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To: Red Badger
Which state / city tax is collected if I live in Virginia, conduct the online purchase from my Washington DC office, from a company based in Maryland, and have it delivered to my brother in California?

Will any states the package moves through also want part of the action? A shipping / transit tax?

What if I buy from England? Tariffs?

Could they just say a online purchase tax is collect by the vendor using the vendor's local rate where the vendor's HQ is located? Of course, this would cause vendors to move to states with no sales tax.

27 posted on 12/06/2012 12:12:37 PM PST by Lichgod (Means testing is wrong.)
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To: Lichgod

In your specific example, the tax would be collected based on California’s sales tax for where the product is delivered.

I would expect that they would use product shipping address to determine the locality for purpose of calculating the sales tax.

Your example is interesting because you are buying something for someone else. In a brick-and-mortar store, there is little ability to collect sales tax based on where you will use the item. So, if I buy something in DC and bring it home to Virginia, I’ve paid DC sales tax.

Virginia law requires that if I buy something in a state that has a lower sales tax than our sales tax, I am supposed to pay the tax on the difference — IF I am buying something to bring into the state. I think pretty much everywhere I’ve bought things has had higher sales tax than Virginia, so I’ve pretty much ignored that.

But obviously 0% is less than 5%, so I do pay the Virginia sales tax on all my online purchases if they weren’t already collected, unless the purchase was a gift for someone in another state.

I wish Amazon would make this easier; I have to pull up each invoice to see whether they collected sales tax or not. They could give me a page view that showed every invoice with the dollar amount and shipping and sales tax, all in one table. But I could also just fill out my spreadsheet during the year.

When this law is passed, I will no longer have to do all that work, nor will I have to fill out an extra tax form every year. So for me, this change is a good thing. But that is only because I already obey the law and pay the taxes due.

For those who do not, and who don’t buy from companies that already do business in their state, this will be a change. But on the upside, they will no longer be committing fraud each year when they sign their tax forms swearing under penalty of perjury that they have reported all taxes due (at least in Virginia, since the use tax is on the income tax form).

53 posted on 12/06/2012 2:30:47 PM PST by CharlesWayneCT
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