Connecticut Hunting Down Online Shoppers Who Didn't Pay Sales Tax
courant.com
courant.com
Seems like a weird thing for the commissioner of the tax department to say if the tax department is trying to solicit the cooperation of said companies.
I imagine this is a case of a tax guy not used to the spotlight, finally getting in the spotlight and not using PC language.
Then again, I'm not sure if tax commissioner is a position that usually attracts the politically savvy.
It’s hard to believe anyone doesn’t know they are responsible for paying their own sales tax on out of state transactions. It’s on the state tax forms, the tax software asks about it, your tax preparer will ask about it, etc. It was also big news when the states were going up against Amazon for collecting sales tax. Besides that, ignorance of the law is never an excuse for breaking it.
Anyway, NewEgg has to have known that some consumers were purchasing from them to avoid sales tax and that this will lead to reduced sales.
I really wish you were being facetious. I get the feeling you'd be very surprised to learn about your fellow citizens and their knowledge of American tax laws.
> Ignorance of the law is never an excuse for breaking it. I disagree. From the perspective of someone who doesn't know the law, how are they supposed to follow it? Even an intelligent and competent person doesn't know all the laws, especially in America. I would wager that every person in this forum has broken at least one law without knowing it.
I've bought stuff on Newegg and haven't received a tax letter, but I didn't spend $2000.
Well, that's the last time I'm using NewEgg.
“Following tax laws”
I'm pretty sure the state of Connecticut is to blame here, not NewEgg. It's not NewEgg's job to violate tax laws on its customers' behalf. If Connecticut-based customers dislike the actions of the state (which I hope they do), it's on them to make that known to the state.
The only language that makes NewEgg look like they are proactively giving up this data comes from a spokesperson for Connecticut itself, who has a vested interest in making it look like NewEgg is to blame, not the state.
They chose to give their records to the government which causes a major hassle for those users (and increases the likelihood that those records get breached, infringing on users' privacy). They did this at the expense of potentially hurting future Newegg sales because they'll have to honestly show users the tax while they are buying things, rather than having the government hunt down users later on.
Newegg and all companies that exist within the confines of the US national borders have a legal requirement to do certain things. This is no different to what the citizens are legally required to do.
If the state imposes a "use tax" on your purchases then you are required to follow that up. If the legal requirements are that companies are to give the purchase records to the state authorities, then that is what will happen.
Just because you find it objectionable is irrelevant.
However, if you want to start a grass-roots objection to these tax regimes then start with your local, state and federal politicians. Make it plain that they will no longer be getting the popular vote and that their cushy jobs will be taken from them permanently.
But, as you most likely know this will not happen and the situation will not change as the general populous has no interest in the matter.
If we could stop people from committing crimes and using privacy rights to get away with it, we would actually have a much stronger argument for privacy rights.
[1] https://www.reddit.com/r/Denver/comments/7w6opn/newegg_use_t...
The fact is Newegg tried to fight it and got strong armed. No idea why we expect Newegg to fight a legal request from a government agency for rightful tax collection.
We all knew the gig, no tax professional, or even tax software, didn’t ask about purchases subject to the use tax.
People still comment about tax killing good deals, the fact is the tax is always there, whether you report it is sometimes up to you.
I’m probably paying the amount (want to verify the amount doesn’t include one returned item), we always knew this might happen.
http://www.ct.gov/drs/cwp/view.asp?A=1510&Q=270228
It’s technically not sales tax, but “use tax” in this case.
For years tons of online retailers didn’t charge sales tax with purchases, all of those purchases were subject to use tax. Even Amazon (or was it eBay?) wasn’t charging tax in CT a few years back iirc.
There are lots of various reasonings in why they don’t collect depending on how charitable you are to the retailers, ranging from “We get to advertise cheaper prices” to “We didn’t want to manage taxes in 50 states”
>The issue of imposing sales tax on out-of-state purchases ultimately may be settled by the Supreme Court.
>In a 1992 case dealing with a mail-order office supply company, the court ruled that states could not require companies that did not have a physical presence in their state to collect sales tax.
