California going to charge "Use" tax for online or out of state purchases.

[Rob King]

Well, I got a letter today saying that The state of California will be charging a "Use" Tax on EVERY purchase that was made out of state or online tax free including EBAY. They can audit people from 2007-2009 on all their purchases made. The "Use" tax is equivalent to standard CA sales tax which is 9.75%.. Man we get KILLED on taxes in CA. Apparently it has been in LAW since 1930. CA is just finally playing that card. Gonna be an F'ed up audit for a lot of Californians...

Do You Owe 'Use Tax'?

[drBill]

Was the letter from the state board of equilazation?

CA has been TRYING to enforce or implement something like this for years. They will have a very stiff battle on their hands if they try again.

[Rob King]

Originally Posted by drBill

Was the letter from the state board of equilazation?

yep..

[drBill]

Originally Posted by Rob King

yep..

Well, it's going to be interesting watching ebay, and all the on-line retailers get up their elbows and down and dirty. Should be a fun fight to watch.

Not looking forward to things if CA wins.

Honestly the state board of equilazation has tried to tax out of state purchases many times before. Some companies just fold to their requests, and others flip em the bird and tell em to . They currently have no jurisdiction out of state. That may change.

[AllAboutTone]

No harm intended, but I'm glad you guys live there and not me, you can have ALL it has to offer....

[carlheinz]

This state has been mis-managed and they are looking for any scraps or crumbs they can find.Thinkin of moving to Nevada.

[Fletcher]

All states do this... got audited by Massachusetts Department of Revenue in 2008 and they taxed EVERY on-line purchase made for 4 years previous [no interest or penalties because we had always paid our sales tax bill to the state on our in state sales].

Your best bet is to be "audit proof" and just pay them what they're due for your on-line purchases.

[Rob King]

Strangely enough, I actually never knew about that law. It just blows getting caught off gaurd on more taxes that you owe. uugh....So much for trying to save a buck here and there...

[drBill]

Rob - I've been told tonight by people who know the system pretty well that this "use" tax has been in place for at least a couple of decades. The only thing "new" is that the bankrupt state of CA is going to pull out all the stops to try to collect.

[Rob King]

Decades for sure. Since the 1930's!! What asshole snuck that law in? Lol
I'm not much of a moaner but between all the taxes I pay in this damn state, it pisses me off I gotta deal with this.. It just blows.

While I'm on the subject of hating California at the moment (can never hate the weather though), my wife told me there is a new "peril" tax on every W-2 employee paid in CA. Her checks are $100 less per month going to the state.

Pretty soon we'll be back to Rome circa 1AD. Lol

ok I'm done now...

[Dean Roddey]

The weather is something that I would really just die to give up, but I'm going to have to. It's just too expensive, and yeh, you get taxed out the wazoo here.

[Rob King]

Anyone in California.. Enjoy this read..

Your Use Tax Responsibility - Board of Equalization

[surflounge]

Originally Posted by carlheinz

Thinkin of moving to Nevada.

Las Vegas real estate prices have fallen 54.6% from their highs and are expected to lose another 23.9% by June 2010.

time to look for a 'vacation studio' spot at least.

[drBill]

I was looking at property in Prescott/Sedona recently and when I asked the real estate agent what the tax base was, he didn't even know. That's the first thing I check on CA properties, as it can easily raise your monthly payment up to 2k a month. So, he didn't know and had to figure it out. It was aboutt 1/10th of what the same tax base is in OC - and if you take what you GET for the dollar, probably 1/25th as expensive. And the roads are in MUCH better condition. And the state isn't bankrupt. And the air is clean. And the real estate is 1/3. And on and on.....

CA blows....

[Kris]

Come to Florida and bring your money!

[TRA]

It's happening all over. The IRS is cracking down on tax laws that have been in place for years, but haven't really been enforced.

Here are a couple of examples:

If a gear dealer in New York has an item dropshipped from XYZ microphones to their customer in Maryland the dealer in New York must have tax exemption in the state of Maryland to not be taxed.

If the dealer was in Ohio and the customer is in Colorado the dealer only needs tax emeption in one of those states to be tax exempt.

It's the responsibility of the manufacturer that dropshipped the items to collect that tax. It's different for each state/scenario. I actually have a spreadsheet that maps out the different scenarios so I know who is responsible when.

[drBill]

Originally Posted by Kris

Come to Florida and bring your money!

Not likely.

[Rob King]

Originally Posted by drBill

Not likely.

That makes 2 of us... lol

[Fletcher]

Originally Posted by TRA

It's happening all over. The IRS is cracking down on tax laws that have been in place for years, but haven't really been enforced.

