Newark charging sales tax for out of state orders

[Potato Cakes]

Has anybody ever received an explanation from Newark why they charge sales tax for out of state orders? I asked them this some time ago but never got a response. I generally order from other suppliers, but I recently bought a handful of things from them since they had them readily available, so I was re-annoyed at this business practice of theirs. Do they have offices in every state?

Thanks!

Paul

 

[ruffrecords]

Does this mean many folk in the US who live near a state border always pop across the border to buy stuff and avoid sales tax??

How do you prove you are from out of state?

What would Jack reacher do?

Cheers

Ian

 

[emrr]

Does this mean many folk in the US who live near a state border always pop across the border to buy stuff and avoid sales tax??

If you are physically there, you pay tax.  If it's shipped, you might not.  Many interstate vendors collect.  Newark has warehouses all over, that counts as physical presence. 

 

[JohnRoberts]

Has anybody ever received an explanation from Newark why they charge sales tax for out of state orders? I asked them this some time ago but never got a response. I generally order from other suppliers, but I recently bought a handful of things from them since they had them readily available, so I was re-annoyed at this business practice of theirs. Do they have offices in every state?

Thanks!

Paul

Many larger internet vendors are now charging state sales tax. By law if the business has a physical presence in the state they must collect sales tax, but it is inevitable that all web sales will eventually pay sales tax.  Maybe Newark became large enough, or was bought by somebody large enough.

In general you owe the sales tax even if you are not charged. When I file my MS state personal tax return they ask me how much sales tax I owe them for things I purchased out of state and didn't pay tax on.... Since I am honest I try to pay them what I owe.

The feds need to rationalize this to not burden small companies with the myriad tower of babel that is state sales taxes.. every state has different rules and different rates.  I suspect computers could actually help manage this but it is an active point of contention between old school bricks and mortar, and new school small web businesses.  Large web businesses are already charging and paying sales tax to the states.

JR

 

[Potato Cakes]

Does this mean many folk in the US who live near a state border always pop across the border to buy stuff and avoid sales tax??

How do you prove you are from out of state?

What would Jack reacher do?

Cheers

Ian

If the shipping out of state, then it is considered out of state commerce. Here in the US, unless that company has an affiliated office, warehouse, etc, in the state it is being shipped to, then no sales tax is/should be applied.

I only saw the second Jack Reacher whilst on a long flight, and I don't think I would want to hitch hike everywhere nowadays, especially to DC. Every time I am there something makes me feel very uneasy.

[/quote]
In general you owe the sales tax even if you are not charged. When I file my MS state personal tax return they ask me how much sales tax I owe them for things I purchased out of state and didn't pay tax on.... Since I am honest I try to pay them what I owe.[/quote]

In the state of Tennessee, where silly things like personal state income tax do not exist, I am not asked about out of state purchases. The only time I know of that this applies is when I buy a vehicle across state lines, then I have to pay that sales tax when I get it registered here where I live.

A few years back, there was a pro audio vendor (Pro Audio Solutions, I believe) that was based here in Nashville, but was loosing so much business to out of state companies that would offer free shipping and no sales tax, they moved across the border to Franklin, KY to remain competitive. It's also nice country side in that area.

I've not been charged sales tax from companies such as Mouser, Digikey, etc. Only retailers with an office here in TN have charged tax for online purchases. Maybe Newark does have a warehouse in the great state of Tennessee, which is the only explanation that would make sense. I'll ask them again and see if anyone responds.

To finish off like a fifth graders essay... In conclusion, I will just try to stick with the usual vendors that I can and not more for goods when I don't have to.

Now time for some late night fun with a chop saw and a Brad nailer.


Thanks!

Paul

 

[PRR]

> Does this mean many folk in the US who live near a state border always pop across the border to buy stuff and avoid sales tax?? How do you prove you are from out of state?

I remember when Pennsylvania had sales tax and New Jersey did not. The roads just over the bridges into NJ were lined with stores primarily selling to Pennsy people.

OTOH on a hike we crossed the bridge to buy candy on the Pennsy side and had to pay 3 cents more than we expected.

No, if you walk into a retail shop where there is sales tax you pay sales tax. It isn't where you are from, it is where the sale is made.

However in car sales, sales tax is collected when you "title the car": report your purchase to the DMV and get the slip of paper which confers your ownership. In-state dealer sales, the dealer handles this. Out of state I think you get a transportation permit to take it home and quickly report to your own DMV.

If I was closer to the border, and a drinker, I would buy my booze in New Hampshire. The state tax is lower. And they know it. There's just 11 miles and 3 exits along the NH turnpike, one of those exits is just the largest liquor store north of Boston (who also go to NH for low prices).

 

[Potato Cakes]

> Does this mean many folk in the US who live near a state border always pop across the border to buy stuff and avoid sales tax?? How do you prove you are from out of state?

I remember when Pennsylvania had sales tax and New Jersey did not. The roads just over the bridges into NJ were lined with stores primarily selling to Pennsy people.

OTOH on a hike we crossed the bridge to buy candy on the Pennsy side and had to pay 3 cents more than we expected.

