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RealChuckB -> RE: Tax for download only? (11/26/2015 8:38:33 PM)
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quote:
ORIGINAL: Iain McNeil
Hi guys,
talking to Bluesnap, the laws changed in some states in the US. In California and Massachusetts taxes now have to be charged and these are apparently different to VAT which is now absorbed on to the price. Some apply to physical some digital so the rules are applied differently in each state - its a legal mess!
Its a really complex subject because every country (and even states without a country) have their own sales tax rules. We don't deal with it as its just too complex and rely on our re-sellers to deal with this.
The tax was correctly charged so you have not lost out. What I don't understand is why you have no tax now - this should still be charged so it sounds like a bug. I'd buy now before they fix it and the tax appears again.
We'll also talk to Bluesnap to see if there is any other way to deal with it, but its all correct unfortunately because of the state you live in. I'd go and lobby for a tax cut!
Iain,
Agree that this seems a bit complicated but part of the problem is that many ecommerce companies don't really invest any efforts (or have much knowledge) to get this right.
This happen to be a field that I know pretty well and I'm always flabbergasted about the level of knowledge (or, better, lack thereof) of people and companies working in this field.
Without making this overly complicated, here are some points:
1. I assume that people here in the thread are coming from different countries, so they speak about different types of taxes - VAT is commonly charged in Europe, sales tax is charged in most US states and both handled differently.
2. For both types of taxes, the location of the seller and the customer may be relevant. It is important to understand that many ecommerce providers operate as legal resellers of the wares, meaning that they take title and sell in their own name and for their own account, in most jurisdictions, this makes them the relevant party when it comes to assessing taxes.
3. In California, all-electronics transactions are sales tax exempted, meaning that if a CA resident purchases a download-only game, there should be NO sales tax charged, independent where the seller is located.
4. An order of DC: Barbarossa with a physical element (such as a CD or probably also the printed manual) would LIKELY make such sale subject to sales tax in CA, ideally you would only charge the sales tax on the physical item (often back-up CDs are priced separately), in case of the printed manual, that might be a bit more complicated. If in doubt, the reseller might resort to charge to be on the safe side.
5. Interesting detail: sales tax and use tax are basically the different side of the same medal - ultimately responsible for paying the tax is the customer, the seller only acts as the "long arm" of the state. So, if a customer is NOT charged sales tax by a vendor for a transaction for which he should be charged, he is still liable for the tax (use tax) to the state. We had this situation as long as Amazon was not charging sales tax for sales into CA, the customers would (still) be liable to pay such taxes to the state ... not that many people knew (or did)
6. Sellers only need to charge sales tax in the US state where they have a so-called "nexus"; a physical presence in the state will create such nexus, other activities (such as sales personnel being active in such state, regularly attending trade shows, etc. might also - this is a complicated topic that each state handles slightly different).
7. VAT is also not that easy and it has changed dramatically on 1/1/2015 - since then, VAT in Europe needs to be charged at the rate of the country where the customer resides ("destination-based"), before it was based on where the seller was located ("source-based"). Many ecommerce providers didn't properly make the switch. There are some additional rules for sellers that are NOT located in Europe.
8. There are also different rules about how you have to show taxes to (end-) customers in Europe and the US. It is not permissible in Europe to NOT show the VAT and you can also not simply "include" it in the end price. For the US, it would be ok to only show the sales tax at the very end of the transaction after the buyer already made the purchase
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