US sales tax (for US customers)

[The Magnificent Goldberg]

I know there's sales tax in America. I know it's different in different states. So, when you buy something on line from say, Mosaic, or Concord or Amazon.com, does the firm add on the sales tax for the customer's state, or the tax for the seller's state, or no tax at all?

The thing is, if the price to American addresses is the same as it is to British ones, and includes sales tax, we're paying taxes to some US government (which?). So I want a vote I don't really; what I want is cheaper records, of course.

MG

[Aggie87]

What I've read is that if an online business has brick-n-mortar (or administrative/warehousing even?) sites in your particular state, you are charged sales tax on the online purchase. If they don't, you aren't.

I don't have any idea how that would affect costs for international orders, or if they charge some sort of tax on non-U.S. orders....

[jazzypaul]

I know there's sales tax in America. I know it's different in different states. So, when you buy something on line from say, Mosaic, or Concord or Amazon.com, does the firm add on the sales tax for the customer's state, or the tax for the seller's state, or no tax at all?

The thing is, if the price to American addresses is the same as it is to British ones, and includes sales tax, we're paying taxes to some US government (which?). So I want a vote I don't really; what I want is cheaper records, of course.

MG

for the most part, mail/online purchases don't incur sales tax unless the sale is made in the state of the transaction (so, I believe Mosaic is in CT. If Joe Blow buys a couple of Mosaic boxes in CT, he pays the tax. If Joe Blow is, say, me living in Illinois, then I don't pay them).

I would assume that the same goes for international sales.

Does that help?

[Christiern]

If the business has an address in the state you are having the merchandise sent to, you pay that state's sales tax. Otherwise yoo don't, but there are useless politicians who want to change that so that we all pay a sales tax on just about everything.

[The Magnificent Goldberg]

Well, that's an unexpected response! I really imagined a consistent system

So what it means is that the price quoted on line doesn't include tax, so we're not paying it over here. We just pay (UK) VAT if it gets stopped in customs.

Thanks folks.

MG

[robviti]

what inconsistent about the system? like chris said, you pay a sales tax if the company you're buying from has a physical presence in the state where you live. i guess the logic behind this is that if the company benefits from various state services (police and fire departments, water and transportation systems, etc.), they should bear some of the burden of paying for these services. the only exceptions to this rule are if you live in a state that has no state sales tax (Alaska, Delaware, Montana, New Hampshire, and Oregon), or if you qualify for tax-exempt status (religious and charitable organizations, etc.). come to think of it, holy sister jazzshrink has a nice ring to it, doesn't it?

[Dan Gould]

what inconsistent about the system? like chris said, you pay a sales tax if the company you're buying from has a physical presence in the state where you live. i guess the logic behind this is that if the company benefits from various state services (police and fire departments, water and transportation systems, etc.), they should bear some of the burden of paying for these services. the only exceptions to this rule are if you live in a state that has no state sales tax (Alaska, Delaware, Montana, New Hampshire, and Oregon), or if you qualify for tax-exempt status (religious and charitable organizations, etc.). come to think of it, holy sister jazzshrink has a nice ring to it, doesn't it?

Remember that MG never studied US history. "Federalism" has no meaning to him.

[kh1958]

It's a constitutional issue--a business in California for example selling in interstate commerce to a resident of Texas, can't collect California sales tax from a resident of Texas because the Texas resident doesn't have sufficient contacts with the state of California to be subject to its taxing authority. If the California business has a physical presence in Texas, then it would be required to collect Texas sales tax from an internet sale to a Texas resident.

Most states have a "use" tax which corresponds to the sales tax--a product which is brought into the state and was not subject to a sales tax is subject to the use tax. So in this instance in theory the Texas resident is supposed to pay the use tax (the same as the Texas sales tax) to the State of Texas. The use tax is perhaps the most widely ignored set of laws in the United States, other than speeding laws.

