Sales Tax ?? (Full Version)

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Johnus -> Sales Tax ?? (9/25/2009 2:47:23 AM)

I ordered and downloaded last night; no problem as usual. But I was charged sales tax. I don't think I ever paid sales tax on a Matrix digital download purchase. I am a New York State resident.

What gives ??



E -> RE: Sales Tax ?? (9/25/2009 3:07:13 AM)

Good question. 



JudgeDredd -> RE: Sales Tax ?? (9/25/2009 7:33:22 AM)

They introduced Sales Tax in New York due to the "financial depression" [;)]



E -> RE: Sales Tax ?? (9/25/2009 9:20:27 AM)

The question regarding out of state sales tax remains.



Aurelian -> RE: Sales Tax ?? (9/25/2009 9:24:33 AM)

I didn't pay any here in PA. Of course that could change. (Philadelphia just got to raise the tax to 8% while the rest of the state is 6%. They say it's temporary.......)



JudgeDredd -> RE: Sales Tax ?? (9/25/2009 12:12:23 PM)

I was only jesting E - forgot the smiley...added now [:D]



Erik Rutins -> RE: Sales Tax ?? (9/25/2009 12:15:07 PM)

Unfortunately, some recent tax law changes in certain states (where they no longer accept an out of state resell certificate) required DR to start charging sales tax outside of Minnesota (where they are based), even on digital downloads. I believe they now have to charge in 11 states. Charging in NY was necessary due to a new affiliate law that NY passed. Sadly, the US seems to be catching up to Europe in this area.



ool -> RE: Sales Tax ?? (9/25/2009 2:23:58 PM)

They said the same thing about taxes period when they were first introduced. Lesson in all this? Never give a politician of any party access to your wallet. They never take their hands out of your pockets!



Phatguy -> RE: Sales Tax ?? (9/25/2009 5:03:58 PM)


quote:

ORIGINAL: JudgeDredd

They introduced Sales Tax in New York due to the "financial depression" [;)]


Dontcha know? New York bankers need extra funds. I mean, how can they be expected to pay for their yachts and jets on a measly 20million bonus.......



Fallschirmjager -> RE: Sales Tax ?? (9/26/2009 5:45:25 AM)

TN must one of those states. I am surprised the state legislature even knows what the internet is much less that it is a source of commerce and must be taxed.
I was charged tax for a Matrix game for the first time for WitP AE and was surprised.



killroyishere -> RE: Sales Tax ?? (9/26/2009 7:58:08 AM)

Well that means buying everything from ebay and used Amazon.com for me then. god I want to cuss outloud about this F N G GD MFing G.



jackx -> RE: Sales Tax ?? (9/26/2009 12:14:08 PM)

If it can be taxed, even the most ignorant politician will inevitably be aware of it.

I'm bracing myself for the tax increase after the election right now, you should count yourselves lucky - at 8% (or there about), you have a lot of catching up still left to do before you even come close to Europe. ;)



bigmilt -> RE: Sales Tax ?? (9/26/2009 3:06:44 PM)

That's why overstock and amazon dropped all their ny affiliates - so they wouldn't have to charge tax.



harley -> RE: Sales Tax ?? (9/26/2009 3:31:32 PM)

FWIW we have a GST in Australia, set at 10%. Our states do not have the constitutional right to levy taxes, the feds have to do it, and pass the money on.

What's good about it, though, is that imports are only taxed if the GST would be over $100, so we can buy up to $1000 stuff from over-seas without tax. Yay!



killroyishere -> RE: Sales Tax ?? (9/26/2009 4:39:39 PM)

I did some sales checks on Amazon this morning and thankfully no taxes were added to any of my orders. So maybe Matrix can put some of their games up on Amazon.com? [:D] I also wish they would move to Gamers Gate for direct download instead of Digital River. I don't get charged any tax there either.



