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'[OT] Digikey to charge sales tax?'
2006\02\14@192656 by Aaron

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Did anybody else in the USA get a letter from Digikey asking for a sales tax exemption form be filled out and returned to them?  I don't understand why they need to charge sales tax when I am in a different state than I am??  Obviously, as a hobbiest, I'm not exempt or I wouldn't be complaining. :)  Of course I could shop else where online, but nobody else meets my needs as well.  :(

Aaron

2006\02\14@193803 by Tom Sefranek

face picon face
We get one every year.

Aaron wrote:

>Did anybody else in the USA get a letter from Digikey asking for a sales tax exemption form be filled out and returned to them?  I don't understand why they need to charge sales tax when I am in a different state than I am??  Obviously, as a hobbiest, I'm not exempt or I wouldn't be complaining. :)  Of course I could shop else where online, but nobody else meets my needs as well.  :(
>
>Aaron
>  
>

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2006\02\14@202421 by Peter van Hoof

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--- Aaron <.....aaron.piclistKILLspamspam@spam@gmail.com> wrote:

> Did anybody else in the USA get a letter from
> Digikey asking for a sales tax exemption form be
> filled out and returned to them?
[snip]

Yep, got one and I'm not a big customer either
just for hobby perhaps a few hundred $ a year

Peter van Hoof


2006\02\14@210922 by Marc Nicholas

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Okay, I don't even live in the U.S. (anymore), but doesn't a business have
to send a sales tax exemption in *any* state they have a presense in?

I seem to recall a presense is something along the lines of any proactivity
in that state, which might include a sales rep etc?.

-marc


On 2/14/06, Aaron <aaron.piclistspamKILLspamgmail.com> wrote:
>
> Did anybody else in the USA get a letter from Digikey asking for a sales
> tax exemption form be filled out and returned to them?  I don't understand
> why they need to charge sales tax when I am in a different state than I
> am??  Obviously, as a hobbiest, I'm not exempt or I wouldn't be complaining.
> :)  Of course I could shop else where online, but nobody else meets my needs
> as well.  :(
>
> Aaron
> -

2006\02\14@222608 by Aaron

picon face

----- Original Message -----
From: "Marc Nicholas" <.....geekythingKILLspamspam.....gmail.com>


> Okay, I don't even live in the U.S. (anymore), but doesn't a business have
> to send a sales tax exemption in *any* state they have a presense in?
>
> I seem to recall a presense is something along the lines of any
proactivity
> in that state, which might include a sales rep etc?.
>
> -marc



Yes, but why then weren't they charging me sales tax from my very first
order years ago?  If they now have a rep (or whatever) in my state, they
should say so...

Aaron

2006\02\14@233448 by David VanHorn

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>
>
> Yes, but why then weren't they charging me sales tax from my very first
> order years ago?  If they now have a rep (or whatever) in my state, they
> should say so...


Because states are increasingly after that revenue they are loosing to
online sales.

2006\02\14@234401 by Sergey Dryga

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Aaron <aaron.piclist <at> gmail.com> writes:
> Yes, but why then weren't they charging me sales tax from my very first
> order years ago?  If they now have a rep (or whatever) in my state, they
> should say so...

The tax law has changed in many states this year. I think some 30 states
formed a sales tax treaty to charge tax on internet sales.  Technically, you
are supposed to pay tax yourself, although at least some state tax returns
have an option to pay tax for online purchases as a percent of income.
If the company has physical presence in the state, it becomes company's
responsibility to collect tax, not buyer's.

One can get exeption if purchases are made for resale only.
BTW, other companies also charge tax, e.g. Newark does.  

Sergey


2006\02\14@235641 by David VanHorn

picon face
California went so far as to try to collect income tax on you, if you
"worked" in the state, like attending a trade show or contracting for
someone there, when you live and actually work elsewhere.  Worse, they
didn't care that you were already paying income tax in your home state.

That program seems to that died with a dull thud.