It goes on to say that South Dakota has passed a law saying out of state retailers need to collect state sales tax, but that the supreme court has agreed to hear a challenge to the case.
There’s a field right there on your tax forms for it, it’s very clearly explained:
http://www.ct.gov/drs/cwp/view.asp?A=1510&Q=270228
I wonder how many people are going to be caught pants down if they go after more companies...
Current case: https://taxfoundation.org/supreme-court-south-dakota-wayfair...
In essence: Unless you're in the woods fashioning your own clothes, tools, shelter, education, communication, transportation, health care, using only natural resources that fully replenish, you're dependent on some system. The level of dependency varies, and the nature and level of support varies, but it is present.
> which amounts to "we think you once may have benefitted from something we did without consulting you, so you owe us a share of your profits from now until the end of time".
A fairly biased-sounding interpretation, particularly the "once may have benefitted". The whole point of the argument is that there are so many assets that are not of your making: Educated workers. Healthy workers. Means of transportation. Educated customers. Healthy customers. Ways to communicate. I can see arguing if these are more/less efficient or reliable via free market vs another system, but to say "once may have benefitted" is pretty disingenuous. Heck, living to be old enough to MAKE the clever decisions, being educated enough at that time (oh, you were home schooled? How did your instructor learn what they learned?) and healthy enough (how do we know what IS healthy? One need only look at certain remedies that are still passed around today to see we can't just count on our own opinions on cause/effect) and had customers likewise, and a common currency, not to mention not having someone with enough friends and weapons take everything away from you - these didn't manifest because someone is just that awesome, they are the result of a system.
Re: Taxation, here's a libertarian-friendly argument: Let's imagine a group of people get together and agree to a set of rules. They agree on consequences for breaking those rules. Now you have a govt and taxation. "But _I_ didn't choose these!" you declare. True. I support that people should be able to revoke their citizenship and leave. "But it's not fair to have these rules forced upon me! I should be able to stay, or..." It totally isn't "fair". Or is it? How do you define "fair"? Regardless, there are number of ways to set your own rules that have been proven to work: negotiate a price in a mutually agreeable accommodation with enough people to enforce the rules you want. We call this government, and one of the rules is taxation. Most agreed-upon sets of rules define additional ways to change the rules, but with or without those changes, all governments are such systems.
I truly do support the idea that people should be able to revoke their citizenship, because being born and early childhood are a place where you have no choices - but you don't get to keep "your" land and "your" property when they ARE the result of the system you are rejecting. An investment manager doesn't get to keep all the profit they generate because THEY increased the value - a 200% return is still 0 if you start with 0. But yeah, if anyone wants to leave that isn't a criminal, I think the system should support it. They are welcome to find some place to live that isn't already under the control of a group of free-thinkers that have leveraged their natural talents to be able to enforce their rules. Good luck to them.
Outside of that, I don't understand the argument that governments are somehow inherently evil when they are the direct result of the very principles that argument is arguing in favor of.
What "system"? You don't need any "system" to negotiate with another private party for mutual benefit. I have something you want, you have something I want, we agree to trade—done. No one else can take any credit for that.
A fairly biased-sounding interpretation, particularly the "once may have benefitted".
I disagree, but it works just as well if you drop the "once may have" part and abbreviate it to "we think you benefitted from something we did without consulting you". Doing something which you think benefits someone else does not entitle you to compensation. Compensation must be negotiated and mutually agreed to in advance. If you don't have an agreement like that in place then you have effectively chosen to grant the other party a gift. You may argue that they should reciprocate (though they can reasonably disagree—what you see as beneficial to them may appear otherwise from their point of view) but you are not entitled to compensation for your unilateral action.
Let's imagine a group of people get together and agree to a set of rules. They agree on consequences for breaking those rules. Now you have a govt and taxation.
No, what you have at this point is a voluntary club with membership dues. You don't have government and taxation until you start enforcing those rules on people who never agreed to them. At that point your club turns into a criminal organization, similar to the Mafia. When your criminal organization grows a PR branch and starts claiming that it's criminal actions are "legitimate" and "for the public good", then you have become a government (but that doesn't mean you're no longer a criminal organization).
