Ohio taxes on out of state purchase?

[rjkobbeman]

In the past, and probably still true, OH and PA were two of the worst states for having bunches of different city, county, township and state taxes that need to be accounted for in payroll processing.

There could well be that many different sales tax rates. Said that way, it illustrates how stupid the situation is. Also how difficult it would be for internet-based sales to be accurately taxed. Everytime a city, county or township makes a change, somebody has to update computer programs to reflect that. It also means they will pay someone to keep them informed of those changes. Very wasteful.

All but a couple state's budgets are in deep doo-doo now. They will no doubt increase tax collection enforcement to offset any part of their deficits possible.
Dave.

Which is why businessess are not required to COLLECT sales tax unless they have a physical presence in the state that the buyer is located.

This isn't just for Internet sales. It is for any sale, like mail order catalog, etc.

It is also why states have "use" tax. It is up to the buyer to pay themselves.

 

[dave1949]

Which is why businessess are not required to COLLECT sales tax unless they have a physical presence in the state that the buyer is located.

This isn't just for Internet sales. It is for any sale, like mail order catalog, etc.

It is also why states have "use" tax. It is up to the buyer to pay themselves.

No, that is not the reason businesses are not required to collect those taxes.

If you are paying employees nationwide, you are expected, and will, withhold and remit all applicable payroll taxes for any locale an employee works and/or lives in. It is done every week and is quite possible. Messy and expensive? - yes.

If it can be done for payroll, it can be done for sales. They are not required to collect sales taxes for political reasons, not technical reasons. If it were determined that cross state border sales are to be taxed at the time of sale, the market would provide the data processing tools to do that in short order.

I am not defending the interstate sales tax system. I couldn't give you a good rationale why I should pay Maine 5% sales tax if I go to New Hampshire and buy a sales tax free washing machine, for example. The system is what it is.
Dave.

 

[rjkobbeman]

No, that is not the reason businesses are not required to collect those taxes.

If you are paying employees nationwide, you are expected, and will, withhold and remit all applicable payroll taxes for any locale an employee works and/or lives in. It is done every week and is quite possible. Messy and expensive? - yes.

If it can be done for payroll, it can be done for sales. They are not required to collect sales taxes for political reasons, not technical reasons. If it were determined that cross state border sales are to be taxed at the time of sale, the market would provide the data processing tools to do that in short order.

I am not defending the interstate sales tax system. I couldn't give you a good rationale why I should pay Maine 5% sales tax if I go to New Hampshire and buy a sales tax free washing machine, for example. The system is what it is.
Dave.

Yes it is. If a business has an operation in a given state, they must collect sales tax for a sale in that state. Meaning, if you live in Illinois and you buy something on the Internet from a company that has a physical presence in Illinois, that business must collect sales tax from the sale. In the same example, if the business does NOT have a physical presence in Illinois, that business is not required to collect sales tax from the sale. This is why some Internet sales collect tax and some do not. It is why you don't know what the sales tax will be until you say what state/zip you live in.

Keep in mind, when sales tax is required to be collected on an Internet sale, the tax rate is the rate where the buyer lives... not where the company operates. If the buyer lives in a state that does not have sales tax, no sales tax should be collected. Also, if the seller is not required to collect sales tax (because of reasons explained in my previous paragraph), the buyer may still be on the hook for "use" tax. It depends on the state. If a state does not have sales tax, it will not have a "use" tax.

 

[dave1949]

Yes it is. If a business has an operation in a given state, they must collect sales tax for a sale in that state. Meaning, if you live in Illinois and you buy something on the Internet from a company that has a physical presence in Illinois, that business must collect sales tax from the sale. In the same example, if the business does NOT have a physical presence in Illinois, that business is not required to collect sales tax from the sale. This is why some Internet sales collect tax and some do not. It is why you don't know what the sales tax will be until you say what state/zip you live in.

Keep in mind, when sales tax is required to be collected on an Internet sale, the tax rate is the rate where the buyer lives... not where the company operates. If the buyer lives in a state that does not have sales tax, no sales tax should be collected. Also, if the seller is not required to collect sales tax (because of reasons explained in my previous paragraph), the buyer may still be on the hook for "use" tax. It depends on the state. If a state does not have sales tax, it will not have a "use" tax.

We are talking about two different things. You are explaining how the sales tax rules work, I am talking about why they are what they are.

How they are applied now, amounts to a politically maintained loophole that has become irrational in light of the growing dollar value of business conducted on the 'net by consumers.

In that it represents some portion of a tax revenue stream that is now not collected but used to be, this loophole skews tax collection in a direction that was never intended. I don't know if that is more good than bad, but it is happening. I don't see how it cannot put upward pressure on income and property tax rates. Personally, I prefer consumption taxes.
Dave.