2006\02\15@075304 by John Nall

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Aaron wrote:

>Did anybody else in the USA get a letter from Digikey asking for a sales tax exemption form be filled out and returned to them?  I don't understand why they need to charge sales tax when I am in a different state than I am??  Obviously, as a hobbiest, I'm not exempt or I wouldn't be complaining. :)  Of course I could shop else where online, but nobody else meets my needs as well.  :(
>  
>

They've been charging me sales tax for some time now.  And yes, I did
get a letter also.  In theory, everyone should charge sales tax for
online sales, but most people do not.  I am beginning to get ticked off
at Digikey for other reasons, and am going to switch to someone else.  
(grumble, grumble).

John

2006\02\15@080548 by John Pfaff

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John Nall wrote:

>Aaron wrote:
>
>  
>
>>Did anybody else in the USA get a letter from Digikey asking for a sales tax exemption form be filled out and returned to them?  I don't understand why they need to charge sales tax when I am in a different state than I am??  Obviously, as a hobbiest, I'm not exempt or I wouldn't be complaining. :)  Of course I could shop else where online, but nobody else meets my needs as well.  :(
>>
>>
>>    
>>
>
>They've been charging me sales tax for some time now.  And yes, I did
>get a letter also.  In theory, everyone should charge sales tax for
>online sales, but most people do not.  I am beginning to get ticked off
>at Digikey for other reasons, and am going to switch to someone else.  
>(grumble, grumble).
>
>John
>
>  
>
For online sales, if the vendor doesn't have a presence in your state,
it is supposed to be your responsibility to file the proper forms and
pay the sales tax yourself to your state.  Otherwise merchants would
have to file paperwork in every state in which they have customers.  
Merchants only have to charge sales tax in states in which they have a
presence.
If Digikey is now asking for your exemption number, maybe they are
putting a facility in your state.  Of course this is all conjecture.

2006\02\15@113132 by Harold Hallikainen

face picon face

> For online sales, if the vendor doesn't have a presence in your state,
> it is supposed to be your responsibility to file the proper forms and
> pay the sales tax yourself to your state.  Otherwise merchants would
> have to file paperwork in every state in which they have customers.
> Merchants only have to charge sales tax in states in which they have a
> presence.
> If Digikey is now asking for your exemption number, maybe they are
> putting a facility in your state.  Of course this is all conjecture.


Residents of states with sales tax are supposed to pay "Use Tax" on
interstate purchase. The California 540 Tax form has a line for this.
There is an interstate cooperative being set up to have sellers in one
state report to several states, though I don't know the details of this. I
had always thought it'd just be simplest if states collected sales tax on
all sales, whether within their state or to other states. This appears to
run into two problems, though. The US Constitution Commerce Clause
prevents states from taxing interstate sales. I had always thought this
was an effort to prevent states from establishing import duties on goods
from other states, but apparently it also applies to what are essential
"export duties" on sales to other states. The other more interesting (to
me) issue is that one who pays taxes is to benefit from those taxes. If
someone in New York were to pay a California sales tax, they would not
benefit from that tax, since the tax is for the benefit of the residents
of California. So, we're going to end up with some convoluted system where
vendors in one state collect sales tax for another state...

Harold


--
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2006\02\15@123044 by VULCAN20

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John Pfaff wrote:

{Quote hidden}

We got one and have only placed an order 3Yrs ago for about $15.

Also I was doing my taxes last week for Wisconsin.  They have apart on
the form for "USE TAX".

This is for anything bought out of state and brought into the state or
any item bought in the state that did not have SALES TAX  collected on it.

You want a real tax issue talk to an interstate truck driver about road
tax.

John

2006\02\15@131627 by Gerhard Fiedler

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Harold Hallikainen wrote:

> The other more interesting (to me) issue is that one who pays taxes is to
> benefit from those taxes. If someone in New York were to pay a
> California sales tax, they would not benefit from that tax, since the
> tax is for the benefit of the residents of California.

The question about who benefits from a sales tax is not so easy to answer.
In a sense both seller and buyer benefit from it, so it wouldn't be
unreasonable (in the light of this argument) that the seller pays the tax,
wherever he/she/it does business.

(On a side note: That's how VAT in many European countries works, without
the complications of sales tax.)

The fact that the buyer pays it is just an arbitrary convention; it could
just as well be the seller. And so any arguments derived from this
convention are just as arbitrary.

