Online sales tax, am I exempt?

[chenn]

What is the name of your state (only U.S. law)? Nevada

Dear Forum,

I was planning on doing business with Sun Microsystems online. However when It came for me to check out my purchase they decided to charge me sales tax on my purchase. Sun does not have any sales offices in Nevada, though I do think they have some kind of office here the phone number to it is no where to be found. Their main offices are in California and Colorado.

A 1992 U.S. Supreme Court ruling said that states can't force businesses to collect sales taxes unless the businesses have operations in that state.

As a result of this ruling, generally only businesses with a "physical presence" in a state — such as a store or office building — collect sales tax on products sent to buyers in the same state. For instance, a Nevadan buying something from Barnes & Noble Inc.'s website pays sales tax because the bookseller has stores in the Nevada. Buying the same thing directly from Amazon would not ring up sales tax.

"Physically presence" to me means sales office.

Am I required to pay taxes on this online purchase?

 

[Zigner]

What is the name of your state (only U.S. law)? Nevada

Dear Forum,

I was planning on doing business with Sun Microsystems online. However when It came for me to check out my purchase they decided to charge me sales tax on my purchase. Sun does not have any sales offices in Nevada, though I do think they have some kind of office here the phone number to it is no where to be found. Their main offices are in California and Colorado.

A 1992 U.S. Supreme Court ruling said that states can't force businesses to collect sales taxes unless the businesses have operations in that state.

As a result of this ruling, generally only businesses with a "physical presence" in a state — such as a store or office building — collect sales tax on products sent to buyers in the same state. For instance, a Nevadan buying something from Barnes & Noble Inc.'s website pays sales tax because the bookseller has stores in the Nevada. Buying the same thing directly from Amazon would not ring up sales tax.

"Physically presence" to me means sales office.

Am I required to pay taxes on this online purchase?

If Sun requires you to pay the tax in order to buy from them, then of course you do. Furthermore, your understanding of "physical presence" is a bit lacking...

 

[chenn]

Thanks for the quick reply zigner,

You didn't really answer my question though. Simply having an office in a state that sales nothing is enough to justify charging online sales tax? I thought the law was designed so that if you had a store in that same state you would be charged sales tax.

Maybe you just don't understand the law and someone more insightful can provide a better response?

 

[Zigner]

Thanks for the quick reply zigner,

You didn't really answer my question though. Simply having an office in a state that sales nothing is enough to justify charging online sales tax? I thought the law was designed so that if you had a store in that same state you would be charged sales tax.

Maybe you just don't understand the law and someone more insightful can provide a better response?

Maybe YOU don't understand. Since when does "physical presence" mean a "store" as opposed to an "office".

In any case, if you want to do business with them, pay the tax.

 

[Antigone*]

Maybe you just don't understand the law and someone more insightful can provide a better response?QUOTE]

Remarks like that will get you very far.

You've just insulted a senior member with a vast amount of knowledge and experience. If his advice is not good enough for you, then you just might be out of luck.

 

[chenn]

Thanks for the quick response.

Have you ever heard of a "Use Tax" ? That's what many internet sales fall under.

Use tax - Wikipedia, the free encyclopedia

"For example, a resident of Massachusetts, which has a five percent "sales and use tax" on certain goods and services, purchases non-exempt goods or services in New Hampshire for use, storage or other consumption in Massachusetts. Under New Hampshire law, the New Hampshire vendor collects no sales taxes on the goods but the purchaser/user must still pay five percent of the sales price directly to the Department of Revenue in Massachusetts as a use tax. If the same goods are purchased in a U.S. state that does collect sales tax for such goods at time of purchase, then whatever taxes were paid by the purchaser to that state can be deducted (as a tax credit) from the five percent owed for subsequent use, storage or consumption in Massachusetts. (Clarifying Note: With few hair-splitting exceptions, no state's vendors will charge the native sales tax on goods shipped out of state. New Hampshire vendors, however, do not omit tax because something was shipped to Massachusetts or some other state; rather, they omit sales tax because New Hampshire does not impose a sales tax in the first place.)"