No, if you walk into a retail shop where there is sales tax you pay sales tax. It isn't where you are from, it is where the sale is made.

However in car sales, sales tax is collected when you "title the car": report your purchase to the DMV and get the slip of paper which confers your ownership. In-state dealer sales, the dealer handles this. Out of state I think you get a transportation permit to take it home and quickly report to your own DMV.

If I was closer to the border, and a drinker, I would buy my booze in New Hampshire. The state tax is lower. And they know it. There's just 11 miles and 3 exits along the NH turnpike, one of those exits is just the largest liquor store north of Boston (who also go to NH for low prices).

Correct. If I am physically in a different state I am paying their sales tax.

I bought my current vehicle in KY and drove it home, then had to do DMV registration and pay sales tax for this state as those taxes go (or are supposed to go) to roads and such here in TN where I do most of my driving.

I guess I just need to find out if Newark has some sales office or warehouse in this state. That would leave me with no more questions in life.

Back to the chop saw!

Thanks!

Paul

 

[Mbira]

Not all states don't charge sales tax when an order is shipped out of state.  In fact fewer and fewer all the time.  Here in Texas I was always lead to believe that if I ship a product out of state that I didn't charge sales tax.  Now come to see that in the case of Texas you must charge sales tax based on the state of origin (Texas).  Other states make you charge sales tax based on state of destination (which is more of a pain because then you have to maintain several different sales tax figures when you go to pay your sales tax).

Anyway, the point is that things seem to have changed for many states, so be sure and do your research if you are a business that charges sales tax.

 

[Potato Cakes]

Not all states don't charge sales tax when an order is shipped out of state.  In fact fewer and fewer all the time.  Here in Texas I was always lead to believe that if I ship a product out of state that I didn't charge sales tax.  Now come to see that in the case of Texas you must charge sales tax based on the state of origin (Texas).  Other states make you charge sales tax based on state of destination (which is more of a pain because then you have to maintain several different sales tax figures when you go to pay your sales tax).

Anyway, the point is that things seem to have changed for many states, so be sure and do your research if you are a business that charges sales tax.

Copy that. I will keep that in mind.

Thanks!

Paul

 

[Potato Cakes]

I am not charged sales tax from any Mouser order, which comes out of the great state of Texas. Nonetheless, if I do start selling any products, I will pay close attention to what must be rendered unto Caesar when the interstate commerce is concerned.

Thanks!

Paul

 

[JohnRoberts]

Not all states don't charge sales tax when an order is shipped out of state.  In fact fewer and fewer all the time.  Here in Texas I was always lead to believe that if I ship a product out of state that I didn't charge sales tax.  Now come to see that in the case of Texas you must charge sales tax based on the state of origin (Texas).  Other states make you charge sales tax based on state of destination (which is more of a pain because then you have to maintain several different sales tax figures when you go to pay your sales tax).

Anyway, the point is that things seem to have changed for many states, so be sure and do your research if you are a business that charges sales tax.

I am not required by state of MS to charge sales tax on drum tuners I sell and ship out of state, I just deduct out of state shipments from gross sales each month before filing my state sales tax return.

It is the personal income tax return that asks me to personally self report any out of state purchases I made.

Since I ran a mail order business back in the 70s, this sales tax across state lines has long been a contentious issue for local merchants remaining competitive (NH is notorious for booze sales to boston residents). 

I predict being able to slide on sales tax will eventually go away, it has been discussed for probably decades and now web sales is making it a real economic issue, while the large players do collect sales tax (perhaps to avoid more onerous regulation).

As it is now it is too complex for small companies to easily collect and remits sales tax to every state we sell to.

I hate to even write this but a single federal sales tax, that they then distribute to the sundry states would be practical, but I do not trust legislators to not abuse yet another revenue stream.

JR

 

[mjrippe]

If I was closer to the border, and a drinker, I would buy my booze in New Hampshire. The state tax is lower. And they know it. There's just 11 miles and 3 exits along the NH turnpike, one of those exits is just the largest liquor store north of Boston (who also go to NH for low prices).

Of course liquor stores in NH are state owned, so they still win.  There is also a "rest stop", I believe just above the Mass. border, which has a liquor store so you don't even have to leave the highway!

 

[ruffrecords]

Why not rationalise it to a single value in every state and make it chargeable on every sale? (I was going to suggest making it a federal tax but I don't think that would go down too well)

Cheers

Ian

 

[JohnRoberts]

Why not rationalise it to a single value in every state and make it chargeable on every sale? (I was going to suggest making it a federal tax but I don't think that would go down too well)

Cheers

Ian

There have been efforts to rationalize the sales tax rates and applicability but it varies too much (ranges from <3% to more than 7%). Some wealthy states charge elevated sales tax rates, then exempt different things. Some states don't charge sales tax for food, some charge extra taxes for lodging. Many large cities charge their own sales taxes.  A literal taxation tower of babel.

This is a very old topic with numerous vested interests, but the constitution considers this the state's right to tax local commerce. Interstate commerce is a different thing.  The commerce clause a federal power enumerated in the constitution grants the federal government power to regulate commerce disputes between states. The sales tax conflict was tested in court in 1992 (Quill Corp v. N. Dakota) and the state lost, but there were earlier court cases too.