Gerhard

2006\02\15@141748 by Harold Hallikainen

face picon face

{Quote hidden}

OK, that's interesting! We can assume it's always the seller that's paying
the tax, then the seller includes that as a "cost of doing business" in
the price charged the buyer. Since the seller IS within the jurisdiction
of the taxing authority, the seller DOES benefit from that tax...

Sales tax law here is complicated and full of exceptions. Food, other than
snacks and food eaten on the premises, is not taxed. Most other retail
items are. Taxable items bought for resale (like PICs) are not taxed.
Instead, the final product is taxed. I've kinda thought it would be
interesting to have one very low sales tax that applied to everything,
whether it was for resale or not. This would increase the cost of items
with long supply chains, but probably a very small portion of the existing
markup by each entity in the supply chain.

Does VAT stand for Value Added Tax? How does this work with a chain of
suppliers, each adding some value?

Harold


--
FCC Rules Updated Daily at http://www.hallikainen.com

2006\02\15@143039 by Danny Sauer

flavicon
face
Harold wrote regarding 'Re: [OT] Digikey to charge sales tax?' on Wed, Feb 15 at 10:50:
> Residents of states with sales tax are supposed to pay "Use Tax" on
> interstate purchase.

Amusingly enough, IL residents are supposed to file form ST-44 at tax
time only if they have spent less than $600.  If at any time more than
$600 is spent out-of-state (US or not) and the tax rate paid was less
than the 6.25% IL charges (add another 1% for drugs), the form is
supposed to be filed by the last day of the month following the month
in which the purchase was made.  So if I buy, say, a new rear axle
assembly and a hood from a MO junkyard, and pay $600 without paying
local sales tax, I'm supposed to pay sales tax directly to the state
of IL by the end of next month.

Sigh.  There's a late filing penalty and a late payment penalty, as
well as an under reporting penalty.  There's also form RC-44 for
cigarette purchases and RUT-25 for automobiles/etc, with more taxes.
I wonder if my paying that tax will get the road I take to work
fixed, or some funding for schools outside of Chicagoland...  I think
I'll just go volunteer at the local high school instead of paying an
almost completely unenforcable tax.

--Danny

2006\02\15@145627 by Gerhard Fiedler

picon face
Harold Hallikainen wrote:

> Does VAT stand for Value Added Tax?

Yes.

> How does this work with a chain of suppliers, each adding some value?

Extremely simple. If you sell something (professionally, doesn't matter
whether product or service, and doesn't matter whether to businesses or
final consumers), you need to collect VAT on top of that. This VAT has to
be spelled out in the invoice. The VAT that you have to pay to the
government is the balance of collected (through sales) and paid (through
purchases) VAT.

The advantage is that there's no tax exemption and the associated
bureaucratic overhead (but creating the same effect, and better), and
there's no difference between buying something for resale and buying
something for use (in business). For both you pay VAT, and for both you
discount that paid VAT against the VAT you collect when you sell.

In the end, who pays it all is the final consumer (like with all taxes,
more or less covert); that is in this case the last in the chain who can
not deduct the paid VAT from collected VAT. And what this last one pays
gets passed on to the government by everybody who added to the final sales
value of the product or service, in the proportion they contributed to it.

There are of course the exceptions to the rule... for example, basic items
like food are exempt, and books only pay half the rate (in Germany at
least; I suspect it's similar but different in the details in other
countries).


IMO this system makes more sense than the sales tax system, as it is
simpler and more logical and involves less administrative overhead.

Gerhard

2006\02\15@150750 by Danny Sauer

flavicon
face
Gerhard wrote regarding 'Re: [OT] Digikey to charge sales tax?' on Wed, Feb 15 at 13:58:
> IMO this system makes more sense than the sales tax system, as it is
> simpler and more logical and involves less administrative overhead.

Without complexity, it must be more difficult to hide fraud, and even
more difficult to grant exemptions to various special interest groups
in exchange for votes.  Oh, and it requires states to agree on a fixed
rate.  So, it's not coming to the USA anytime soon, despite its
obvious advantages...

