Buying on Web to avoid sales taxes could end soon

Jan 12, 2009

NEW YORK - Shopping online can be a way to find bargains while steering clear of crowds — and sales taxes.

But those tax breaks are starting to erode. With the recession pummeling states' budgets, their governments increasingly want to fill the gaps by collecting taxes on Internet sales, which are growing even as the economy shudders.

And that is sparking conflict with companies that do business online only and have enjoyed being able to offer sales-tax free shopping.

One of the most aggressive states, New York, is being sued by Amazon.com Inc. over a new requirement that online companies must collect taxes on shipments to New York residents, even if the companies are located elsewhere. New York's governor also wants to tax "Taxman" covers and other songs downloaded from Internet services like iTunes.

The amount of money at stake nationwide is unclear; online sales were expected to make up about 8 percent of all retail sales in 2008 and total $204 billion, according to Forrester Research. This is up from $175 billion in 2007.

Based on that 2008 figure, Forrester analyst Sucharita Mulpuru says her rough estimate is that if Web retailers had to collect taxes on all sales to consumers, it could generate $3 billion in new revenue for governments.

It's uncertain how much more could come as well from unpaid sales taxes on Internet transactions between businesses. But even with both kinds of taxes available, state budgets would need more help. The Center on Budget and Policy Priorities estimates that the states' budget gaps in the current fiscal year will total $89 billion.

http://tech.yahoo.com/news/ap/20090112/ ... ales_taxes

Patterson has turned into a true piece of $hit... First off he can't police the web and there will be vendors who won't charge tax so it’s a waste to even try to enforce this. However Patterson is going to tax the populous of this state into a depression with his plans. This guy doesn't stand a chance of being reelected.

It's only a matter of time before Congress allows taxing of online transactions.

Newegg tried to follow that rule, they implemented it...the sales hit the floor for NY customers. 3 months later they removed it...

I can understand tax on online purchases. However, I think you should pay the tax of where the site is located, not where the recipient is. It's like buying from a store in Jersey....I pay JErsey tax, not NY tax, no matter where I might be bringing the goods.

Patterson sucks.

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Originally Posted by Phil D.

I can understand tax on online purchases. However, I think you should pay the tax of where the site is located, not where the recipient is. It's like buying from a store in Jersey....I pay Jersey tax, not NY tax, no matter where I might be bringing the goods.

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Actually, by law, you are required to pay NYS sales tax on those purchases, although you do get credit for the local sales tax you paid where it was purchased. From NYS Tax Publication 39 (dated 8/04, so it's not a "Patterson" thing...):

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Individuals, estates, trusts and businesses that are residents of New York State who purchase items or services outside of New York that are then brought into New York and used here are liable for the compensating use tax. The amount subject to tax is generally the original purchase price, including any shipping or delivery charges...

Resident purchasers reporting New York State and local use tax may have paid a sales or use tax in the state and/or locality where they purchased and took possession of the item or service. New York Tax Law provides a "reciprocal credit" for sales or use tax paid to another state and/or locality in that state...

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If you buy a new car out of state, and try to register it in NY, you will have to pay the difference in sales tax when you do. Also, if you live in NY and buy a car in a different area of NY (say you live in NYC but buy a car in Westchester) you have to pay the sales tax based on the area in which you live/register it, so you can't run to a lower tax area to make the purchase.

While you may hate having to pay sales tax on an internet purchase, think of this from the point of view of the guy who owns the store down the street. He has the same product that Amazon has, for about the same price. But you buy it on-line to save $2 in sales tax, he eventually goes out of business, and then you come here and bemoan the fact that some big box store has driven out another local merchant.

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Originally Posted by moose135

While you may hate having to pay sales tax on an internet purchase, think of this from the point of view of the guy who owns the store down the street. He has the same product that Amazon has, for about the same price. But you buy it on-line to save $2 in sales tax, he eventually goes out of business, and then you come here and bemoan the fact that some big box store has driven out another local merchant.

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Very true, right now, the internet enjoys competitve pricing against brick & mortar type stores.

Why should that be the rationale?

Why not then throw prohibitive tariffs on all imports since they enjoy an advantage with cheap labor elsewhere?

Let the stores go out of business, and perhaps all the local taxes and real estate prices will have to come down to encourage brick and mortar businesses that have too much overhead. Same goes for the pathetic auto industry.

New York State Govt is going to put itself into a depression to pay its bloated work-force and insatiable social welfare programs.

Tom