"But _I_ didn't choose these!" you declare. True. I support that people should be able to revoke their citizenship and leave.
Why should they leave? They have every right to stay. That citizenship was forced on you without your consent. You never agreed to give anything up as a condition of rejecting it.
you don't get to keep "your" land and "your" property when they ARE the result of the system you are rejecting
Your property rights are your by natural law, created by the mixing of labor and unowned land and subsequently transferred between private individuals by mutual consent, and not the result of any "system". No government has any right to take them away.
I don't understand the argument that governments are somehow inherently evil when they are the direct result of the very principles that argument is arguing in favor of.
Clearly you have no idea what principles those are, or you wouldn't have made that mistake. The one thing all governments have in common is that they employ force against people who never agreed to those rules and did not first use force against them. That is diametrically opposed to the principles that argument is in favor of—in particular the Non-Aggression Principle.
(1) Skimming Wikipedia suggests otherwise: https://en.wikipedia.org/wiki/European_Union_value_added_tax
Edit: ack! I meant reform, not return!
Doing it this way has no apparent advantage at all and several disadvantages.
It's worse for privacy, because if you remit sales tax then the state knows your total for the state, not who your customers are and how much they spent with you (obviously a problem for specialty retailers).
It's worse for bureaucracy and waste, because instead of automatically paying at the time of purchase, everyone has to fill out separate paperwork and pay separately.
And it's worse for small businesses, who now retroactively have to waste time unscrewing this because Newegg just told the state that they owe a bunch of sales tax they may not actually owe, because the parts they bought were either resold to customers not in Connecticut or resold in Connecticut where the small business itself already collected the sales tax.
Especially when, because it happens at scale, it only means the state has to raise the tax rate by that amount to raise the equivalent revenue to cover the bond interest it has to pay because it didn't get the money sooner.
"I do think it’s an overreach, but the discussion we have every day with clients is how much risk are you willing to take?” he said. “If you want to tell Connecticut to go pound sand, we can do that. If you want to have a discussion about when to begin collecting tax on your terms, we can do that as well.”
Starting to collect new taxes is one thing but collecting back taxes for three years just doesn't seem right.
This isn't behavior CT invented, though. I live in New Hampshire (that has no sales tax) and would often hear stories of Massachusetts state police camping out at the border doing spot checks to make sure people paid their taxes. No idea if they were "boogey man" stories or real though.
The sales tax system in the US is horribly complex. That's why while companies have popped up to help online retailers navigate it.
I wonder if they collect enough tax revenue to cover salary.
Is it still misuse if it’s net positive for the state?
If net positive _revenue_, and your perspective is stage budget (or you benefit from state funding) its a win.
If the net is a calculation of revenue, public safety, and overall community, maybe not.
Troopers are generally traffic and criminal law enforcement agents - public safety. Tax law enforcement may be the jurisdiction of state police in that region, but its rare to use patrol to enforce those laws. There is typically a division specific to revenue.
Taking focus from patrol away from the enforcement of criminal and traffic laws and pivoting that to securing the state budget would be considered by many to be a misuse.
If troopers are looking for unpaid taxes, who is looking for reckless or drunk drivers? Who is conducting area patrols where visibility is a much a crime deterrent as actual arrests?
What probable cause is used to stop any car at the state border and look at receipts? Traffic violations do not provide for vehicle searches, and IIRC there are no dogs that sniff out undocumented expensed.
Such divisions in jurisdiction are in place so that the "long arm of the law" does not get too long.
> No idea if they were "boogey man" stories or real though.
It may very well be a tall tale designed to scare people into filing their sales tax payments. And/or shopping in state because the net gain for shopping in New Hampshire would be $0.
The law is very complicated and filing the payment is not straight forward. And while many people I know understand it fully, I don't expect everyone to.
Edit: I see the confusion. When I said "new tax" I meant, taxes on orders that happen after they started aggressively enforcing the rules. I.e. no back dating.
Either way, this state is broke and will do anything to dig themselves out of the grave they've dug.
"Newegg and other companies gave up their customer records in response to letters that the state tax department sent last summer to about 150 online retailers that have significant sales to Connecticut residents."
It's very frustrating.