Erik Rutins -> RE: Sales Tax ?? (9/26/2009 6:52:22 PM)

quote:

ORIGINAL: killroyishere
I did some sales checks on Amazon this morning and thankfully no taxes were added to any of my orders. So maybe Matrix can put some of their games up on Amazon.com? [:D] I also wish they would move to Gamers Gate for direct download instead of Digital River. I don't get charged any tax there either.


Gamersgate is owned by another publisher (Paradox) who are in Europe, they are also download-onlly. Digital River is a third party company that any publisher can theoretically use, though we were the first and pioneered the whole physical on demand system and taught them about game publishing. It's been a long term relationship that works better than the other alternatives we've explored, but we are re-evaluating it fairly regularly to make sure that we have the best solution for our customers and developers.



brianlala -> RE: Sales Tax ?? (9/26/2009 7:05:56 PM)

It still doesn't sound like DR or Matrix has a nexus in New York. The whole point of companies like Amazon dropping their NY affiliates was to avoid having a nexus in that state because without a nexus in a state then that state cannot legally collect state taxes from the entity. Does DR have some sort of nexus in NY?

If DR doesn't have a nexus in NY then I believe it would only be "voluntarily" collecting the sales tax on behalf of NY customers rather than being obliged to do it. In this case, it wouldn't be a nice thing for DR to do considering that customers could just as easily be paying "use" tax instead of sales tax...and as we all know, NOBODY pays use taxes on their internet purchases and neither have I ever heard of a state going after somebody for failure to pay use taxes.

How to collect use taxes and/or force out-of-state businesses to collect another state's sales tax is all being debated in the Streamlined Sales Tax Project but it is highly unlikely that states will come to a consensus. Nevertheless, to get back to my original point, if DR does not have a nexus in NY then it should not be collecting sales tax from NY and remitting it to NY. That is just a disservice to its customers. Let the customer decide whether to pay the use tax or not.



wworld7 -> RE: Sales Tax ?? (9/26/2009 9:12:24 PM)


quote:

ORIGINAL: brianlala
In this case, it wouldn't be a nice thing for DR to do considering that customers could just as easily be paying "use" tax instead of sales tax...and as we all know, NOBODY pays use taxes on their internet purchases and neither have I ever heard of a state going after somebody for failure to pay use taxes.

In the past many states have gone after only big ticket items (cars, art work, etc...). This is changing now and many states are going after every possible dollar they can find.

quote:

ORIGINAL: brianlala
Nevertheless, to get back to my original point, if DR does not have a nexus in NY then it should not be collecting sales tax from NY and remitting it to NY. That is just a disservice to its customers. Let the customer decide whether to pay the use tax or not.


Let the customer decide was the "old way" things worked or actually DIDN'T work well

I do not want to disagree with you, but I am not so sure DR has any choice but to collect the tax. I find it hard to imagine they would do so if they were not obligated by law.



brianlala -> RE: Sales Tax ?? (9/26/2009 10:21:46 PM)

Hi Flipper,

Cars are a completely different discussion and are extremely easy to track due to the necessity to register them in each state. The whole gist of my argument is that if DR has no nexus (i.e. No physical presence) in New York then there is absolutely nothing that New York state can do to force DR to collect NY state sales tax. If DR does have some sort of presence in NY then, absolutely, NY legally can force DR to collect sales tax on sales in that state. This is precisely why Amazon was forced to drop its affiliate marketers in NY this year. NY argued that since some of these affiliate website owners resided in NY, then this created a nexus in NY for Amazon.

Amazon, faced with either: 1) putting itself at a competitive disadvantage to some of its rivals by being forced to charge NY state sales taxes or 2) dropping the extra sales that came in through its affiliates, chose #2 and said bye-bye to its NY affiliates. This is why, I believe, Amazon does not charge sales tax in NY yet.

http://www.taxfoundation.org/news/show/25120.html

I agree that legislatively many states are "going after every possible dollar they can find" but I can guarantee there will never be a situation where citizens not paying use taxes for small-ticket online purchases will be charged with tax fraud. It's simply completely unenforceable and trying to force online companies to collect sales tax for a state they have no nexus in will also be unenforceable because it is unconstitutional and/or no sales tax states have ZERO incentive to go along with something like the Streamlined Sales Tax Project.