Here are a couple of examples:

If a gear dealer in New York has an item dropshipped from XYZ microphones to their customer in Maryland the dealer in New York must have tax exemption in the state of Maryland to not be taxed.

If the dealer was in Ohio and the customer is in Colorado the dealer only needs tax emeption in one of those states to be tax exempt.

It's the responsibility of the manufacturer that dropshipped the items to collect that tax. It's different for each state/scenario. I actually have a spreadsheet that maps out the different scenarios so I know who is responsible when.

That is not the IRS, it happens on a state by state basis as the Federal Govt. doesn't give a shit about state revenue [except that it can be deducted from Federal tax payments at the end of the year]. Each state varies on this. California [no surprise to anyone] the worst with the "drop ship tax collections" that have to be collected by MFG's for drop ships... so it is often less expensive for all involved if you have the product shipped to an out of state dealer and then back to California [I think this is the UPS loophole].

Also, if you stay current and correct with all of your state tax payments except the use tax, the reality of the situation is that if you lose your receipts or restructure you books to reflect "tax payments" being made to the retailer you can probably get away with it without penalty. Remember the state has the 'burden of proof' and the only way they'll know what is going on is if the schedule an audit [which is usually scheduled a couple of weeks in advance so you can "cook your books" as necessary.

Happy dodging!!

[LeMauce]

So... Let somebody buy gear for you outside CA. Drive to it and take it home as a gift. Don't see the problem... Mhzz perhaps I start a GIFT shop next to the border of CA

[WTMNMF]

I love living in a high cost of living area!

Chew on this:

If, say, the cost of housing = 50% of income and your monthly income is $2,000, then you have $1,000 left over for everything else. What ever you buy locally may cost more in a high cost of living area, but everyone is in the same boat, so income is adjusted to compensate to a great degree. But whatever is purchased from the national/global market costs the same for everyone! OK, local taxes will have a small influence on the cost, but this is minor compared to the differences in income from place to place.

So now let's make the income $10,000 per month. The housing is still 50%. That leaves $5,000 for the rest. But all of the the staple items that I get from Amazon through 'Subscribe and Save' still cost me the same as it would if I was living in a cheaper, lower income area. If I was taking $500 of my monthly income and spending it online then it is only 10% of what I have available instead of 50% of the previous examples amount.

When you want a new piece of gear from a national vendor would you rather be the first case or the second?

Other things scale in favor of high cost/high income. How about rewards on credit card purchases? If things cost me twice as much (but I'm paid about twice as much) then I get twice the rewards/miles/etc. on each purchase! When I spend those rewards in a national/global market my rewards go twice as far.

Hey, what if I'm homeless in a high cost of living area? Well that is better as well... What ever assistance I receive (from local sources) is scaled up and goes further when I spend it at a store that is using national pricing. Chain stores are quite likely to have the same or close to the same pricing everywhere.

High sales tax is a penalty against the poor for sure though and that is why the wealthy like to use it to run government because, as you can see, the richer you are, the less of your income goes to taxable expenses and therefore a smaller percentage of your income pays for government as compared to the poor.

$.02

[Animus]

Originally Posted by WTMNMF

I love living in a high cost of living area!

Chew on this:

If, say, the cost of housing = 50% of income and your monthly income is $2,000, then you have $1,000 left over for everything else. What ever you buy locally may cost more in a high cost of living area, but everyone is in the same boat, so income is adjusted to compensate to a great degree. But whatever is purchased from the national/global market costs the same for everyone! OK, local taxes will have a small influence on the cost, but this is minor compared to the differences in income from place to place.

So now let's make the income $10,000 per month. The housing is still 50%. That leaves $5,000 for the rest. But all of the the staple items that I get from Amazon through 'Subscribe and Save' still cost me the same as it would if I was living in a cheaper, lower income area. If I was taking $500 of my monthly income and spending it online then it is only 10% of what I have available instead of 50% of the previous examples amount.

When you want a new piece of gear from a national vendor would you rather be the first case or the second?

Other things scale in favor of high cost/high income. How about rewards on credit card purchases? If things cost me twice as much (but I'm paid about twice as much) then I get twice the rewards/miles/etc. on each purchase! When I spend those rewards in a national/global market my rewards go twice as far.

Hey, what if I'm homeless in a high cost of living area? Well that is better as well... What ever assistance I receive (from local sources) is scaled up and goes further when I spend it at a store that is using national pricing. Chain stores are quite likely to have the same or close to the same pricing everywhere.

