Internet Sales Tax Coming Up For Vote- Paying Tax on DAZ Products?
Novica
Posts: 23,859
http://news.yahoo.com/senate-bill-lets-states-tax-internet-purchases-071827312.html
I've been a small business owner and sold both online and in a brick and mortar location, so I understand both positions on taxing online purchases.But as a consumer- it's something to think about if you're planning on becoming deeply invested with DAZ products or other 3d stores. You might soon have to pay sales tax for your state. DAZ shopping cart will have it automatically for your state (if it's required. You won't have a choice to file it, DAZ will collect it.)
Will be interesting to watch. I got an email from eBay about a petition they were sending, a couple weeks ago.
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Comments
Amazon is very much lobbing for this bill. Not sure how it would effect small business owners since very few of them have stores in multiple (or in many cases any) locations. That said there are already several states that require sales tax on any and all internet sales. My state does and has for around a year or so. DAZ has been taxing me in accordance with my state law for around a year I think. It didn't change my spending any though. Not everyone does charge me tax however. Not sure if they are eating the 8% or just hoping they don't get caught. And it is possible that some on line retailers will simply jump prices up nominally to cover state taxes or simply take the "hit" like they do with discounted or free shipping.
I don't think the U.S proposed legislation would apply to Daz except in states where they have a physical presence or in states where they sell more than $1 million a year which I don't think Daz does that much. I believe there are some states like Texas that already require Daz to collect sales tax.
In my country (part of European Union) we have VAT, which is something like the U.S. sales tax. VAT is charged on everything, regardless if the goods (or service) is sold in a brick shop or online. Some U.S. online shops charge it on me already when they recognize where I am from, like Amazon for example - they do not include the VAT amount in the normal sale price but add to it, which makes everything much more expensive for me than for Americans. If DAZ did it too, it would be a big STOP for my spendings in DAZ webstore, because our VAT is 21% and most products would become too expensive for me to buy.
Amazon is very much lobbing for this bill. Not sure how it would effect small business owners since very few of them have stores in multiple (or in many cases any) locations.
If this is the bill I think it is, it's going to require bunches of extra man hours to keep track of it all. Which could hit small internet businesses very hard. Tax in IL is, I think, 6.5%, but many communities around Chicago (including the city itself) add 1-4%, which is why I'm not sure exactly what IL sales tax is, since most receipts just list "Sales Tax" and don't divide out what goes to the city and what goes to the state. Even without the extra work of keeping track of community taxes, it still will require keeping track of 50 (or more, depending on how you count places like DC and Puerto Rico) tax rates and submitting the taxes to the appropriate state governments, which will add to time required for accounting.
Are you allowed to claim "taxes paid to a foreign government" as a deduction on your own taxes? I know we can do that in Canada if there is a tax-reciprocity treaty between the two countries (as there is between Canada and the USA).
If you can do this, then you'd get the money back when you file your income tax report (as either a refund or a credit toward the tax you have to pay)... but DAZ3D would have to give you receipts for the taxes they collect. I know I'll be asking for such receipts if this goes into effect.
Are you allowed to claim "taxes paid to a foreign government" as a deduction on your own taxes? I know we can do that in Canada if there is a tax-reciprocity treaty between the two countries (as there is between Canada and the USA).
If you can do this, then you'd get the money back when you file your income tax report (as either a refund or a credit toward the tax you have to pay)... but DAZ3D would have to give you receipts for the taxes they collect. I know I'll be asking for such receipts if this goes into effect.
VAT paid on business expenses can be set against VAT due to be collected from your own customers, in the UK, or is not payable, in most other parts of the EU, if a business is VAT registered. I'm not sure how those below the VAT threshold are handled, but presumably if the item is an allowable expense the total price can be offset whether or not VAT is handled separately.
Are you allowed to claim "taxes paid to a foreign government" as a deduction on your own taxes? I know we can do that in Canada if there is a tax-reciprocity treaty between the two countries (as there is between Canada and the USA).
If you can do this, then you'd get the money back when you file your income tax report (as either a refund or a credit toward the tax you have to pay)... but DAZ3D would have to give you receipts for the taxes they collect. I know I'll be asking for such receipts if this goes into effect.
If I were a company, I think something like that could be possible under certain circumstances. The most important thing would be that the goods would have to be for my business (= meaning to be useful for that business). If I for example were owner of an accounting company, I could get VAT tax returned for buying an accounting software, but not for buying 3D software & content - but if I had a graphics studio, then a refund could be possible. Still, it would be a HUGE amount of paperwork and I am not entirely sure if it would work at all, since European VAT is a bit different from American sales tax and getting refund for a tax paid in another country is very tricky even when only other European states are involved.
