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Carrier Scammed on AT&T Sales Tax?
- Thread starter Burrstone
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to be replaced by 'gate threads.I can't wait until next Friday so threads like this will go away
OP had an ATT unlimited plan (grandfathered as it is no longer offered). AFAIK, AT&T only offers the discount on their Mobile Shared Value Plan which does not include an unlimited option.
Wow! You must be young.
There was fear and hate of AT&T, along with all other phone companies, many years before the concept of a cell phone or the first Apple computer was even thought of.
If you think that sales tax on phone trade should work the same way as it does for cars then you need to address this with your state legislature and not with the phone companies. The phone companies have no desire to charge more sales tax than they have to, they are just complying with state and local sales tax laws.
You pay sales tax on the device you bought. You also pay tax on the service you receive monthly. They are two separate things.
Actually they do care if it is being leased but in the case of consumer cell phone purchases like we often see they are not leased, they are purchased on a revolving credit plan and paid off like a credit card or home improvement loan which is why full sales tax is paid up front. If they were truly leased (which they are not)sales tax would be applied differently.
That being said, regarding actual LEASES MOST states do not charge full sales tax up front on a true LEASE (some do though, NY is one). In most states when you lease you pay tax on the cap cost reduction (deposit) you gave them and then on each monthly payment. That's how it is on my leased vehicle in NJ.
Here is a C&P from a web search:
Sales Tax
If you make a down payment (capitalized cost reduction) on your auto lease, you will be charged state and local sales tax on the down payment amount in most states and in Canada. It is payable at the time you sign your lease contract as part of your “due at lease signing” amount.
Although most states only charge sales tax on individual monthly payments (and down payment, if any), some states, such as Texas, New York, Minnesota, Ohio, Georgia, and Illinois, require the entire sales tax to be paid up front, based either on the sum of all lease payments or on the full sale price of the vehicle, depending on the state. Georgia now has a new up-front ad valorem tax but no monthly or annual taxes. Customers often choose to roll up-front taxes back into the capitalized cost and finance it with the lease. See below for more details.
If you trade in a vehicle at the time you lease or buy a new car, you are given sales tax credit for the value of the trade-in in many states.
I think the real issue, if you're worried about being scammed, is having to pay the sales tax on the full retail price rather than the price you pay for the phone. *That* seems like nonsense.
I know that AT&T used to do this when I was with them. You buy a phone for $199 but you have to pay sales tax on the full retail price of $749. AT&T subsidizes the phone but sloughs the tax they're supposed to pay on you, the customer.
I know that AT&T used to do this when I was with them. You buy a phone for $199 but you have to pay sales tax on the full retail price of $749. AT&T subsidizes the phone but sloughs the tax they're supposed to pay on you, the customer.
That right there is pretty much the correct way to look at it.
You made an agreement that said you'd pay $0 upfront, plus tax, which AT&T is actually incredibly clear about. You then told AT&T that you'd pay them back at or within 20 months. AT&T then told you that they'd forgive 8 months of the debt if you gave them back the phone after 12 months and agreed to take a new phone with another 12/20 month agreement.
You know, a lot of these things people are saying are carrier scams are actually state law. If you want to change it, go talk to your legislature.
I suspect that you simply believe this and don't actually know which state law mandates either the customer paying tax on the full retail price of a device rather than the purchase price or paying tax on full retail price of a device bought on installment and not having the remainder refunded if the device is not actually paid in full.
If I'm wrong and you actually know which law mandates those behaviors please cite a state's law in this thread for the rest of us.
http://articles.latimes.com/2010/oct/25/business/la-fi-lazarus-20101026 An example of California law.
In addition, some states do allow lowered sales tax on trade ins, but it isn't a remainder refunded, it's just that the "fair market value" of the trade in is deducted from the selling price of the newly purchased item. The hoops required to establish "fair market value" of traded in merchandise may be extensive, and it likely is not allowed to establish the fair market value as the "remainder of the finance contract" (which probably has nothing to do with fair market value). If your state allows this, you can push it with the carrier, but they are probably not equipped to appraise every phone that comes back to them.
I'm not a tax attorney, but I do have some familiarity with sales taxes in the restaurant industry. For example, the "bundling" example is similar to a circumstance where a restaurant might promo "free character mug with entree purchase" where restaurant food is not taxable, but character mugs are. In that case, sales tax must be charged on the "value" of the character mug (rule of thumb is what would you sell it for unbundled). In my state and many states, it is required to state on the receipt to the customer what the sales tax is, even if the business "pays it". The receipt would have to show the discounted price of the entree, the fair market value of the mug, and the sales tax paid on the mug, all of which must add up to the price the customer pays. The customer always ends up paying.
I think you should re-read the article you linked rather than simply linking something you quickly googled.
First of all, only two states allow taxation on the full retail price of bundled cellular devices (CA and RI; MA used to be the third but that was changed by directive in 2011 to only tax the sale amount unless it was bought below wholesale cost). In California's case, it wasn't state law that created the tax burden but rather the tax revenue board through Regulation 1585. Numerous Senators *have* tried to reverse that ruling, not least in part because it causes confusion among California consumers since it *only* applies to cellular devices.
Furthermore, the tax code itself contains contradictory direction in this regard. As pointed out in the article you cited, and why I encouraged you to read it more closely as well as research the relevant tax codes you seem to think exist, Sections 6006 and 6051 seem to conflict with Regulation 1585 (again, a regulation that specifically targets cellular devices; in spite of some people in this thread claiming this is how retail sales work, the facts are this is unique among the states (2 out of 50) and unique within at least one of those states in that it does not apply to other retail sales).
