Sales tax on online purchases
 

Have any of you noticed the impact paying sales tax is on online purchases? Even Reverb... What a hit. Is this new? I just purchased a new guitar via Reverb - from another state... and my state doesn't have a state tax. Anyway, it was significant $$ of course.

I just can't recall having to pay this before with online purchases.. or maybe it's because I bought a "new" guitar?

edit: Update

CT77:

Oops - my bad. I meant we don't have a state income tax. Yeah - we definitely have a sale tax... It's anywhere from 8.5 - 8.9% or so.

New tax rules have kicked in, but there are only certain states that are mandated for the retailer to collect sales tax. Yes, it's impacted my purchases, both locally and online. I'm buying some more small things locally but pressing my regular online retailers for stronger deals and even going to retailers who won't charge tax. In fact, some of the retailers are charging sales tax rates higher than our local rate, which I object to strenuously and act accordingly.

Avoiding the political aspect, as cited in my book "The World According to Vindibona"... I find sales tax an obnoxiously deceptive representation of the rates- as when you pay sales tax you're using money to pay that tax that you've already paid tax on through income taxes etc. So in effect, if you're getting hit with a 10% sales tax rate as we are here... the effective sales tax is a much higher percent when you calculate the gross dollars it took to pay the net sales tax. I call that "tax stacking". I also believe that sales tax hurts poorer folks who have to consider it in budgeting for purchases, while it has no effect on rich folks who don't sacrfice anything to be able to pay the tax. And ironically, there ultimately had to be online sales tax, as repugnant as it is, to level the playing field for the brick and mortar stores who've been slammed with the inequality.

Yes, it really stinks!! The tax on my $3k martin was horrible!!

You mention that your state doesn't have a state tax - not sure exactly what you meant, but WA does indeed have a 6.5% sales tax and is usually listed as a state major retailers must collect sales tax from (For example Musician's Friend). As a matter of fact, it's the ONLY state that Reverb forces Tax collection from if you are a seller. From the the Tax Policy page when you set up a shop: "Tax rates for the following US regions are automatically calculated at checkout: WA".

That, my friend, is a straight up bummer!

CT77:

Oops - my bad. I meant we don't have a state income tax. Yeah - we definitely have a sale tax... It's anywhere from 8.5 - 8.9% or so.

The reality is that you are legally responsible for the sales tax when you buy a product from outside your state. If you've receievd guitars in the past without the seller collecting sales tax than you owe money to your local department of revenue.

Just got an email from Reverb with the states involved. WA is "live" on that issue now. Reverb automatically adds the taxes upon purchase..

So I'm just lamenting the taxes I've had to pay on a couple of recent online purchases - to include an expensive guitar from a Reverb store in Arkansas.

:(

What's that old saying? "Taxation without representation". :D

I believe even before this change, you are supposed to pay tax on everything. If you didn't, you needed to report it on your income tax return which no one does.

We've been kind of using a sort of ignorance "loop hole" to this point.

Ouch. I quoted Google at 6.5%, but that's just the "state" portion, without other municipalities added in. And according to vindibona1's note above, it's probably effectively even higher when viewed as "tax stacking".

On that note, given robj144's point that most of us have been getting away with not reporting these purchases all along, I should bring up that musicians are also allowed to write off (or at least depreciate) necessary Gear purchases - and I doubt many of us do this either.

On line tax
 

On an expensive guitar that may actually put the Mom & Pop shop back in the running. If you buy from a store out of state that doesn't have a presence in your state they don't collect tax. You may pay shipping but that has to be less than the tax on a $3k+ guitar.

Here in Canada we are also charged sales tax for online items, whether it be from Amazon, Walmart, Long & McQuade, etc. It's a whopping 15% regardless of whether I purchase online or in a store. Makes a car purchase very expensive.

My opinion on sales tax runs into the "political" area so I can't say what I really think about sales tax and the cause of it to begin with.

That said here in Jersey we play less than 7% now and not on everything so I can't complain ..... much :D

This is correct. You were always liable for the tax. Most people don’t report it, either because of ignorance or because they could get away with it.