But I am not a business, I am just a normal non-business person, an employee, and 3D is only my hobby. I think taxes here work a bit differently than they do over there because when I file my yearly income tax report, I cannot include VAT into it and cannot ask for it to be refunded. Only companies (business entities) can do that, people who are not a business cannot. Because to get a VAT refund, one must file a VAT report, which is only possible for companies, not for normal people. No-one here can ask for a refund of "VAT tax" while filling "income tax" report, because those are two entirely different taxes and cannot be mixed together.
As a non-business, I am also not required to collect any VAT tax on my own and send it to the institution that collects it (I am not sure if I explain this correctly and how different our tax systems really are). VAT tax is already included in the products I buy (be it online or offline), so basicaly I am paying VAT by buying the goods. The company that sold me the goods collects the VAT money that was included in the product price and sends it to our equivalent of the American IRC.
While I'm not crazy about being taxed to begin with, I'd rather see some consistent legislation put in place, as I'm already being hit with Texas sales tax by DAZ... even on the cost of my PC membership. The thing is, the tax rate they hit me with is my full state AND city tax, whereas some retailers just hit me with State taxes and others don't charge me any tax at all. Now that the genie is out of the bottle, I'd think the least that could be done is to standardize everything so that at least you're sure you're paying the proper tax and not just what some paranoid bean counter thinks is the right amount.
The VAT system is, in general, a LOT simpler than the mess we have to weave through in the U.S. About the only advantage we have in the States is that if you do any commercial work at all in which your 3D can somehow be integrated, you can write off most of your CG expenses as long as the overall business runs at a profit.
Good luck with standardization. The states haven't had a very good track record with that in any respect!
Dana
The discussion at hand is on Taxation of Internet purchases only. Please keep to this topic and do not get into personail views of taxation in general and keep the discussion apolitical.
I DO NOT agree with Taxation on Digital Content, DAZ products or any Internet sales of non-tangible goods and services.
Thank you.
Especially when you would be paying taxes on something you don't own, just buying the right to use it only under certain conditions.
...will be interesting to see what happens here in Oregon as well as Alaska, Montana, Delaware, and New Hampshire, all of which do not collect a state sales tax.
Just what we need, more taxes......I don't recall telling the people whom represent us to give us more tax, not last time I checked.
People keep asking the government to do more things. The government has to pay for that somehow, and it's not as if they can make an IPO of stock in the business...
The only sane states in the entire US.
Apparently it just passed the US Senate. I imagine it'll pass the House too considering how many...um...business-oriented representatives are in there.
Doesn't make any sense to me that businesses support it. It means higher prices and therefore probably a decrease in sales.
Hm, maybe DAZ should make some big sale before they start to charge the sales tax, so that we can buy things we want before they get more expensive due to the tax...
Yeah I thought so too, but I read this from the article linked:
" A broad coalition of retailers is lobbying in favor of it."
So yeah, I don't know.
If the House votes against it, it might be the first intelligent thing they've done in years. ;)
It's all crony capitalism - which isn't capitalism at all. The big and midsize retailers want it to handicap or eliminate small businesses before they can become real competition. Whenever you see a big business supporting some government initiative/law it is not out of the goodness of their hearts - there's profit to be made for them by restricting or eliminating their competition. This is done all the time whether it is for "regulating an industry" or "increasing taxation". Only the big companies can afford to have compliance departments, legal departments and large tax accounting groups. When these laws get passed, it kills their smaller and more nimble competitors who can't afford the cost of compliance. It's all about restricting or even eliminating the free market to protect the establishment.
Perhaps it's a coalition of brick-and-mortar retailers who are upset about losing sales to lower-priced online merchants...? If it is, this would be a leveling of the playing field for them.
Unfortunately, Amazon.com is one of the law's supporters. I think you'll find that most of the big online retailers are in favor of this since it will likely knock out a bunch of their smaller competitors in one swift motion.
Unfortunately, Amazon.com is one of the law's supporters. I think you'll find that most of the big online retailers are in favor of this since it will likely knock out a bunch of their smaller competitors in one swift motion.
Yep.
And as mentioned earlier, I don't know why purely digital stuff should be included. They're not in competition with any of the brick and mortars. :(
Reminder: The discussion at hand is about Taxation of internet products. It is not for speculating on which companies are for or are not for taxation. Further speculation will be moderated. Your view on the issue is fine.
Excuse me?!?!?! How can one intelligently discuss the taxation of internet products without enumerating the pros and cons as put forward by supporters and opponents? Legislation doesn't just magically create itself. There was input from most of the parties named or from interest groups they support. It's how it works. Perhaps it would be better not to discuss the issue at all then. Seriously because all you're left with is 'I like it' vs 'I don't want it'.
Hmm, everything I've bought from DAZ had sales tax, but I guess us Utahns are just weird.
(As for standardization, the sates tried it once, people got sick of only being able to drive 55 mph through the middle of nowhere. :lol: )
I think Jaderail meant not to wildly guess as to how any particular company might lean on this issue. Basically "don't make up stuff". :)
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