked with taking care of all the details so the consumers don’t have to.
Instead of registering for your own registration number and filing
Form G-26, the Department will permit individuals who are not in
business to merely submit a letter with a check for the use tax
due.
That’s classic. Translation: Hell yeah, we’ll take a letter and a check. Be sure you give us all the information so we can file it into our database to make sure you’re covered. muffled laughter Right, Social Security number, favorite food, whatever you want; just send that check on in and we’ll take care of it.
I need to give Hawaii some tourism dollars just for the great brochure.
If I recall, the Vermont state tax return has a nice little chart for calculating the Use Tax, with income guidelines. It seems they don’t want it calculated to the penny; just a fair representation of it. I tend to just ballpark it.
Just to point at you all and laugh. HK tax form takes 5-10 minutes to fill in, if you are being lazy. The thought of all these rules, allowances, exemptions that then mean you need to pay someone to do your tax return? LOL
One of the negatives of moving to WA was that all our Amazon purchases cost 8.75% more.
I’m surprised this is a surprise to anyone, since it got so much coverage when online shopping first started to get popular back in the late 90s. Tons of articles about how you could avoid sales tax, but you were supposed to pay it yourself.
Nice making this a public poll. “Have you spent years buying stuff online without paying the sales tax you’re legally obligated to pay?”
As someone who was audited by the State of North Carolina … don’t count on “nothing will come of this,” as the ultimate action. I’ve bought a ton from Amazon, and I will be affected by this as well. It sucks, but our state is 3 billion dollars in the hole right now. It’s not as insane as say … California, but it’s not much better.
Not if you’re a business buying for resale and such.
I agree with Denny. How is it that so many of you didn’t know about this?
You are forgetting the current moronic Supreme Court. Assuming it ever got there.
Could Amazon get away with collecting a flat rate from each state? The reason I ask is that in many states counties, cities and townships are allowed to assess their own sales and use taxes such that driving down one road near me the sales tax I pay fluctuates from 5% to 9% depending on where I am when I stop as I pass through a few counties and whatnot. It would be a nightmare for them to have to keep track of the differing rates everywhere.
If your life is simple, filling out taxes here is easy as well. As you get older, things get more complicated.
You could be right. But even if they do decide to do something, I imagine we’ll all get hit with an amount based on some sort of calculation. No way they audit every resident of the state who shops online.
You could be right. But even if they do decide to do something, I imagine we’ll all get hit with an amount based on some sort of calculation. No way they audit every resident of the state who shops online.
I’m always pretty surprised when I hear someone in a Use Tax state hasn’t heard of this either. Turbotax has always asked me pretty clearly about it when doing the State portion of the return, and I’d assume anyone filling out the forms manually would at least wonder what a line they don’t understand is for.
Kind of disturbing that paid preparers aren’t asking about it, but maybe they’re expecting you to bring in receipts for it if you’ve got it.
I assume at some point, when the online vendors are required to collect the taxes, that some sort of centralized database will be setup and it will be the responsibility of the States to keep it updated. I just can’t see the Feds (or whoever makes it mandatory) requiring every Bob’s Online Rocking Horse Emporium to keep up with all the city, county, and state tax rates.
Personally Florida doesn’t have a personal state income tax to file.
I’m 100% sure there are companies that provide sales tax calculation software and services, and that any small business can hook into them.
Florida residents are still required to pay use taxes by filing a form and sending a check.
Florida Consumer Information
Have you bought or received merchandise from out of state or through the internet?
You Might Owe Florida TaxMost Florida citizens are not aware that this state has a “use tax.” Use tax normally applies to items purchased outside Florida, including another country, which are brought or delivered into this state and would have been taxed if purchased in Florida. The use tax rate is the same as the sales tax rate, 6%.
Examples include:
Purchases made through the Internet
Mail-order catalog purchases.
Purchases made in another country.
Furniture purchased from dealers located in another state.
Computer equipment ordered from out-of-state vendors advertising in magazines.If an out-of-state seller fails to collect sales tax, it is your responsibility to comply with Florida law. You must submit payment directly to the Florida Department of Revenue. This payment is required by section 212.06(8), Florida Statutes. To file and pay use tax, complete an Out-of-State Purchase Return (Form DR-15MO). If the tax owed is less than one dollar, you do not have to file a return.
Is there an exception?Yes. Items you purchase and use in another state, territory of the United States, or the District of Columbia for 6 months or longer before bringing them into Florida are not subject to use tax. Items you purchase and use in another country do not qualify for this exception.
Is there a credit for any tax paid at the time of purchase?Yes. If you paid 6% or more sales tax to the seller at the time of purchase, no tax is due. However, if the seller charged less than 6% tax, you must pay “use tax” equal to the difference between what you paid in tax and the 6% tax imposed by Florida. You cannot use any sales tax paid in another country as a credit against the Florida tax due.
Example: You purchase an item from a mail-order catalog company located in Georgia. The Georgia company charges you a lawfully imposed Georgia sales tax of 4%. The item purchased is shipped to you at a Florida location. You must pay an additional 2% Florida use tax, unless the tax is less than one dollar ($1).
When must the tax be paid?The tax is due on the first day of the month following the quarter in which purchases are made and is late after the 20th. If the 20th falls on a Saturday, Sunday, or a state or federal holiday, your payment and return must be postmarked on the first business day after the 20th. However, taxpayers who make occasional purchases from out of state find it easier to pay the tax and file the DR-15MO when the purchase is made. There is no limit on the number of DR-15MOs that you can file with the Department during any calendar year.
Example: If you purchase an item from outside Florida on February 1, the tax is due on April 1 and late after April 20.
Normally, the Department will waive penalties for taxpayers who voluntarily pay use tax liabilities. Failure to voluntarily comply with Florida sales and use tax laws subjects you to certain penalties.
I understand that and posted the link a page back. I was just explaining how I never knew about it until now.