Buying Gear Online & Paying Sales Tax?!?!

[TheDiver]

Hello fellow divers,

Although I'm new to the Internet and these forums, I've been involved in scubadiving for many years now. Recently, I started looking to use The Internet to buy new gear for my wife and I. I used the ScubaDirectory search engine to find a company that sold dive gear and had a store that was local to me. What I found was a company called Divers Discount Supply, which seemed to sell a LOT of gear and a location in Seattle. While the site's a bit confusing for a new user like me, it seemed friendly and certainly had what I wanted.

Before I placed an order, I looked for information on the company around the web as best I could. Mostly I found other dive sites, including this one but I also found a few complaints with price matching and shipping. None of what I found seemed too bad so I started my order, put things into my shopping basket (I think that's what it's called). Right before I sent the money, I noticed that there was no sales tax except in California, even though the company had a store in Washington!

Now like I said before, I'm new to the Internet and I know the rules are a bit different but I have been in the sales business for many years and I know a bit about tax laws. What concerns me is that if Divers Discount Supply or another company has an office or a store in a state which they don't charge sales tax, they might be breaking the law. While I like saving money, I know the point of sales tax and I know that states like mine need money to keep growing.

Further more, I specifically looked for a company with a store local to me so that I could take things in if any problems arose but I'm concerned that they could be shut down or penalized if they really aren't reporting tax. Does anyone know why they aren't charging sales tax or what could happen if anyone found out? Like I said before, I'm new to the Internet and don't want to do something illegal. Thank you!

 

[Military Diver]

A company that includes the sales tax (if that is the point) has to disclaim they are doing so.

I do not see anywhere such a disclaimer. This could possibly be a ligitimate issue. I would contact your local tax attorney if you feel there could be an issue.

Better safe than sorry.

 

[Zagnut]

Correct me if I'm wrong but, I believe that in most if not all states, your purchases are exempt from sales tax if they are made online. If I remember correctly, this was enacted back in the Clinton days as an incentive to promote internet commerce and stimulate the internet industry growth in general.

 

[Rick Murchison]

In general, if a company has "nexus" in a state then it must collect sales tax on all items sold in that state. There may be specific exceptions somewhere but that's the general rule. Furthermore, courts are ruling in favor of states collecting sales tax on things *ordered* into the state - IOW if you're *in* CA when you place the order for delivery in CA, no matter where or how the order is placed, you owe CA the sales tax. It is inevitable that sales tax will eventually be applied to everything sold - the battle in dealing with interstate sales tax will be between the states, but we'll all have to pay *somebody*.
Taxing the internet is a completely separate issue - collecting sales tax on sales made over the internet isn't taxing the internet any more than collecting sales tax on mail order is taxing the mail. The internet itself is tax exempt for the time being, but with that much money involved it's only a matter of time before the thieves in government figure out a way to steal some of it.
Rick

 

[scubakat]

Hi TheDiver & Welcome! I am not sure what sites you are looking at, but I don't think that Discount Divers (a seattle dive shop) is the same as Divers Discount. Good luck shopping... (What are you looking for?)

-kate

 

[Zagnut]

Thanks for the clarification Rick. It seems like I remember they have been debating sales tax on internet purchases for awhile now. I'm sure internet purchases will eventually be taxed. You are right. Once politicians saw the volume of revenue that is now being generated on the internet, the debating was on. Diver, enjoy it while you can because it probably won't last now that the internet has become more mainstream and so many people are buying online.

 

[TheDiver]

ScubaKat,
Thank you so much for pointing that out! I'm still trying to figure out how this all works.

As for the taxt debate, I sure hope they figure this all out soon. I know it confuses me so it must confuse the people trying to sell stuff even more.

 

[Deadeye]

I have used the Internet to purchase many things, and have always been charged sales tax if the company has an outlet in the state.
I seem to remeber discussing this with my satellite TV provider, and I was told that it is required to do so.
If a firm does not have an outlet in your state, they should not charge sales tax until laws are passed which require them to do so. I suspect this will be happening soon since congress did not extend the exemption on Internet sales.

 

[tholt576]

I'm required by the NC state DoR to collect sales tax on any purchases shipped to addresses inside NC. Other states theoretically could have different laws, but I've never heard of it. A state is not required to collect sales tax on anything. However the federal government prohibits them from collecting on things not sold in the state. That's why mail order companies don't collect tax on sales to other states.

 

[Puddle Jumper]

If I may, Having gone through two state audits in my business, this is the way it works. If a company ships a product out of state, the company can not collect in state sales tax for that product. The state that receives that product however can collect sales tax, those laws have been in effect for a long time. There is also a federal tax for out of state purchases that is out there that I pay in my main business. No one (the feds or the states) has figured out a way to implement these sales taxs to internet purchases. Don't worry they will, the states are actually suffering big time from the revenue lost from the out of state sales. Botttom line, if you buy your equipment from the LDS you don't have to worry about service. (if there still in business from everyone else buying over the net)

Puddle Jumper