More to the point, none of this speaks directly to the issue raised in the beginning about who keeps the sales tax paid on a device that is returned to the manufacturer (again, in all other contexts the sales price would be refunded) *and* the fact that you didn't actually read the Regulation is indicated by the fact that section (b) (5) outlines how to apply the Regulation to "Consignment" sales (which installment plans could arguably fall under).
So which carriers are charging sales tax on the full retail price of bundled cell phones contrary to state law or regulation, and why aren't they being sued? I went back and checked my old receipts from when we did contracts, the sales tax is only on the price I paid (so you're right about that). So why are people under the impression that carriers are charging sales tax on the full retail price of a subsidized phone when they're not supposed to (i.e. a scam)?
The other question is if the carrier is establishing the value for all trade-ins based on the remaining balance of the contract, does that state consider that "establishing fair market value" for the purpose of offsetting the sales tax on the new purchase?
The vast majority of businesses don't deliberately flout state law on things like collecting sales tax, because the tax man will **** you up. In the cases I've known personally about, it was inadvertent, or due to different interpretations of what was taxable (i.e. a take and bake pizza from a Papa Murphy's versus one from the grocery store).
Wrong and wrong.
Sales tax is due on a lease. Most states with a sales tax charge it on the down payment and the monthly lease payment, but a few states collect it on the full sales price.
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As already pointed out, sales tax rules vary by state.
That said, there isn't a single state in the United States that requires dealerships collecting sales tax based on the retail price of a vehicle regardless of what a customer pays.
Wrong a third time. Time to take a seat in the dugout.
Texas laws require that the lessor (the lease company) pay sales tax on the full value of any vehicle they buy from a dealer and lease back to a lessee (you and me). This is different from most other states in which no such tax is charged to the lessor, or the tax is administered in a different way.
Of course, Texas lessors don’t want to absorb the cost of the tax. If they did, there would probably be no leasing in Texas. Therefore, the lease company simply passes along the tax bill to the leasing customer. The leasing customer therefore pays full sales tax just as if he was buying the vehicle, not leasing.
Of course, Texas lessors don’t want to absorb the cost of the tax. If they did, there would probably be no leasing in Texas. Therefore, the lease company simply passes along the tax bill to the leasing customer. The leasing customer therefore pays full sales tax just as if he was buying the vehicle, not leasing.
On a lease you pay tax on the portion of your lease payment every month so your statement is entirely incorrect. In fact, some states make you PREPAY the tax on the whole lease (sum of lease payments). If you buy the car out after you pay tax on the purchase amount.
This is not so in California - you pay tax on the entire car and get no tax credit when selling or trading in - Most of these tax issues vary state to state and can not be stated as absolutes.
And to the OP, LOL @ scammed.
So let me get this straight. ... this person canceled their pre order over an incorrect assumption?
You've clearly never leased a car. Depending on the state you either pay sales tax on monthly payments or all up front. You pay tax on part you are "renting".
Yeah I've done my fair share of leasing - it is it's own little world that most people know little to nothing about. In any case, as I'm sure you know, sales tax (and the way it is collected) varies state to state.
Actually, I just leased an eGolf two weeks ago.
If I had purchased the car I would have received the $7,500 federal incentive as a tax credit on my next year's tax return and $3,500 from the state. I would have had to pay sales tax on the entire purchase amount (not the *retail* amount, however, which is what we're discussing in this thread). Since I leased, however, my purchase price was reduced by nearly $10,000 due to the labor day incentives the dealership was offering and if I choose to buyout the car at the end of three years I'll only pay "sales" tax on the $16,000 dollar residual.
I live in California. You do not pay sales tax on the retail value of a vehicle regardless of whether you lease or purchase. If you lease, you only pay tax on the lease payments and if you choose to buyout the car you only pay tax on buyout amount. In neither case do you pay tax based on the sticker price, you pay tax based on the actual value of the vehicle as determined between you and the seller.
My statement was entirely correct although I noticed that you glossed over the fact that I quoted "sales" tax and replaced it with you claiming that one pays tax on "renting" in your misguided attempt to invalidate my statement. You can't change the meaning of my statement and then call your changes invalid; that's a strawman fallacy.
You need to learn how to read before you insult people.
There is nothing in what you quoted stating that a leasing customer pays tax on the full retail sticker price regardless of what he or she pays, which is what the person starting the thread was complaining about and what I've written multiple times is unique in regards to cellular devices.
Since I've stated it in the thread multiple times, and I've specifically replied to you before and you still failed to understand the discussion, here it is in a plain example:
If the retail price of an iPhone is $749 but I pay $299 and an eGolf is $36,000 but I pay $28,000
In California, I will pay taxes on the iPhone based on the $749 retail price and taxes on the eGolf based on the purchase price of $28,000
In Texas, I will pay taxes on the iPhone based on the purchase price of $299 and taxes on the eGolf based on the purchase price of $28,000.
The thread starter was asking why he or she has to pay taxes on the full sticker amount regardless of what the cost or value of the iPhone was negotiated to, which is a valid question given that it's a unique tax regulation that applies only to cellular devices per Regulation 1585 (and there is only one other state that has similar exceptions).
Just like your Texas example, which is one of the few states that charge taxes based on the full *purchase* price (not "retail", as you continue to claim and keep posting that I'm incorrect about) at the end of a lease buyout.
Because it's not a car purchase.
More like buying a tv.
You pay the full tax when you buy it. Att doesn't finance interest free your taxes.
The question he was asking wasn't whether he should pay taxes at all, but rather whether taxes on the unpurchased portion of an item should have been credited back to him.
If it was a car, it would have been.
You can't argue that since it's not a car, and it's like a TV, then you shouldn't expect to receive a tax credit on a returned amount. If you buy a TV from walmart and use it for 6 months and then return it to the store, you will get the full sales tax amount credited back to you if they accept the return.