Carrier Scammed on AT&T Sales Tax?

[Burrstone]

The only scam here is the OP's "education". How sales tax works is basic civics / home-economics. It's appalling that we let people get out of school and into the real world without understanding this stuff.

Wow. You must have aced Assumptions 101! I graduated college with a bachelors in business, am a member of a international honor society, and have gotten an A in every economics & accounting class I have taken. But go ahead and assume away, whatever makes you feel like a big man on the internet. You can continue down this road all you want I really don't care what you have to say about me, just know I'm laughing at you!

You're being scammed by your local government for requiring sales taxes and how the funds are used, but not by at&t for collecting them. All merchants must collect them as per tax policy.

That may be true... ...and I know merchants must collect sales tax. LMAO I've owned a "retail" establishment and have managed many other when I was younger.

What I am slightly concerned about is they charged the tax for the device up front but I am wondering if they are also doing it on my monthly bill. How can I tell if any tax is being paid on my installment plan? That's what concerns me. I don't trust stuff like that.

As I have used the the Next plan for years I can tell you that they are not charging you tax monthly, they collect it upfront (which is kind of a big part of this thread lol)

I can't wait until next Friday so threads like this will go away

I wish you would go away now.
lol j/k

You fully bought the phone. You are not leasing. You are not renting. You bought it.

Just like buying a car with 48 months of payments. You bought it.

A car lease is different as you will not own the car at the end. Actually, you do not own the car at all.

I understand the difference between leasing, renting, and installment payments. The problem with what you said is that "the phone is not fully bought" until I make the last payment. I could make one payment and stop making payments. I would then have to turn in the phone because it is not "fully bought."

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.

Yes, Thank you. In NY you must pay tax upfront.

So let me get this straight. ... this person canceled their pre order over an incorrect assumption?

Me (OP)? No, that is an incorrect assumption you've made.

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.

Wow, thank you! One person can think and not attack me or want to give me a lesson on taxes!

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.

Umm, actually no. It's not like that at all. If you can buy a TV and return in 6 months first of all amen to you. Second, you don't have a deal with Walmart that you may trade it in for a newer model after 6 payments. With AT&T the deal is I may trade in the phone after 12 payments.

So maybe it is like the car lease after all. I found an article about leasing cars in NY.

Say the car is worth $30,000 new. The dealer estimates it will be worth about $14,000 at the end of a three-year lease term.


Your monthly lease payments are based on $16,000 - the difference between the cost of the car and the residual value at the end of the lease. So is the sales tax.

This leads me to believe (as I originally assumed) I should be due a refund or credit of sales tax.

I think others are right though that this is not a lease, it is an installment loan so I should be due all sales tax upfront. So, should I be due a refund of sales tax if we both agree I can trade in the item at month 12 and not pay the full retail price and agree to buy a new model? To tell you the truth I haven't googled it that far yet.

I now think AT&T may have set this "installment plan" with 20 payments, allowing customers to trade in their phone at 12 payments knowing iphone fans would jump at it and they (AT&T) could pocket millions in pre collected taxes for months 13-20 not used. Conspiracy theory? Of course! I wouldn't put anthing past this company, would you? Especially after this whole throttling data thing. Like I said, I wish I could know if AT&T was actually handing over the full tax collected to the State.


That was only 2 pages! I can't to see people insulting me, telling retail businesses must collect, and looking forward to reading how taxes for car loans are collected in other states. As much fun as it has been reading the last two pages of this thread I think I'll take a nape, get drunk, then watch trailer park boys instead of reading anymore tonight.

 

[capitanbuzo]

Wow. You must have aced Assumptions 101! I graduated college with a bachelors in business, am a member of a international honor society, and have gotten an A in every economics & accounting class I have taken. But go ahead and assume away, whatever makes you feel like a big man on the internet. You can continue down this road all you want I really don't care what you have to say about me, just know I'm laughing at you!



That may be true... ...and I know merchants must collect sales tax. LMAO I've owned a "retail" establishment and have managed many other when I was younger.



As I have used the the Next plan for years I can tell you that they are not charging you tax monthly, they collect it upfront (which is kind of a big part of this thread lol)



I wish you would go away now.
lol j/k



I understand the difference between leasing, renting, and installment payments. The problem with what you said is that "the phone is not fully bought" until I make the last payment. I could make one payment and stop making payments. I would then have to turn in the phone because it is not "fully bought."



Yes, Thank you. In NY you must pay tax upfront.



Me (OP)? No, that is an incorrect assumption you've made.




Wow, thank you! One person can think and not attack me or want to give me a lesson on taxes!



