Amazon Alerting Customers About Sales Tax Owed to South Carolina? Is This Real?

bandit0013 wrote:
Funkenpants wrote:
DSGamer wrote:

If someone tells you at the time of purchase that this item will be taxed then fair enough. If they actually charge you for the tax then I won't love that, but at least I paid it at the time and don't have the hassle later. But this is really weird to me and I wonder if on Monday this won't be a bigger story. It has the feel of Amazon trying to embarrass SC. It's not a Quickster-level PR faux pas, but it is really really odd to me.

I'm surprised they didn't tell you that at the time of sale. It's worth noting that Amazon is trying desperately to avoid collecting sales tax liability out of pure self-interest. They know not having to collect the tax leads to higher sales, and they don't care what effect e-commerce has on the local tax base.

Well, there are two points of self interest as to why Amazon doesn't collect sales tax. One is that it does give them a lower price point, since even if they match the local store in price it still comes out ahead because it doesn't collect sales tax. The other is that it is completely absofarkingly unreasonable to expect any entity that ships to all zip codes to be able to effectively calculate state and local sales taxes. The states DO NOT provide a service for doing this in an easy manner, thus it is an unreasonable burden on retailers. Also, if you did require this ala the Amazon tax in the interest of fairness you should slap every E-Bay selling individual or small business with the same burden. Selectively applying this to Amazon is BS.

However, I would like to point out that where I live, the sales tax is around 7%. Anytime I shop for anything and go to a Big Box store to check it out, I scan Amazon on my smartphone and the price is often 20-30% less. Making Amazon collect taxes isn't going to stop Best Buy from going belly up. Hell, I was just looking at a nice LED TV the other day that amazon had my local best buy beat by like $650.

I just watched a documentary on Best Buy and the docuementary said on average the prices are 10-15% more. Maybe you just buy stuff that has a higher markup hence the larger difference. The funny part is, if box stores like Best Buy go belly up, where will you go to look at that nice LED TV before you commit a large sum of money on it?

That's kinda what all those Amazon reviews are for.

But honestly I've looked at enough TVs the last few years that I'm probably only going to buy a Samsung, Sony, or maybe LG. Seen lots of crappy screens of other brands and know people that have had bulbs burn out on some other brands. So generally just stick with the good ones.

Walmart and Target both have pretty big walls of TVs nowadays too. Really Best Buy isn't doing anything for me.

Stele wrote:

Really Best Buy isn't doing anything for me.

Where else are you going have a helpful salesman talk you into $240 HDMI cable? You gotta pay for quality...

In this case, though, I would have bought the gift in Oregon (no sales tax) and shipped it from here. Soooo... what does that mean?

One more time for the skimmers:

Stengah wrote:

The problem is that [your purchases] are taxed, but the online retailer doesn't have a physical presence in the state, so they're not required to collect that tax. The taxes aren't being applied retroactively, they're just being reminded that buying something off of the internet is taxed the same way it would be if they bought it from a brick & mortar store down the street.

If you don't live in SC, you don't owe them any tax. You probably owe the state you do live in tax though. You live in Washington State, right?

WA's Use Tax[/url]]Use tax is due if:
...
Goods are purchased out of state by subscription, through the Internet, or from a mail order catalog company. Many of these companies collect Washington’s sales tax, but if the company from which you order does not, you owe the use tax.

In this case, it seems that South Carolina decided to settle for Amazon reminding their customers that they might owe the state back taxes.

Quote heavily trimmed to highlight the important bits.

Stengah has the right of it. Essentially, if you live in one of the 45 states that have a state sales tax, you are supposed to pay tax on every purchase you make. Generally, if the business from which you are purchasing doesn't have a physical presence in that state, they are not required to collect the tax. That doesn't mean it's not owed. In that case, the individual is "required" to pay a use tax instead. As this nolo.com article says, "The only difference between sales and use tax is which person -- the seller or the buyer -- pays the state." The reason you would owe tax in Washington on the item you had shipped to SC is that your "primary use" was as gift (in much the same way as if you'd bought the gift at Wal-mart and shipped it).

As for the notices, I'm guessing that it's easier for Amazon to just do a simple database query for "Select all orders where destination state = SC, group by purchaser" as opposed to something more complex trying to determine if the pruchaser was the recipient or what have you.

So, in summary, no, you - DSGamer - probably (Note: I am not a tax expert) do not owe SC use tax. Someone who lives in SC would. On the other hand, you probably do owe WA use tax on the gift you had shipped to SC.

Are you filing Oregon income taxes for the period that included the date on which you bought that gift? If that's the case, since Oregon has no state sales tax and you were an Oregon resident at the time of purchase, I would say that you owe no use tax on that particular purchase. Of course, I'm not a tax expert, but that's my interpretation.