I suspect computer technology (maybe even blockchain) will eventually resolve this, but I do not see any easy answer as the constitution prevents states from messing with the other states commerce. So the sellers are outside the states jurisdiction, OTOH the buyers local to the state are arguably subject to state regulation.  Interesting, collecting sales tax from local residents, for out of state purchases is prohibitively difficult now (unless you use the honor system like MS does.).

JR 

 

[PRR]

> rationalise it to a single value in every state

Maine recently raised from 6% to 6.5%. Our Governor "needs" the flexibility to adjust the rate to suit local economy. (There's a ratchet in the works: rates almost never go down.)

And as mentioned: some of the rules are baroque. Here, 5 bagels is taxed, 6 bagels is not. (One is a snack, the other is groceries.) The classic thinking exempts "essentials"; is underwear essential? Soda-pop? Water in an area of bad wells? Bottled water with strange names in blue bottles at absurd price? If you only sell non-staples, like resistors or drum tuners, it is safe to just collect tax on everything. But as you get to general goods, you don't want to collect tax on non-taxable *in the buyer's state* for fear of complaint leading to lawyer and accountant bills.

 

[ruffrecords]

> rationalise it to a single value in every state

Maine recently raised from 6% to 6.5%. Our Governor "needs" the flexibility to adjust the rate to suit local economy. (There's a ratchet in the works: rates almost never go down.)

And as mentioned: some of the rules are baroque. Here, 5 bagels is taxed, 6 bagels is not. (One is a snack, the other is groceries.) The classic thinking exempts "essentials"; is underwear essential? Soda-pop? Water in an area of bad wells? Bottled water with strange names in blue bottles at absurd price? If you only sell non-staples, like resistors or drum tuners, it is safe to just collect tax on everything. But as you get to general goods, you don't want to collect tax on non-taxable *in the buyer's state* for fear of complaint leading to lawyer and accountant bills.

I suppose it is a bit like VAT throughout Europe. Each country sets the rate (20% in the UK and 19% in Germany for example) and each country has excepted or reduced rate items such as children's clothes and heating fuel. However, the cross border rules are quite simple - you pay the VAT rate of the country that supplies the goods/services.

Cheers

Ian

 

[JohnRoberts]

I suppose it is a bit like VAT throughout Europe. Each country sets the rate (20% in the UK and 19% in Germany for example) and each country has excepted or reduced rate items such as children's clothes and heating fuel. However, the cross border rules are quite simple - you pay the VAT rate of the country that supplies the goods/services.

Cheers

Ian

But imagine if you had 50 different VAT rates, not to mention different cities with additional taxes and exceptions.

We considered VAT here and my resistance to it is because I do not trust the congress to reduce our other taxes a like amount.

JR

 

[PRR]

> pay the VAT rate of the country that supplies the goods/services.
> not to mention different cities with additional taxes and exceptions.

"In some jurisdictions of the United States, there are multiple levels of government which each impose a sales tax. For example, sales tax in Chicago (Cook County), IL is 10.25%, consisting of 6.25% state, 1.25% city, 1.75% county and 1% regional transportation authority. Chicago also has the Metropolitan Pier and Exposition Authority tax on food and beverage of 1% (which means eating out is taxed at 11.25%). cite

OTOH, Oregon Montana and New Hampshire have no sales tax.

Yes, collecting the rate at the seller's location would be simpler. But online sellers would flee, say, Chicago, and reincorporate at Helena or Nashua.

 

[Mbira]

I am not required by state of MS to charge sales tax on drum tuners I sell and ship out of state, I just deduct out of state shipments from gross sales each month before filing my state sales tax return.

According to this, MS is an origin based sales tax state so you are required to charge sales tax on out of state sales:
https://blog.taxjar.com/charging-sales-tax-rates/

But then other sites say if you don't have nexus you don't have to collect it:
http://www.salestaxinstitute.com/Sales_Tax_FAQs/Sales_Tax_Liablity_customer_does_not_pay_Use_tax

It's confusing to me.  Perhaps the origin-based thing only applies if you also have nexus in the state you are selling to?

 

[hodad]

Why not rationalise it to a single value in every state and make it chargeable on every sale? (I was going to suggest making it a federal tax but I don't think that would go down too well)

Cheers

Ian

If you want to know how weird it really is, where I live the sales tax is 9%.  If I drive a mile to the next county over, it's 7%.  If I go 15 miles up the road to yet another county, it's 6%.  Here in Georgia there's a base state sales tax that can be supplemented by local sales taxes.  So if you want to buy a new car, you go to the area where sales tax is 6%. 

As far as Newark goes, I seem to remember them charging sales tax on me in Georgia way back in the dark ages when people ordered from catalogs and placed orders with humans over the telephone.  One issue is that many businesses have some sort of corporate presence in numerous states, even if stuff gets shipped from far away.  I think this may be the case with Newark--I think I actually asked someone there about this very thing sometime in the early 2000s.  IIRC, that was their explanation.