[The Magnificent Goldberg]

what inconsistent about the system? like chris said, you pay a sales tax if the company you're buying from has a physical presence in the state where you live. i guess the logic behind this is that if the company benefits from various state services (police and fire departments, water and transportation systems, etc.), they should bear some of the burden of paying for these services. the only exceptions to this rule are if you live in a state that has no state sales tax (Alaska, Delaware, Montana, New Hampshire, and Oregon), or if you qualify for tax-exempt status (religious and charitable organizations, etc.). come to think of it, holy sister jazzshrink has a nice ring to it, doesn't it?

Remember that MG never studied US history. "Federalism" has no meaning to him.

Not quite right, Dan. To me, consistency would have been that tax was collected from everyone or no one. Now it's been explained (and thanks all), I can see it's NOT like trying to collect a French tax on a sale by Amazon.fr from a British resident. Amazon.fr charges VAT (our equivalent of sales tax) on sales to customers in other EU countries. So, when I buy an album from them, I'm paying a tax to the French Government. Ditto for Amazon.de, or Zweitausend; part of my payment goes to the German Government. The reverse is true if a French person buys from Amazon.co.uk.

So, if different countries over here can manage it, why can't US States?

MG

[Christiern]

Don't give them any ideas, MG!

[marcello]

Think of the US system as 50 different city states, like in say old Italy.

Yeah, it's that fucked up.

[Stefan Wood]

Think of the US system as 50 different city states, like in say old Italy.

Yeah, it's that fucked up.

No it's not THAT fucked up. Not even close.

[The Magnificent Goldberg]

Another point occurs to me. How does a person know where Amazon.com or CDUniverse etc are located? Because the calculation of which retailer is cheaper on a specific item, and therefore which to buy from, obviously depends on knowing that?

And, what's the position with Amazon sellers? If Dan buys something from Amazon (who I assume don't live in Florida) which is actually coming from Caiman down the road from him, does he pay tax or not?

MG

[The Magnificent Goldberg]

Think of the US system as 50 different city states, like in say old Italy.

Yeah, it's that fucked up.

In fact, there were customs barriers between most or all of the Italian city states. There are none in the US, so it's NOT quite that bad

And the EU is twenty-odd different states... And the rivalry, even enmity, between some has lasted many hundreds of years.

MG

[Tom Storer]

Amazon.fr charges VAT (our equivalent of sales tax) on sales to customers in other EU countries. So, when I buy an album from them, I'm paying a tax to the French Government. Ditto for Amazon.de, or Zweitausend; part of my payment goes to the German Government. The reverse is true if a French person buys from Amazon.co.uk.

So, if different countries over here can manage it, why can't US States?

I'm thinking French companies are obliged to charge VAT and pay it on to the government for whatever they sell, no matter who buys it, but American companies are obliged to charge sales tax and pay it on to the state government only in those instances where the customer is residing in their state (or they are operating in the customer's state). Therefore the price of VAT is passed on to all customers in Europe but the price of the sales tax in the US is passed on only to the customers to whom it applies.

[GA Russell]

MG, North Carolina, for example, has a sales tax of 7%. The govt of NC would like to collect that on everything that a resident of NC purchases. But...

The US Constitution prohibits states from interfering with interstate commerce. Just as France numbers its republics by the number of constitutions it has had (Isn't France now the Fifth Republic?), the US is now on its second republic.

The first constitution was called the Articles of Confederation, which existed approximately from 1776 to 1789. The Articles of Confederation allowed the States much more independence than our present constitution, which was passed in 1789.

Under the Articles of Confederation, business was a mess. Each state was printing its own money, I think. States were taxing goods shipped in from other states. So the 1789 constitution prohibited such interference.

So since 1789, states have been prohibited by the Constitution from placing a sales tax or tariff on goods purchased from another state. However, if a company has a location in the state, a purchase from that company is considered intrastate commerce (and therefore taxable) no matter where the good is actually shipped from.

