Wondering about taxes

[100thMonkey]

Hi everyone.

I was wondering about taxes on the stuff we buy. The reason I ask is because when I was smoking I ordered from Indian reservations for about a year. They didn't charge taxes. A year or so later I got a scary letter from I believe the Commerce department in California asking for those taxes. They had gotten the customer list from these reservations (not cool, I know) and were hitting up customers for the taxes.

What are the issues we need to be aware of? I've noticed that I often don't see tax charged on my purchases from different places. Maybe they are included in the purchase price. I don't know. What do you think?

Thanks and don't mean to be paranoid.

 

[LowThudd]

Currently, there is no sales tax on out of state mail orders. As far as cigarette taxes, e-juice is not considered a tobacco product by the FDA or the ATF, so therefor it is only aplicable to sales tax, which we are not required to pay since in most cases we are buying from out of state. When I did order something from in CA, I was charged standard sales tax.

 

[SgtDGun]

if the vendor is not in your state you don't owe taxes. I believe there may be a couple of states that don't follow this

 

[bsoplinger]

Almost every state that has a sales tax has a corresponding use tax on the books. The use tax allows sales taxes paid to offset the amount of use tax owed. Which means if you buy in state since you paid sales tax you owe no use tax but if you buy out of state you owe the use tax.

Years ago before the internet there wasn't much out of state commerce and the states didn't worry much at all about the lost tax except on big ticket items like cars. Now that there is so much the states are actively trying to get those taxes.

Bottom line: As far as your state is concerned you owe tax on all those out of state purchases. If they have a way to prove you made purchases they will prosecute and you will loose.

 

[100thMonkey]

Got it, thanks everybody, that's interesting.

 

[Satharra]

Almost every state that has a sales tax has a corresponding use tax on the books. The use tax allows sales taxes paid to offset the amount of use tax owed. Which means if you buy in state since you paid sales tax you owe no use tax but if you buy out of state you owe the use tax.

Years ago before the internet there wasn't much out of state commerce and the states didn't worry much at all about the lost tax except on big ticket items like cars. Now that there is so much the states are actively trying to get those taxes.

Bottom line: As far as your state is concerned you owe tax on all those out of state purchases. If they have a way to prove you made purchases they will prosecute and you will loose.

This is quite true. Most states you'll see it on your income tax forms. If you choose not to report it, be prepared for when/if they catch you. There will be fines and interest assessed. With the rise in Internet sales and state and local budgets in need of more tax dollars, be prepared for states to start looking more closely at how they can determine and accurately tax Internet-based purchases. When there's money being lost and dollars needed for state budgets, they'll find a way.

Btw, this applies to all online sales unless they specifically charge tax (JCPenney's, for instance). Just because the Internet-based vendor doesn't charge tax doesn't mean that there isn't going to be tax owed.

 

[banjo]

California has special taxes on tobacco products. If they were not paid by the supplier on the reservation, they can charge you no matter were the shipment originated. These taxes are not considered State Sales Taxes.........

 

[100thMonkey]

Re: A year or so later I got a scary letter from I believe the Commerce department
I went and looked up my paperwork on this. All of it was handled by the State Board of Equalization, Excise Taxes Division and Property and Special Taxes Department. One form was titled, "Cigarette and Tobacco Products Use Tax Return," and the other, "Cigarette and Tobacco Products Excise Tax Return." It all came out of Sacramento and ended up costing me $566.00!

The perhaps saving grace here is that my PV is not classified as a tobacco product right now. And I agree with you, Satharra, these days (especially California) states are looking for revenue in all ways.