Once again, if DR has a nexus in NY then they ARE obligated by law to collect NY sales tax. Otherwise, no way, no how are they obligated by law to collect sales tax and they are doing it by choice (which the law does not forbid as long as the sales tax revenues are distributed properly).



E -> RE: Sales Tax ?? (9/27/2009 12:06:21 AM)

Here's the official automated Digital River response to this issue...
=====================================================================

Thank you for contacting The Online Store Customer Service Team.

PLEASE NOTE: This is an automated response created to immediately help
you with your issue. If you still require further assistance please
reply to this message.

All orders processed through the Online Store are subject to sales tax
under the following conditions:

- Residents of Minnesota, California and Washington State are charged
applicable sales tax. Some Online Stores charge taxes in additional
locations, please check the Online Store FAQ section for verification.

- Digital products sold into the European Union include a VAT (Tax)
charge of 15.0% for most countries. Orders billed to Switzerland are
subject to a 7.6% VAT while orders billed to Norway or South Africa are
charged a VAT of 0%. (NOTE: If your product is being delivered outside
of the EU, you will not be charged VAT once you have entered your
payment information.)

- Physical products sold into the European Union include a VAT
charge. However, the VAT rate, and hence the total price, may alter once
the shipping destination has been selected. For customers from Austria,
Belgium, Denmark, France, Germany, Ireland, Italy, Netherlands, Spain,
Sweden, and UK the national VAT rate will be applied. For all other EU
customers, the UK VAT rate of 15.0% will be applied. A VAT invoice can
be viewed and printed at the end of your purchase. (NOTE: If your
product is being delivered outside of the EU, you will not be charged
VAT once you have entered your payment information.)

The Online Store uses a service called Taxware to determine the correct
amount of tax to collect based on the postal code entered on the order.
All city, county and state information is factored into the rate applied
to the transaction.

For US and Canadian customers, if you are tax exempt, we request that
you fax a copy of your tax exempt certificate/documentation along with a
copy of your invoice or confirmation email to our accounting office.

Fax number: 1-952-253-8760
Attn: Email Case ID 11960440

For European customers, if you are VAT exempt, please reply with the
order number and your VAT ID so we can refund the applied taxes.

Thank you for contacting the Online Store Customer Service Team. If you
have any further questions or concerns, please reply to this e-mail.

Sincerely,
Customer Service Team
Email ID 11960440
=========================================================================

It seems the in-state presence is no longer the crux of the out-of-state sales tax charging issue for Digital River.



wworld7 -> RE: Sales Tax ?? (9/27/2009 2:50:00 AM)

Brianlala,

I understood your view in your post and you were correct on the nexus issue.

I do not know where the nexus in NY is located.

Be well,



Johnus -> RE: Sales Tax ?? (9/27/2009 3:07:51 AM)

Erik:

Never had a problem with a Matrix download; or with Digital River. If, however, they are charging sales tax they are not obligated to, that is a MAJOR problem. The tax added over $4.00 to my $49.99 purchase. Four dollars doesn't sound like much, but I buy a lot of Matrix games; and if it is not legally required, it would anger me each time I made a purchase.

Also Digital River doesn't list New York as one of the locations where sales tax is necessary.

Finally, if Digital River is paying sales taxes where same are not necessary, some authority from New York State will track the responsible persons down and have them committed. On the other hand if they are collecting sales taxes and not remitting same to the State of New York, the responsible persons will find themselves subject to another form of confinement.



Erik Rutins -> RE: Sales Tax ?? (9/27/2009 3:27:42 AM)

Johnnie,

quote:

ORIGINAL: Johnnie
Never had a problem with a Matrix download; or with Digital River. If, however, they are charging sales tax they are not obligated to, that is a MAJOR problem. The tax added over $4.00 to my $49.99 purchase. Four dollars doesn't sound like much, but I buy a lot of Matrix games; and if it is not legally required, it would anger me each time I made a purchase.