[The Magnificent Goldberg]

MG, North Carolina, for example, has a sales tax of 7%. The govt of NC would like to collect that on everything that a resident of NC purchases. But...

The US Constitution prohibits states from interfering with interstate commerce. Just as France numbers its republics by the number of constitutions it has had (Isn't France now the Fifth Republic?), the US is now on its second republic.

The first constitution was called the Articles of Confederation, which existed approximately from 1776 to 1789. The Articles of Confederation allowed the States much more independence than our present constitution, which was passed in 1789.

Under the Articles of Confederation, business was a mess. Each state was printing its own money, I think. States were taxing goods shipped in from other states. So the 1789 constitution prohibited such interference.

So since 1789, states have been prohibited by the Constitution from placing a sales tax or tariff on goods purchased from another state. However, if a company has a location in the state, a purchase from that company is considered intrastate commerce (and therefore taxable) no matter where the good is actually shipped from.

Ah! Now we're getting at it! Because each State in the EU is a sovereign state, each can tax more or less whatever they want in whatever way they want (though there are harmonisation moves - and VAT is broadly payable on the same goods, with similar exemptions and at similar rates throughout). Because the US States are NOT sovereign states, they CAN BE, and HAVE BEEN, prevented from taxing as they wish.

That is really very interesting. Thanks very much.

MG

[BERIGAN]

I bought some used cds from wherehousemusic.com a few months back and noticed I was taxed at the end. Since all teh wherehouse music stores in Georgia have closed down, I asked why I was taxed? Well, the parent company of wherehouse, Trans World Entertainment, owns the F.Y.E. chain of stores which is still here in Georgia.

MG, you do make an interesting point about sellers on Amazon. No tax on regular amazon(I assume even if you were to buy merchandise in their home state?) purchases, since they don't have brick and mortor stores anywheres. But, what if you purchased a used cd from someone in your home state? Should they be collecting taxes??? Why do I mention this??? To give someone ideas?

Eh...I am tired, someone do the heavy lifting for me and figure it out...

[The Magnificent Goldberg]

I bought some used cds from wherehousemusic.com a few months back and noticed I was taxed at the end. Since all teh wherehouse music stores in Georgia have closed down, I asked why I was taxed? Well, the parent company of wherehouse, Trans World Entertainment, owns the F.Y.E. chain of stores which is still here in Georgia.

MG, you do make an interesting point about sellers on Amazon. No tax on regular amazon(I assume even if you were to buy merchandise in their home state?) purchases, since they don't have brick and mortor stores anywheres. But, what if you purchased a used cd from someone in your home state? Should they be collecting taxes??? Why do I mention this??? To give someone ideas?

Eh...I am tired, someone do the heavy lifting for me and figure it out...

Oh, hang on; Amazon don't charge tax to anyone, because they don't have a retail operation in a building open to the public. So, firms like Concord and Mosaic are in the same situation and don't charge tax to anyone?

MG

[kh1958]

I bought some used cds from wherehousemusic.com a few months back and noticed I was taxed at the end. Since all teh wherehouse music stores in Georgia have closed down, I asked why I was taxed? Well, the parent company of wherehouse, Trans World Entertainment, owns the F.Y.E. chain of stores which is still here in Georgia.

MG, you do make an interesting point about sellers on Amazon. No tax on regular amazon(I assume even if you were to buy merchandise in their home state?) purchases, since they don't have brick and mortor stores anywheres. But, what if you purchased a used cd from someone in your home state? Should they be collecting taxes??? Why do I mention this??? To give someone ideas?

Eh...I am tired, someone do the heavy lifting for me and figure it out...

Oh, hang on; Amazon don't charge tax to anyone, because they don't have a retail operation in a building open to the public. So, firms like Concord and Mosaic are in the same situation and don't charge tax to anyone?

MG

You don't have to have a retail operation in a state. A corporate office is sufficient. I imagine Mosaic collects sales tax from Connecticut residents and amazon from Washington residents (plus other states if they have shipping warehouses in those states).