Anyone else here have any experience in this? I'm not going to "Pay the tax because they say so" when I've purchased many items online before without having to pay tax.

 

[Zigner]

I'm not going to "Pay the tax because they say so" when I've purchased many items online before without having to pay tax.

Then don't - you are free to buy from somebody else.

 

[chenn]

You've just insulted a senior member with a vast amount of knowledge and experience. If his advice is not good enough for you, then you just might be out of luck.

Insulted? Wow there must be some huge Ego's around here if you think that was an insult. I was simply stating that (maybe?) internet law is not his expertise.

And his advice was not good enough for me thank you, He basically said "because a company says pay me I should automatically pay them" without quoting any sources or providing any insight on internet tax law.

I don't really care about senority as this is the only question i will probably ever ask here.

 

[Zigner]

He basically said "because a company says pay me I should automatically pay them" without quoting any sources or providing any insight on internet tax law.

If you don't pay it, how can you FORCE them to sell to you? Oh yeah, you can't...

 

[FlyingRon]

It's not a use tax. It's a sales tax. Sun has a locus in NV.
This isn't any sort of "internet" tax law. It's plain and simple Nevada sales tax.

 

[chenn]

That's true I can't force them to sell me it unless I pay it.

But are they breaking any laws by forcing customers to pay tax with respect to the Use tax (which i belive this falls under)? Use tax - Wikipedia, the free encyclopedia

 

[Zigner]

That's true I can't force them to sell me it unless I pay it.

But are they breaking any laws by forcing customers to pay tax with respect to the Use tax (which i belive this falls under)? Use tax - Wikipedia, the free encyclopedia

Answer: No

 

[tranquility]

The term the OP is searching for is nexus. It has nothing to do with if a businesses have operations in a state exactly. It depends on if the company has enough presence that the state has jurisdiction over it. In the supreme court case mentioned, a company sold by mail order and mailed out catalogs in a state. They purchased warehouse space in that state to store the shipment of catalogs until bulk mailing. The state said that is enough to establish jurisdiction, but the supremes said no. It's far more complex then that, but the term is nexus.

Physically presence" to me means sales office.

Or it could be a storage facility they own, or a salesman working out of his home in the state or any one of a number of things which would cause the courts to believe nexus occurs. To say "sales office" is silly and has little relevance to a very complex topic.

Am I required to pay taxes on this online purchase?

Yes, you are required to pay taxes. (Sales or use.) You fall under the jurisdiction of the state and nexus is not a question. The case you speak of refers to if Sun *must* collect and pay over sales taxes. Even if the question is no (I think they have a presence in NV by the way.), does *not* mean they can't do it if they want to.

Simply having an office in a state that sales nothing is enough to justify charging online sales tax? I thought the law was designed so that if you had a store in that same state you would be charged sales tax.

Nope. Even though the case had to do with warehouse space (the key was the sending of catalogs for reasons I won't go into here), I believe they rented or leased it. Clearly a sales office in a state would be a substantial presence to where a company had purposefully availed themselves to the economic benefits of the state. However, that does not mean lesser presence does not give rise to nexus or a due process violation due to a lack of substantial minimum contacts. (Bunch of magic words there, I hope I didn't screw them up.)

Hope that was insightful enough for you.

 

[chenn]

Thanks Flying Ron,

Ok, so a company having an office in a state in which that office doesn't do any business, and doesn't make any sales, is good enough for that same companyto require online sales tax in that state then.

I guess i'm used to not paying any sales tax on internet items, as almost everyone who does ecommerce is out of state from me. If just having an office in the state is good enough to comply with the law then so be it.

Thanks for the replies.

 

[chenn]

tranquility,

That was very insightful and cleared a lot of my questions up. Thank you very much