Edit: Now that (if I understand correctly) you're a Washington resident, items purchased in Oregon for use in Washington are subject to use tax:

Washington State Department of Revenue wrote:

When is use tax due?
Use tax is due if:

Goods are purchased in another state that does not have a sales tax or a state with a sales tax lower than Washington’s. For example, items you purchase in Oregon that are used in Washington are subject to use tax.

So there's that.

Grumpicus wrote:

Are you filing Oregon income taxes for the period that included the date on which you bought that gift? If that's the case, since Oregon has no state sales tax and you were an Oregon resident at the time of purchase, I would say that you owe no use tax on that particular purchase. Of course, I'm not a tax expert, but that's my interpretation.

That's mine as well. Which is part of why the email was a big WTF to me. Shouldn't Amazon know how that works?

Grumpicus wrote:

Edit: Now that (if I understand correctly) you're a Washington resident, items purchased in Oregon for use in Washington are subject to use tax:

Washington State Department of Revenue wrote:

When is use tax due?
Use tax is due if:

Goods are purchased in another state that does not have a sales tax or a state with a sales tax lower than Washington’s. For example, items you purchase in Oregon that are used in Washington are subject to use tax.

So there's that. ;-)

That's actually a funny little thing in Oregon. People choose to move out of Portland to Vancouver because the schools are better, supposedly, and they don't like Oregon's tax structure. But then they basically shop in Oregon to avoid sales tax. They even used to buy cars in Oregon, but I think that loophole was closed.

It's become a bit of a thing, the rivalry between Oregon and Vancouver. Right now we're fighting over increasing the width of the bridge between the two states. Washington wants Oregon to bear a lot of the cost even though most of the traffic is commuters from Washington to jobs in Oregon.

Totally off topic but does Oregon have income tax?

DSGamer wrote:

That's mine as well. Which is part of why the email was a big WTF to me. Shouldn't Amazon know how that works?

From my first post in the thread.

As for the notices, I'm guessing that it's easier for Amazon to just do a simple database query for "Select all orders where destination state = SC, group by purchaser" as opposed to something more complex trying to determine if the pruchaser was the recipient or what have you.

No doubt the wording of the SC law is also a factor. Aside from ease of implementation, casting a broad net is probably adviseable for legal reasons as well.

gregrampage wrote:

Totally off topic but does Oregon have income tax?

Short answer: Yes.

States without an individual income tax

So when DSGamer says people "don't like Oregon's tax structure," what he means is that people in Portland move across the border to Washington so they don't have to pay income tax.*

Edit: *Generally, states without income tax make up the difference with higher property taxes. Nevertheless, if you're upper-middle class or so, it works out better for you because property taxes don't go up simply because you bring home more money.

Grumpicus wrote:

Edit: *Generally, states without income tax make up the difference with higher property taxes.

Kinda surprised they don't go the way of Canada with higher (10%+) sales tax.

Or other specific sales taxes being higher... gas, cigarettes, etc.

gregrampage wrote:

Totally off topic but does Oregon have income tax?

What Grumpicus said. This is the sore spot for Oregonians. People who live in Vancouveria talk about their awesome housing prices, lawns, property, schools, etc. and then come to Oregon for jobs and shopping. So we must be doing something right.

Alas, if you live in Vancouver (in WA, which has no income tax) and work in Oregon, you still have to pay state income tax to Oregon. But you can violate the use tax all you want.

jonnypolite wrote:

Alas, if you live in Vancouver (in WA, which has no income tax) and work in Oregon, you still have to pay state income tax to Oregon. But you can violate the use tax all you want.

That was actually going to be my next question. I wasn't sure if income tax is paid on where you live or where you work.

gregrampage wrote:
jonnypolite wrote:

Alas, if you live in Vancouver (in WA, which has no income tax) and work in Oregon, you still have to pay state income tax to Oregon. But you can violate the use tax all you want.

That was actually going to be my next question. I wasn't sure if income tax is paid on where you live or where you work.

I think it depends on who you work for. My wife travels the world as a contractor. So she gets paid by a US company and he taxes never change. So in theory you could find an agency in Washington to rent your services out across the border.

jonnypolite wrote:

Alas, if you live in Vancouver (in WA, which has no income tax) and work in Oregon, you still have to pay state income tax to Oregon. But you can violate the use tax all you want.

See, proof to my claim that I am not a tax professional. I've never worked across state lines (but I did move from a state with income tax to one without). Thanks for the info.

Usually if two adjacent states have income tax, they'll do some sort of reciprocal deal for people who work in one and live in the other. Of course, if one side has tax and the other doesn't there's not much room for such a deal, so it generally devolves into "either way, you pay tax in the state with income tax".