mats@dual.UUCP (Mats Wichmann) (05/25/84)
I started the ball rolling on this one, so I thought I might as well
finish it off with a summary. Please, no more articles unless you
really have something to add.
The mail I received and the articles posted as followups were ALL
excellent and informed. (Unusual, isn't it... :-). My conclusions:
The law is pretty straightforward, but there are, of course, variations
from state to state (so don't screm if something I say is just a little
off for where you live). Sales/use tax is administered by the
states, so some states may not have any tax at all, while others
have ones that are high.
1) The tax truly IS a use tax. It is to be paid by whoever the ultimate
user of the product is. A reseller does not pay use tax, GIVEN that
he has a valid reseller's permit. A resident of a state pays a use
tax on all items he buys, no matter how (i.e., in person or mailorder),
that are non-exempt.
2) Cars are treated specially in some cases. Note however, that if you,
as a consumer, buy a car, and then resell it, you have `used' it, and
thus tax is due. This seems to usually apply even for car collectors
who never drive the vehicle. The situation would be different if you
were licensed as an automobile dealer.
3) COLLECTION is the real question. To insure collection of the tax,
various different methods are used. The reseller is asked to make the
collection for in-state purchases (asked, as in, he is going to pay
the tax whether he remembered to collect it from the customer or not).
For out-of-state purchases the law is no different. Because of the
independence of the states, the state ONLY has leverage to make the
reseller collect if he maintains an office in the state. Since they
have no leverage on other sellers, the consumer is expected to pay
this tax directly to the state. Some states appear to provide a box
for this on your state income tax form. You are expected to fill in
all untaxed, non-exempt purchases, and pay the appropriate tax on them.
California does not do this (at least I have not seen such an item -
I am going to go look after I finish this). Note that collection
in this case is almost impossible, because the state does NOT have
access to records of these transactions, unless the seller maintains
an office in the state. If the state decided to try to enforce this,
they could presumably selectively audit returns where they demanded
to see records on untaxed purchases.
4) It does not matter where you live, but rather where the transaction
takes place. If you are a California resident and buy something in
New Jersey, you pay NJ tax at the time of purchase. I think, however,
that for a MAIL-ORDER sale, the location of the transaction is defined
as the delivery address. (I find that this raises a question for me -
if I physically make a purchase out of state, I pay tax there. If
I bring the product back into California, is tax due here also?
Can someone please MAIL me on this - enough other topics to flood
the net with).
5) Local taxes vary with collection/disbursement method. If the tax is
collected and administered by the state, like the BART (Bay Area
Rapid Transit) 1/2% surcharge here, it is subject to the same rules as
above. Buying from a mailorder house in San Diego would still require
the surcharge to be collected, since the transaction is completed
at my home address, in a BART county. If I physically make the
purchase in San Diego, I don't pay the surcharge. City taxes,
payable by the merchant directly to the city, rather than being
collected and disbursed by the state, will probably be subject
to different treatment.
6) Most merchants and consumers do not understand how the tax is
supposed to work, so cases where the wrong thing has been done are
likely to occur. Also, some businesses may make some simplifications
to ease bookkeeping chores (at least until the state tax board catches
on, at which time they will be told to set things right).
Nuff said?
Thank you all for your answers.
Mats Wichmann
Dual Systems Corp.
...{ucbvax,amd70,ihnp4,cbosgd,decwrl,fortune}!dual!mats