Let me nip this in the bud - they are charging it because they are obligated to. This just changed, I got the e-mail about it a few days ago. Apparently they do have a tax "nexus" in NY.

Regards,

- Erik



Fallschirmjager -> RE: Sales Tax ?? (9/27/2009 4:51:44 AM)

Weird. I do not see Tennessee mentioned. But I have been charged tax on this game and back in August with AE.
Not that I care too deeply. It has been around $10 and quite frankly the state needs the money. But I wonder where and when the law changed that lets TN residents start being taxed.



Johnus -> RE: Sales Tax ?? (9/27/2009 5:26:51 AM)

Brianlala and Flipper:

If Digital River has a nexus in NY but Matrix does not, is Digital River still required to collect the tax ??  I'm just asking. I know nothing about these laws.



TechSgt -> RE: Sales Tax ?? (9/27/2009 5:36:05 AM)


quote:

ORIGINAL: Fallschirmjager

TN must one of those states. I am surprised the state legislature even knows what the internet is much less that it is a source of commerce and must be taxed.
I was charged tax for a Matrix game for the first time for WitP AE and was surprised.


Fall;

Don't you-all remember? Al Gore invented the internet! [:D]

TS



Fallschirmjager -> RE: Sales Tax ?? (9/27/2009 5:45:19 AM)


quote:

ORIGINAL: TechSgt


quote:

ORIGINAL: Fallschirmjager

TN must one of those states. I am surprised the state legislature even knows what the internet is much less that it is a source of commerce and must be taxed.
I was charged tax for a Matrix game for the first time for WitP AE and was surprised.


Fall;

Don't you-all remember? Al Gore invented the internet! [:D]

TS


No Al Gore jokes :D
He is a state icon and I worked on his campaign in 2000 [;)]



brianlala -> RE: Sales Tax ?? (9/27/2009 6:01:58 AM)

"Brianlala and Flipper:

If Digital River has a nexus in NY but Matrix does not, is Digital River still required to collect the tax ??  I'm just asking. I know nothing about these laws."

I don't know how DR and Matrix are set up as companies and what level of independence they have from each other. Either way, Erik answered the question with crystal clarity by stating that DR does have a physical presence/nexus in NY so all other points are null and void.

This sales tax issue is why, for instance, a company like New Egg charges sales tax in California (where they have their warehouses and thus a nexus) but not in most other states (where they have no nexus). In these no-nexus states, the consumer is required to remit the use tax to their taxing authority if the state has a use tax.

I have no idea why this conversation sparked me except that it was bringing back memories to my public finance PhD days. That's all from me here.



Fallschirmjager -> RE: Sales Tax ?? (9/27/2009 7:09:27 AM)


quote:

ORIGINAL: brianlala

"Brianlala and Flipper:

If Digital River has a nexus in NY but Matrix does not, is Digital River still required to collect the tax ??  I'm just asking. I know nothing about these laws."

I don't know how DR and Matrix are set up as companies and what level of independence they have from each other. Either way, Erik answered the question with crystal clarity by stating that DR does have a physical presence/nexus in NY so all other points are null and void.

This sales tax issue is why, for instance, a company like New Egg charges sales tax in California (where they have their warehouses and thus a nexus) but not in most other states (where they have no nexus). In these no-nexus states, the consumer is required to remit the use tax to their taxing authority if the state has a use tax.

I have no idea why this conversation sparked me except that it was bringing back memories to my public finance PhD days. That's all from me here.




New Egg also started charging me sales tax several years ago so I switched to ZipZoomFly for some of my hardware needs. They are still sales tax free.



bigmilt -> RE: Sales Tax ?? (9/27/2009 2:11:57 PM)

They will collect tax if either matrix or dr has a nexus in new york state. I am in and do the sales tax interface with the company that provides our
sales tax software. New York has stretched the meaning of nexus to the breaking point - if you have a customer in new york state and visit them on
business that will constitute a nexus for them.



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