Forums | MacLife

Mr. T · 2008-08-22 11:28 pm

I got this strange message in my email, today:

newegg wrote:
Dear Valued Newegg Customer,
As a result of recent changes in New York State tax law requiring certain out-of-state retailers to collect and remit sales taxes to the State of New York, we began collecting applicable sales tax for all orders shipped to New York addresses starting June 1, 2008.

After careful review and consideration, we are pleased to inform you that we have stopped collecting New York sales tax, effective August 21, 2008. This decision was driven by your direct and candid feedback and our continued commitment to you as our valued customers.

We appreciate your patience as we worked through this process, and would like to reiterate our commitment in offering our customers the broadest product selection, competitive pricing, fastest shipping, and award-winning customer service.

We look forward to continuing to provide you with the premier online shopping experience for all of your IT and consumer electronics needs.

Sincerely,

Bernard Luthi
Newegg.com
Company Spokesperson and
Vice President of Merchandising

Disclaimer: While Newegg no longer charges sales tax to its New York customers effective August 21, 2008, you may still have an obligation to pay New York State use tax on your purchases. Newegg cannot offer you any tax advice, so please refer to applicable law if you have any questions about use tax. Nothing in this email shall be deemed to approve the validity of any New York State law, including but not limited to section 1101(b)(8)(vi) of the New York State Tax Law, which purports to require Newegg to collect and remit New York State sales tax on its sales to residents of that state.

Can they do this? Or is this a lawsuit waiting to happen?

Fried Chicken · 2008-08-22 11:43 pm

*sits back* *eats popcorn*

I really hope Newegg pulls out on this.

Donkey Butter · 2008-08-23 6:43 am

shouldn't it be illegal for ny to collect taxes on goods purchased outside the state?

if you pop down to jersey and buy a chocolate bar does ny want you to pay tax on that too.

Art743 · 2008-08-23 7:18 am

Sales tax is actually a sales and use tax, meaning to tax any item coming into the state for someone's use, and the burden is on the user, not the seller. But the seller is used as the collection agent.

As an experienced (30 years) sales tax collector in my business, the taxes in all states are "sales and use taxes" If you cross the state line and don't pay the sales tax, you are still liable for the state use tax, which is the same. Since that is impossible to enforce (except for cars), people do it all the time, including internet customers.

Some states have argued that they have the right to enforce the use tax at the point of sale, even outside the state, because that is the only place where the information is available. This is generally successful, and NewEgg is trying to be an exception. My guess is that they are keeping a fund set aside for a possible settlement with NY. We'll see. In the higher end of the electronics business, states have successfully taxed the wholesale transaction to the retailer, knowing that would force the issue. That, in my opinion, is a cop out on the part of the suppliers who did it. I dealt with some of them.

But the trick is it is a use tax, not just a sales tax.

dvpierce · 2008-08-23 7:26 am

Donkey Butter wrote:
shouldn't it be illegal for ny to collect taxes on goods purchased outside the state?

No. At least in Michigan, it used to be that there was a form you had to fill out if you bought something mail order and you as the consumer were obligated to notify the state and submit payment for the correct amount of sales tax. Nobody ever did/does it because there was no penalty and no real way to enforce it.

Sounds to me like NY is now saying that it's the businesses responsibility to make sure that happens.

arkayn · 2008-08-23 9:00 am

I know in Arizona, we only pay sales tax on the internet if the company has a physical presence in the state. Newegg/Tiger/Amazon do not, so I do not get charged sales tax.

ScifiterX · 2008-08-23 9:20 am

Same policy here in FL. The stores vary though.

akb825 · 2008-08-23 1:51 pm

I wish they would rebel against the sales tax in California... Amazon has warehouses in California as well, but don't charge sales tax to Californians.

ScifiterX · 2008-08-23 2:08 pm

I think it is based more storefront presence (either virtual or physical) here in Florida. You do not actually pay distribution warehouses for the product. You do not walk into a distribution warehouse and order something. Tiger Direct is subject to sales tax here because whether there is a brick and mortar branch here in FL, its web ordering branch is based in Miami. Apple's online store is subject to sales tax because even though the web store is based in California the are brick & motor Apple stores here in FL.

Jasoco · 2008-08-23 2:33 pm

I wish they'd do that for PA too. I like NewEgg. But I don't like tax.

Mr. T · 2008-08-23 8:11 pm

Art743 wrote:
As an experienced (30 years) sales tax collector in my business, the taxes in all states are "sales and use taxes" If you cross the state line and don't pay the sales tax, you are still liable for the state use tax, which is the same.

So that's how they do it... Those sneaky bastards!!

akb825 wrote:
akb825 wrote:
I wish they would rebel against the sales tax in California... Amazon has warehouses in California as well, but don't charge sales tax to Californians.

That's interesting. Maybe newegg's defiance is based in part on Amazon's success in CA.

General_K · 2008-08-24 1:41 am

I got that same email from Newegg, and was quite surprised by it. I live in NY and have bought quite a bit from Newegg this year, so I can only hope this sticks.

pottymouth · 2008-08-25 10:16 am

But I think you're all missing the point made by the disclaimer in Newegg's email. Use tax is nothing new. If your state charges sales tax, you're supposed to pay that tax on every purchase you make, whether it's a computer from an online store or a candy bar from New Jersey. If the seller doesn't charge you, then it's up to the buyer to calculate and submit that tax on their own. Never heard of use tax? Not surprising! Nobody does it and it costs states millions in lost revenue. That's why New York tried to change their laws to require retailers to collect those huge tax dollars that New York residents were neglecting to pay.

I dunno. I think I might be with New York on this one. Like, I know I'm not supposed to download TV shows that I forgot to DVR, but I do. I know I'm supposed to pay my use tax, but I don't. I know right from wrong and just because everybody does it doesn't make it right. I'll argue on the legal side until somebody changes the law.

Forums | MacLife

#1 2008-08-22 11:28 pm

Newegg rebels against recent New York sales tax law.

newegg wrote:

#2 2008-08-22 11:43 pm

Re: Newegg rebels against recent New York sales tax law.

#3 2008-08-23 6:43 am

Re: Newegg rebels against recent New York sales tax law.

#4 2008-08-23 7:18 am

Re: Newegg rebels against recent New York sales tax law.

#5 2008-08-23 7:26 am

Re: Newegg rebels against recent New York sales tax law.

Donkey Butter wrote:

#6 2008-08-23 9:00 am

Re: Newegg rebels against recent New York sales tax law.

#7 2008-08-23 9:20 am

Re: Newegg rebels against recent New York sales tax law.

#8 2008-08-23 1:51 pm

Re: Newegg rebels against recent New York sales tax law.

#9 2008-08-23 2:08 pm

Re: Newegg rebels against recent New York sales tax law.

#10 2008-08-23 2:33 pm

Re: Newegg rebels against recent New York sales tax law.

#11 2008-08-23 8:11 pm

Re: Newegg rebels against recent New York sales tax law.

Art743 wrote:

akb825 wrote:

akb825 wrote:

#12 2008-08-24 1:41 am

Re: Newegg rebels against recent New York sales tax law.

#13 2008-08-25 10:16 am

Re: Newegg rebels against recent New York sales tax law.

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