--Danny, still cynical

2006\02\15@160849 by Harold Hallikainen

face picon face

{Quote hidden}

I assume a reseller deducts only the VAT paid on items he/she actually
resells. Do inventory control systems maintain a separate field for the
VAT portion of the cost of goods sold? Seems like there'd be a danger of
someone deducting "paid VAT" on stuff that was used instead of resold
(there's a similar problem with sales tax in buying stuff for resale, then
using it instead).

As another poster pointed out, this DOES get interesting with interstate
commerce since each state is responsible for sales tax. In addition, a
portion of the sales tax goes to the local governments who set the rate of
their "add on" to the basic state tax. How does this work in VAT
countries? Is VAT a national instead of state/local tax? How does it apply
on international sales?

Harold


Harold

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2006\02\15@170222 by Dwayne Reid

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face
At 02:08 PM 2/15/2006, Harold Hallikainen wrote:


>I assume a reseller deducts only the VAT paid on items he/she actually
>resells. Do inventory control systems maintain a separate field for the
>VAT portion of the cost of goods sold? Seems like there'd be a danger of
>someone deducting "paid VAT" on stuff that was used instead of resold
>(there's a similar problem with sales tax in buying stuff for resale, then
>using it instead).

The Canadian version of the VAT is called the GST (Goods & Services
Tax).  Providing that it has a valid GST number, all GST paid by an
organization is deductible.  This does make things pretty simple: the
GST remitted to the tax man is simply the amount of GST charged minus
the GST paid out for ALL expenses.  IOW: Tax remitted/refund = tax
charged - tax paid.

This can lead to an interesting situation where one gets back a GST
refund cheque because the money paid out exceeds what was
charged.  More than a couple of those prompts a call from the tax man . . .

I used to be the Treasurer of a local special interest group that was
funded by membership dues as well as Government grants.  The
executive director was treated as a paid consultant who charged
GST.  We paid out the GST charged on his invoices, then claimed most
of it back as a GST refund.  Had to show supporting documentation
each of the many times the GST people (who were ALWAYS friendly and
helpful and polite) called to check on that most unusual situation.

The Canadian GST is a pretty simple system - much simpler and much
more fair than the old Federal Sales Tax it replaced.

dwayne

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2006\02\15@171205 by Wouter van Ooijen

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> I assume a reseller deducts only the VAT paid on items he/she actually
> resells.

No, everything, including (for instance) toilet paper. It is all
considered part of the cost of making your product.

> As another poster pointed out, this DOES get interesting with
> interstate
> commerce since each state is responsible for sales tax. In addition, a
> portion of the sales tax goes to the local governments who
> set the rate of
> their "add on" to the basic state tax. How does this work in VAT
> countries? Is VAT a national instead of state/local tax? How
> does it apply on international sales?

When selling to a private person in another EC country I charge VAT in
my country (the sellers country, at the rate valid in the sellers
country). AFAIK there is no mechanism to report to the authorities even
how large such sales is. When selling to a company in another EC country
I sell without VAT, but the buying company is responsible for paying the
VAT in his country (at the rate valid in his country). He must provide
me his VAT registration number, and I must mention this number on the
invoice, and report to the authorities the total of such sales for each
VAT registration number.

This might seem a bit complicated but it is very easy to do once you get
the routine. The complications in the system are caused by the
exceptions, like:
- me (as a company) buing from a private person (there is a rule for
this, but only if this is your main way of doing business)
- things that are not VAT taxed, which are of course not 100% defined
(me selling USB PID regions is probably a border case)
- things that are VAT taxed but lower than normal

Wouter van Ooijen

-- -------------------------------------------
Van Ooijen Technische Informatica: http://www.voti.nl
consultancy, development, PICmicro products
docent Hogeschool van Utrecht: http://www.voti.nl/hvu


2006\02\16@054508 by Gerhard Fiedler

picon face
Harold Hallikainen wrote:

> I assume a reseller deducts only the VAT paid on items he/she actually
> resells. Do inventory control systems maintain a separate field for the
> VAT portion of the cost of goods sold? Seems like there'd be a danger of
> someone deducting "paid VAT" on stuff that was used instead of resold
> (there's a similar problem with sales tax in buying stuff for resale, then
> using it instead).

