Taxes

[ksmmoto]

Sales tax, Use Tax and Internet Taxes seemed to get very mixed up. I will try to explain each as I see it.

Sales Tax: Must be collected from buyer by the seller on in-state purchases and out of state purchases when seller has a physical presense in that state. This applies to sale by ANY means, phone, mail, fax OR Internet.

Use Tax: Any out of state purchase where Sales Tax was NOT collected. Use Tax must be paid by the buyer directly to the state. This applies to sale by ANY means, phone, mail, fax OR Internet.

Internet Taxes: This is what people get mixed up on. When you hear or read about Internet Taxes, they are talking about taxing your ISP connection, NOT Sale or Use taxes which are due NO MATTER what. All other forms of communication are taxed - mail, phone and fax.

To make it MORE complicated, Michiagn has a exemption from Sale or Use taxes for agriculture use. This is just done by the buyer asking for it and signing a form filled out by the seller. Not sure how picky the state is when audited and hope to never find out!

Our tax system is WAY to complicated, just a mess really. I don't know if it will truly be fixed ever. But we DO need some taxes, I have been to Haiti and the infrastructure there is a huge problem, you would have to see to believe.

ksmmoto

 

[MikePA]

<font color="blue"> Internet Taxes: This is what people get mixed up on. When you hear or read about Internet Taxes, they are talking about taxing your ISP connection, NOT Sale or Use taxes which are due NO MATTER what. All other forms of communication are taxed - mail, phone and fax. </font>
No offense, but when I hear 'Internet Taxes' the context is almost always the debate about how to collect sales tax for purchases made over the Internet.

 

[sneaky_pete]

</font><font color="blue" class="small">( Michiagn has a exemption from Sale or Use taxes for agriculture use. This is just done by the buyer asking for it and signing a form filled out by the seller. Not sure how picky the state is when audited and hope to never find out!)</font>

Ditto for Texas, on both counts. In addition, we have no state income tax or tax return either. /forums/images/graemlins/cool.gif

 

[rozett]

There is a project that almost all states (and DC) are participating in called the Streamlined Sales Tax Project . As they state it "The Streamlined Sales Tax Project will develop measures to design, test and implement a sales and use tax system that radically simplifies sales and use taxes."

While I would acknowledge that the differences in tax rates, what goods/services are exempt, etc makes it very difficult for businesses to collect sales tax on all purchases, their stated objective is just plain whooey!! What they are really about is rubbing each others backs to insure that each state collects 100% of all the sales taxes that they are 'entitled to' (by law). All these states are frantically groping for more revenue. They want to close all the loopholes that permit normal folks like us from 'getting away with' not paying sales tax.

You can find out more at their web site /forums/images/graemlins/mad.gif

 

[jfdlaw]

Guys, we went through all this in July. I think this is the thread:
Sales Tax?

If your state requires a sales tax (if the local dealer would have charged you tax) you are required to pay it yourself if your dealer does not collect it.

Another way to put this: The state requires the consumer to pay a sales tax (or use tax). To help collect the tax it puts a burden on the dealers over which it has control, to collect the tax from the consumer. The fact that your dealer is not required to collect the tax for your state does not relieve you of your burden to pay it. There are two seperate obligations. Consumer has to pay the tax. Dealer has to collect it.

Think of income tax. Its the individual's responsibility to pay their income tax. To help collect the tax the government requires employers to collect the tax and send it to the state (withholdings). If you are self employed, and don't have an employer withholding the tax does that mean you don't have to pay income tax? No, you have to send it in on your own. If you don't they might not find out, but if they do, you are in trouble.

Sales tax is very similar. The Vendor is just a collector. The obligation to pay is on the consumer.

The state may not catch you if you don't pay it. But that is a gamble. And states are wise to this and are auditing sellers, particularly internet sellers, to find people who fail to pay.

Stick with a local dealer, who is going to support you down the road. Use the prices from the out of state guys to get the best deal, but buy local and pay the tax. It's not worth the risk.

Edit: Another thought, a dealer that tells you that you don't have to pay tax just because he is in another state is either misinformed or lying to you. If they are misinformed or lying about the tax, what else are the misinformed or lying about. Do you really want to do business with them?

I want to clarify the thing I said at the beginning. "If your state requires a sales tax (if the local dealer would have charged you tax)" Obviously you don't have to pay if your state does not require tax on your purchase (like if you have an agricultural exemption, etc).

 

[Henro]

If I made the rules, sales tax would be charged at the point of sale, regardless of where the purchaser was physically. Things would average out state to state...Deadbeats like me who will avoid paying "use tax" could not avoid it anymore... /forums/images/graemlins/smile.gif

Then again, if I made the rules there would be no sales tax to begin with, sales tax being one of the most unfair taxes...my tax system would be based on income...not spending.

Sales tax hurts the little guy who spends all his income pay check to pay check. Not those who have more money than they need. /forums/images/graemlins/frown.gif

If I bought a tractor "tax free" from another state you can be sure I would not be offering to pay local tax on it until I heard the knock on the door asking for it. I am willing to pay my fair share, but not willing to subsidize a system that makes it possible for others not to pay when they make the same purchase.

 

[AndyM]

<font color="blue"> If I made the rules, sales tax would be charged at the point of sale, regardless of where the purchaser was physically. </font>

I've never understood the double-standard in Ohio on sales tax rates...

On most items purchased in Ohio, you are charged the sales tax rate in the county where the purchase is made. However, automobile purchasers are charged the sales tax rate for the county where they live, regardless of the county where they buy the car.

I know exactly why they do this, but it seems to me an unfair double standard for the consumer. /forums/images/graemlins/frown.gif

 

[MadReferee]

</font><font color="blue" class="small">( If I bought a tractor "tax free" from another state you can be sure I would not be offering to pay local tax on it until I heard the knock on the door asking for it.)</font>

Here, here. It's nice to hear someone speak their mind that doesn't follow the current political correctness goody two shoes attitude of most of the recent TBN posters. Screw the government, let them come after it if they want it. I wonder how many of the posters actually practice what they preach.

There. Now I have vented.

But I wil confess that I don't have the tax problem living in tax free New Hampshire, but I still subscribe to Henro's attitude.

 

[Paddy]

I guess my first question would be,,,what's the penalty? If you go through a method where you are clearly trying to hide, you are a criminal! If you just don't pay and they call you on it,

Buyer; "I understood you don't pay on out of state sales".

Tax man: "Sorry your wrong pal, pay up with 10% late fee"

I would go for the 10% late fee. But I can tell you, you try to buy trough a biz you have and provide a tax ID number, that's quickly looking like tax fraud. Same case for Ag or forest, if your not zoned that way you could be in the same boat. I suppose you could get your land rezoned but, that makes a future sale of your land sticky.

 

[jfdlaw]

What is the Penalty? Good question. If I get a chance I'll try to check the NY regs, but off the top of my head I would say:

1. New York usually charges interest on any tax you fail to pay on time. I think it would either be 18% per year, or 1.5% per month from your date of purchase until the time you pay,
2. a penalty, figure at least 10%. I've seen NYS Sales tax sometimes start out much higher and let the taxpayer try to negotiate it down.
3. Its also a criminal act, but I doubt they would bring criminal charges for this. Of course sometimes they like to make an example to scare other people into compliance.