Sales tax as an income stream?

Why company in CA is charging me NY sales tax

[HRoth]

A packaging supplier located in CA with no outlets in NY, where I am located, has suddenly, after more than ten years, decided it is going to collect NY state sales tax. Frankly, I feel doubtful that they are going to turn over that money to the NY Dept. of Revenue. I think they are just going to pocket it. Has anyone else run across this sort of thing? They are asking for a tax number to be faxed to them. I feel like I don't need to provide them with anything of the sort, since I am not located in their state and they should not, at this point, be collecting NY state sales tax. They have no presence in NY state, not even affiliates.

[Leosghost]

Hostgator just decided to charge VAT to Europeans ( they do not need to* )..Godaddy have been doing so for years ( they also do not need to* )..What will they be doing with the VAT collected ? ( approx 20% over "sticker" ) ? ..They both also require business tax docs ( VAT number ) to be sent if one does not wish to be charged..

Neither has "presence" in Europe ..

* These are "services" not goods .."goods" would incur VAT at the point of importation ..services rendered in a non EU jurisdiction are not liable to VAT** ( even when rendered to an EU citizen or company )..confirmed with the French VAT ( TVA ) office here ..with whom I sometimes work as a "consultant" on other matters ..

Makes no difference to me as I reclaim it like VAT ( TVA ) anyway..

** HMRC has the same opinion..That many US businesses are trying "too hard"..:)

[Mackin_USA]

Never heard of this BUT there seems to be a discussion
here [ukbusinessforums.co.uk]

[HRoth]

I have dealt with UK companies trying to charge me VAT, although I am in the US. Some will drop it if I question it; others say "we have to!" In the US, it is not unusual for, say, a big box store that has just opened to be permitted to collect state and local sales tax but not have to actually turn it over to the government for a set amount of time, usually a couple of years. In NY, this amounts to a significant increase in profit, because our sales tax is pretty high. I wonder if these people have "affiliates," and if so, if that is the reason why they think they now will collect sales tax from customers in all the states where they have affiliates (that don't have a web presence that I can see).

[Leosghost]

No EU company has to charge you ( if you are purchasing from outside the EU ) VAT ( or TVA or whatever it is called in their country )..for them to do so, or to attempt to do so is illegal..

re Mackin_USA's link..if the company charging an EU citizen or business has an EU VAT number ..and such a number must be shown on their website ( before sales ) ..and invoices with such a VAT number shown on their invoices, and their prices are marked as "inclusive of VAT" or "exclusive of VAT", with the applicable rate* indicated )..then they can charge VAT..to this date neither Godaddy nor Hostgator are in compliance with the regulation requiring to advertise prices "ex VAT" and to have a VAT number on every page of their websites..

A simple thing to do with GEO targeting..

* as yet the rate is not standardised across the EU..so each EU client should be charged according to their "local rate"..or according to the rate applicable in the country in which the US business has registered for VAT ? ( then they have to get into differential VAT returns etc..can o'worms for accountants )..geo targeting could also simplify this..both vis a vis "display" and "checkout"..

[LifeinAsia]

You could always contact the company and ask them to justify the reasons for collecting the tax. You could mention that you've been in touch with the local tax authorities, who said there is no reason to collect. (If they weren't planning in the first place to remit the money to the tax authority, they may think twice after your message.)

[HRoth]

They emailed me that since they had been bought by another company which has an office in my state, that this means thay they have to collect sales tax from me, even though they are NOT in my state. I am sorry, but that is just baloney. They have not changed their name or anything of the sort. When you go to pay, it is still to the original company, same webhost, same everything. I am going to report them to the NYS Dept. of Revenue, so they can explain to them what they are doing with that sales tax they are collecting.

[LifeinAsia]

Actually, that's a very compelling reason to collect sales tax. Amazon had problems in Texas because of affiliated companies in the state (operating distribution centers, if I remember correctly) and was forced to collect sales taxes. I would say that having your parent company in New York definitely counts as having a physical presence in the state. :)

[HRoth]

Thing is I've bought from their parent company for years and they have never asked for any sales tax or tax documents. Now all the sudden... But what the hey. There are plenty of other packaging vendors out there that do not charge sales tax, etc.

[LifeinAsia]

There are plenty of other packaging vendors out there that do not charge sales tax

True, but you're still obligated to pay the sales/use tax, even if the company doesn't collect it.

[HRoth]

Not if you use the item to manufacture something. Which is what I do. This is packaging.

[LifeinAsia]

Ah, then providing the company with your tax exempt ID should clear the matter up. That's probably what they meant when they asked you to fax your "tax number" to them.

[piatkow]

They have not changed their name or anything of the sort.

Depends if they bought the brand or bought a controlling interest in a corporation.

[dpd1]

Most businesses know how negative people are about paying a tax, and that it is likely people will do exactly what you're doing, and buy from someone else... Therefore, they know it would most likely be in their best interest, not to have to charge a tax. So that in itself would probably indicate that it's legit. I myself actually pay people's sales tax each year, because I know how strongly people feel about it, and I know that if I charged it... I'd probably lose more money than if I just paid the tax. I'm not happy about it, but I have no choice really. Just wish they'd come up with a standard nationwide, so people don't have to keep going trough all this.

That said... I don't think it's out of the question for a business to genuinely not understand tax laws. I personally have met accountants that pretty much don't have a clue, and instruct their clients to play it way too safe... paying for stuff they don't need to pay for. Some accountants are very paranoid and basically just want to protect themselves, more than anything.

[HRoth]

This is the first time I have run across a business that is asking for sales tax for my state when they are not located there, outside of Amazon. In fact, whenever a company asks for my tax number, I consider it a headsup that they might not be a legitimate wholesaler, since no big wholesaler has ever asked me for it; they just assume that I am going to use whatever it is I am buying in manufacturing something, otherwise I wouldn't be buying it. What ordinary retail customer wants 144 empty bottles after all? Get real. I do have a tax number written in my address book, but the certificate--and they have asked for actual copy of the tax certificate to be faxed them, the number itself is not enough, the fact that I've been doing business with them for ten years is not enough, the age of my website is not enough--is buried in my business papers because I have had call to use it only twice in 13 years. I'm not digging it out because some lawyer who had nothing better to do came up with this idea. I consider this request that I fax them a copy of my tax number in order to buy some packaging from them, a company in another state, to be out of line, and I don't care who bought them. I am not buying the stuff from the company that bought them; I'm buying it from them. If this is the wave of the future, okay. When everyone does it, I will comply. But until then, I'm not going to. If they want to do it, fine, they can lose all the business they want. They and their new parent company are the ONLY packaging companies I have come across that are requiring that the tax certificate be faxed to them (or even a number provided). It's just stupid.

[jwolthuis]

is buried in my business papers because I have had call to use it only twice in 13 years.

But you get a new one every year, right? Does your state put an expiration date on them?

[votrechien]

I don't get what the big deal is here. They now have nexus in a state they didn't use to. Very common.

Collecting sales tax and not remitting it is just about one of the worst sins you can make (probably even worse than not paying at all!) so I doubt they're using this as a revenue source.

If anything is going on here I think it's more likely they just decided "oh sh!t, we have nexus in NY- we better start collecting and remitting it".