No. See, here you are trying to apply the confusion created by the sales
tax system to the VAT system. (BTW, I prefer the name VAT to GST, because
VAT describes it better what it actually is.)

The logic is this: Say both company A and company B produce the same
product, and it costs them both 100 to make it. But company A buys 80 of
that in components that go in the product (sales tax exempt) and 20 of it
is in machine and consumable cost (where they pay sales tax on), whereas at
company B 20 of the 100 is components that go in the product (sales tax
exempt) and the other 80 are machine and consumable cost.

The taxing situation WRT sales tax of both would be quite different, for no
apparent reason. In a VAT country, they are both treated the same:
/everything/ you buy is simply considered cost of doing business. (If it
isn't, it shouldn't appear in your accounting anyway.) With VAT, there is
no artificial fiscal difference created between items bought for resale and
bought for use.

This difference between consumables and goods for resale is really a stupid
and arbitrary distinction... Is the solder in the boards you sell bought
for resale or for use? Am I not reselling at least partly my computer and
equipment time when developing professionally?


> As another poster pointed out, this DOES get interesting with interstate
> commerce since each state is responsible for sales tax.

I have only VAT experience inside Germany, and there it is a federal tax.

> In addition, a portion of the sales tax goes to the local governments who
> set the rate of their "add on" to the basic state tax. How does this
> work in VAT countries?

I don't know any VAT country that has local VAT. Since it is a balance
system, there are a number of ways to implement something like this. The
easiest would probably be that a city declares that, say, 10% of all VAT
paid to the higher level (state or federal) gets paid to the city. This
would sort of "hide" the tax from the consumer (in the sense that it
doesn't appear as tax on the invoice), but that's already the case with
income tax and any number of other fees and taxes.

You could also increase the VAT rate (as it happens with sales tax), but
this then can get tricky, with the balance system, to track the exact
amount owed. Doesn't sound good to me, but I haven't thought it through,
from an accounting perspective. I'm a big fan of making taxes /simple/. IMO
the actual losses through unproductive work wasted on supposedly more
"just" taxes are higher than the perceived losses through the "injustices"
with simpler tax rules.

> Is VAT a national instead of state/local tax?

Yes, mostly AFAIK.

> How does it apply on international sales?

Wouter explained that. Let me add that when I lived in Germany and bought
something from overseas (a country with which no VAT treaty exists), I had
to pay VAT on the item bought -- collected by the customs agency (instead
of by the seller).

Gerhard

2006\02\16@095342 by Wouter van Ooijen

face picon face
> > How does it apply on international sales?
>
> Wouter explained that. Let me add that when I lived in
> Germany and bought
> something from overseas (a country with which no VAT treaty
> exists), I had
> to pay VAT on the item bought -- collected by the customs
> agency (instead
> of by the seller).

I sometimes have to pay VAT to the customs agency or the transporter,
sometimes I don't. But I don't care (and if I am honest the gouvernment
does not care either) because I deduct the VAT I payed (from the VAT I
have to pay to the government). For a private person this is of course
different: when no-one charges the VAT to him he will be very happy.

Wouter van Ooijen

-- -------------------------------------------
Van Ooijen Technische Informatica: http://www.voti.nl
consultancy, development, PICmicro products
docent Hogeschool van Utrecht: http://www.voti.nl/hvu


2006\02\17@025554 by William Chops Westfield

face picon face
On Feb 15, 2006, at 12:07 PM, Danny Sauer wrote:

> Oh, and it requires states to agree on a fixed rate.

States, hell.  Part of the sales tax I pay is county, and I
think part of it may be for things as local as the city.

BillW

2006\02\17@033120 by Wouter van Ooijen

face picon face
> Oh, and it requires states to agree on a fixed rate.

Why? I the EC various countries have various rates. The seller charges
the VAT, so he charges the rate of his country.

Wouter van Ooijen

-- -------------------------------------------
Van Ooijen Technische Informatica: http://www.voti.nl
consultancy, development, PICmicro products
docent Hogeschool van Utrecht: http://www.voti.nl/hvu


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