High sales tax is a penalty against the poor for sure though and that is why the wealthy like to use it to run government because, as you can see, the richer you are, the less of your income goes to taxable expenses and therefore a smaller percentage of your income pays for government as compared to the poor.

$.02

I see what you are saying but then again the top 2% tax bracket pays something like 90% of all taxes country wide.

[Dean Roddey]

Originally Posted by Animus

I see what you are saying but then again the top 2% tax bracket pays something like 90% of all taxes country wide.

I think it's more like the top 1% pay something like 30%. The top 5% pay something like 50%.

But, and it's a huge but, that top 1% brings in something like 15% of all income in the country. Think abut that. There are about 300 million people. About a million households take 15% of all income. So the other 290 million get the remaining 85%. That's an insanely disproportionate amount of the country's income to be going to such a small number of people.

They SHOULD be paying that much tax. I think most of us can get comfortable with the fact that someone can work hard and manage to do really well and start a company that creates a good product, and end up with tens of millions (in the bank, not income every year.) I don't think someone like that should be taxed at a rate too far above the average. But when 1% of families are getting a full 15% of all the income brought in, that's getting into an unhealthy dynastic type of situation, the sort that will inevitably grow and eventually will cause some sort of major political fallout. It's that kind of accumulation of wealth at the top that is the cause of socialist revolution.

Is it 'fair'? No, but when it comes to fair vs. a healthy society, and the type of 'unfairness' we are talking about is that your $100M yearly income is being taxed at 50% or some such thing, that's a kind of unfairness that most of us would like to be subject to. If you can't make it on $50M a year, so that the rest can go back to benefit the society that you are benefiting so massively off of, then I'm having trouble feeling sorry for you.

[musikwerks]

I recently visited Los Angeles from Australia for the first time and was shocked at the poor condition of the freeways and roads in general. And LAX, my goodness what a dump. I wonder if Big Arnie will end up legalising Marijuana and tax that instead. Sounds like he inherited a giant steaming turd of a government. Not sure how you go about fixing shuch a huge problem, short of burning it to the ground and starting over again.

I know very little about Californian politics, except what my friends who live there have told me, so please take these opinions with a grain of salt.

[Fletcher]

Originally Posted by LeMauce

So... Let somebody buy gear for you outside CA. Drive to it and take it home as a gift. Don't see the problem... Mhzz perhaps I start a GIFT shop next to the border of CA

If its on your books as an expense then it doesn't matter who purchased it for you or when... the key is to keep "out of state" purchases off your books... which gets back to "cash is king" as you can easily keep cash transactions off your books [both as income and as expenses].

When you're audited they look at your books, if it ain't on the books they can't find it.

Creative accounting is the key [which works in every county, state, and country on Earth]

[Animus]

You are right Dean. I got my numbers wrong. I do think personal individual wealth should be taxed at a higher rate in the top tax bracket.s However I wouldn't advise higher taxes for businesses as this would only costs jobs.

[warhead]

I have a customer who is waiting 2 weeks delivery for some monitors I sold him...that are a 20 minute drive from him in California.

1) They would not let him pick them up
2) If they direct shipped them they would charge me the full retail tax

It is cheaper to ship them 3,000 miles to me and 3,000 miles back to him (as long as he doesn't get hit with tax, but that is not my responsibility).

Kind of reminds me of Jurassic Park: "life will find a way".

So will heavily taxed citizens!

War

[Greener]

Originally Posted by warhead

I have a customer who is waiting 2 weeks delivery for some monitors I sold him...that are a 20 minute drive from him in California.

1) They would not let him pick them up
2) If they direct shipped them they would charge me the full retail tax

It is cheaper to ship them 3,000 miles to me and 3,000 miles back to him (as long as he doesn't get hit with tax, but that is not my responsibility).

Kind of reminds me of Jurassic Park: "life will find a way".

So will heavily taxed citizens!

War

All the fuel used in that shipping was taxed. They get you coming and going.

[d1rtynyc]

I am probably alone in this thinking, but IMO this is a good thing.
You have almost every state broke, schools going to sh!t and essential services being downsized. This tax used to be collected by "brick & mortar" stores that most people bought everything. Now people make much of their purchases from all over the country. This lost tax money adds up and everybody loses in the end. We pay more for state income tax, property tax, DMV taxes, the list goes on.

I imagine in 5 or so years all online purchase will have to have state taxes applied.

[drBill]

Originally Posted by d1rtynyc

I am probably alone in this thinking, but IMO this is a good thing.

OR,

the legislators could just get a grip and stop spending money like there's no tomorrow on their insane pet projects that bring no benefit to the general public.