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Why does Guitar Center charge sales tax for online purchases?

Phydeaux

Member
Messages
613
The last item I bought through the GC website was shipped to my home from the Musician's Friend warehouse in Kansas City. Even so, they still charged 7% state sales tax, just as if I had walked into the local store. Add shipping charges on top of that, and I'm wondering why anyone would order from the GC site instead of avoiding the sales tax and shipping charge by just going directly to MF. :huh
 

prsflame

Member
Messages
3,005
If there is a Guitar Center located in your home state, then they have to charge Sales Tax. I've encountered this issue with other businesses as well, it's not just GC.
 

Thinline_slim

Member
Messages
3,293
If there is a Guitar Center located in your home state, then they have to charge Sales Tax. I've encountered this issue with other businesses as well, it's not just GC.
Yup.

But, if you were to shop at MF and avoid sales tax, that doesn't necessarily mean you're off the hook from paying it. Colorado passed a bill essentially putting the tax collection in your hands for online purchases. So if you avoided it at the point of sale the taxable amount is still due to the state come tax time.
 

Papple

Member
Messages
116
Here in Wisconsin all internet sales are subject to the local "Sales Tax" where ever you purchase the item. I believe they're using the term "Use Tax" in certain States.

Our State Department of Revenue recently sent somebody I know a letter asking them to review there tax records for a certain time period. He passed it on to his accountant who sent a letter to them asking what they were looking for. They never received any response back so it was assumed that everything was okay.

Well fast forward a couple of months and he gets another notice in the mail. In it they told him that since he didn't respond to the original letter they were going to make a judgement without any response from him. He decided to call the person sending the letter and managed to actually talk to that person.

The lady told him that there was a questionable charge on his credit card from 2006 and that they were wondering what it pertained to. After thinking about it he mentioned what he thought it might be and she confirmed it. She told him that since it was an "Out of State" purchase he should of paid Wisconsin the tax regardless of it being purchased out of State since the item was being used in Wisconsin. He also would have to pay a penalty & any interest due.

He told her that he had in fact claimed the purchase plus some other items he had bought. She did a quick check on her computer and saw that he had indeed done so. Fortunately for him he had declared his "Out of State" purchases on his State Tax Forms so he was off of the hook. She never apologized to him for the inconvenience or for taking the time to contact her and as fast as the conversation was started it was over. He did get a confirmation from her though stating that everything was cleared up.

Lessons learned:

1) Never assume that since there is no response from any Government Agency that everything is okay.

2) Just because they don't collect any tax at the time of your purchase don't assume you got away without paying your "Sales Tax".

2) If you are using a Credit Card or Paypal there's a record of your transaction and you might just be surprised by this happening to you. Most States are setting up Tax Collection Departments to collect what they are owed from Mail & Internet Sales.

Buyer Beware!!!!
P
 

A-Bone

Montonero, MOY, Multitudes
Platinum Supporting Member
Messages
103,071
If there is a Guitar Center located in your home state, then they have to charge Sales Tax. I've encountered this issue with other businesses as well, it's not just GC.
This is exactly right.

Also, as far as "use tax" is concerned, this is really not a new thing. In most states it has been the responsibility of the buyer to remit appropriate sales taxes to the state for purchases shipped in from out of state for some time. It has just been the case that people were largely unfamiliar with this and there was little or no enforcement.

What has changed is states are desperate for revenue, and online shopping has become a huge deal, so expect to see more and more states passing laws that allow them to collect sales tax from online purchases even if the item is shipped from out of state. States prefer this to making it the responsibility of the purchaser to subsequently remit the sales taxes.
 

Soul Man

Local 83
Gold Supporting Member
Messages
2,444
Interesting topic.

Here is what Sam Ash says on their website:

When I place an order with SamAsh.com, do you collect sales tax?
We do not collect sales tax for online orders, unless the orders are shipping to New York or Florida.


Really? Why only those two states?
Sam Ash Quikship Corp., which operates Samash.com, is a Florida corporation with offices in New York and Florida; by law, this requires us to collect sales tax on all shipments to and within those states.

So, they tell you "no tax" but in fact you may be snagged later by your own state for not paying sales tax?

Man, that seems complicated and really unfair if your state doesn't vocally come out and tell you what may happen. How many millions of people buy online with no tax thinking they received a great deal only to get railed later?

Something doesn't seem right about that.
 

Guitar Josh

Resident Curmudgeon
Gold Supporting Member
Messages
19,375
I personally think that Use Taxes violates the Commerce Clause, but I really doubt we can get into that here.

Regardless of my personal feelings however, in my state it's the law, so I pay it, begrudgingly as it may be.
 

HugalosPizza

Member
Messages
1,097
Because they would charge you at the door for breathing the air in the store or for viewing their items for sale if they could get away with it.
 
Messages
2,663
Yup.

But, if you were to shop at MF and avoid sales tax, that doesn't necessarily mean you're off the hook from paying it. Colorado passed a bill essentially putting the tax collection in your hands for online purchases. So if you avoided it at the point of sale the taxable amount is still due to the state come tax time.
That has come up a few times as the internet has caused some rethinking of the sales tax laws.
Technically, if you buy something in one state and live in another, you're supposed to file it on your tax returns and request a refund from the state you bought from.

At least that's how it works for auto purchases.
 

1967SG

Member
Messages
3,262
If there is a Guitar Center located in your home state, then they have to charge Sales Tax. I've encountered this issue with other businesses as well, it's not just GC.
Yep, Dell will tell you the same - they are incorporated in every state in the US.
 

A-Bone

Montonero, MOY, Multitudes
Platinum Supporting Member
Messages
103,071
I think in the not so distant future, an online sales tax will exist regardless of nexus.
Not hard to imagine, although rather than an online sales tax, I'm, afraid it will be a patchwork for different states' online sales taxes.
 

taez555

Member
Messages
8,469
I think in the not so distant future, an online sales tax will exist regardless of nexus.
It's already in the works...

http://enzi.senate.gov/uploads/marketplacebill.pdf

It was introduced in the Senate in November.

Basically it's main aim is Amazon.com. Most other major on-line retailers, Guitar Center, Target, Walmart, Home Depot, etc, already collect tax since they already have a physical location in just about every state.
 

ickywoods

Member
Messages
537
Also, as far as "use tax" is concerned, this is really not a new thing. In most states it has been the responsibility of the buyer to remit appropriate sales taxes to the state for purchases shipped in from out of state for some time. It has just been the case that people were largely unfamiliar with this and there was little or no enforcement.
That's exactly correct.
 

Blanket Jackson

Every day is like Tio's birthday
Gold Supporting Member
Messages
16,286
If there is a Guitar Center located in your home state, then they have to charge Sales Tax. I've encountered this issue with other businesses as well, it's not just GC.
^^ this is the reason Apple always gave as to why the Apple online store always charged sales tax as well. Historically. Now, I think that many state laws no longer provide that exemption.
 

Baminated

Senior Member
Messages
6,491
If one does commerce alot, a private mail box, an offshore bank account (not all of them are super expensive), and an international merchant account would give alot of layers rather than the direct soc#/home address tie down, which I think is a huge mistake in the first place regardless
 






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