Umm, actually no. It's not like that at all. If you can buy a TV and return in 6 months first of all amen to you. Second, you don't have a deal with Walmart that you may trade it in for a newer model after 6 payments. With AT&T the deal is I may trade in the phone after 12 payments.

So maybe it is like the car lease after all. I found an article about leasing cars in NY.



This leads me to believe (as I originally assumed) I should be due a refund or credit of sales tax.

I think others are right though that this is not a lease, it is an installment loan so I should be due all sales tax upfront. So, should I be due a refund of sales tax if we both agree I can trade in the item at month 12 and not pay the full retail price and agree to buy a new model? To tell you the truth I haven't googled it that far yet.

I now think AT&T may have set this "installment plan" with 20 payments, allowing customers to trade in their phone at 12 payments knowing iphone fans would jump at it and they (AT&T) could pocket millions in pre collected taxes for months 13-20 not used. Conspiracy theory? Of course! I wouldn't put anthing past this company, would you? Especially after this whole throttling data thing. Like I said, I wish I could know if AT&T was actually handing over the full tax collected to the State.


That was only 2 pages! I can't to see people insulting me, telling retail businesses must collect, and looking forward to reading how taxes for car loans are collected in other states. As much fun as it has been reading the last two pages of this thread I think I'll take a nape, get drunk, then watch trailer park boys instead of reading anymore tonight.

This has already been discussed over the last couple pages. You are not due a refund. Enjoy your drink

 

[Burrstone]

This has already been discussed over the last couple pages. You are not due a refund. Enjoy your drink

....and I never asked if I was due a refund, your opinion, or the consensus of the group. Cheers!

 

[capitanbuzo]

....and I never asked if I was due a refund, your opinion, or the consensus of the group. Cheers!

Well, it seems like you did but who cares, right?

 

[Misaki]

As someone who works in the industry for one of the "Big 2" carriers in the US. You weren't scammed. Most states require taxes to be paid up front. They don't care if it's being financed over time interest-free, they see it as you bought a device at the full retail cost.

If you're in California, you have to pay the taxes on the unsubsidized wholesale price of the device to boot.

 

[lordofthereef]

ATT always charges sales tax up front. As far as I know, TMO is the only carrier that splits it up in installments, and this is because they classify their installments as a lease. It's all about how the sale is filed and then charged. IMO it makes more sense to do tax up front because there is no confusion later when comparing your bill to another person's bill who may have a different (or no) sales tax applied.

 

[lordofthereef]

I saw your post after mine and edited my response after seeing your rationale.

On Tmobile we have EIP, Jump, and Jump on Demand so customers have the choice between financing and leasing. Post #3 misled me by implying AT&T's Next plan was a leasing option. I think you'll agree that the change between "lease" and "finance" is a substantive change and not simply a minor typo like one of these responses claimed.

I'm unsure why tmobile ultimately calls it a lease when others do not. It works then same from the consumers point of view outsidenofnwhen the taxes are calculated. Realistically, next is just as much of a lease as Jump or JoD, it's just not classified as such by ATT

 

[DoofenshmirtzEI]

I'm unsure why tmobile ultimately calls it a lease when others do not. It works then same from the consumers point of view outsidenofnwhen the taxes are calculated. Realistically, next is just as much of a lease as Jump or JoD, it's just not classified as such by ATT

Difference between a lease and an installment loan is who owns the device. Jump On Demand is a lease, at the end of the agreement, you don't own the device, because you have just leased it from them. They do allow you to buy it from them for the residual value, at which point the phone becomes yours. Next is an installment loan, you own the device right from get go. You can legally sell it immediately, you're simply on the hook to pay the balance, much like if you financed it with a credit card and paid monthly on it.

 

[lordofthereef]

Difference between a lease and an installment loan is who owns the device. Jump On Demand is a lease, at the end of the agreement, you don't own the device, because you have just leased it from them. They do allow you to buy it from them for the residual value, at which point the phone becomes yours. Next is an installment loan, you own the device right from get go. You can legally sell it immediately, you're simply on the hook to pay the balance, much like if you financed it with a credit card and paid monthly on it.

To me the difference is still one of semantics. If I can buy it out and have paid no interest (in many cases with T-Mobile the buy out has you having paid less than MSRP) then it's the same thing to me, the consumer. But I do get what you're saying. At the end of ATT 18 month the phone is completely paid off, whereas it is not with TMO.

 

[capitanbuzo]

To me the difference is still one of semantics. If I can buy it out and have paid no interest (in many cases with T-Mobile the buy out has you having paid less than MSRP) then it's the same thing to me, the consumer. But I do get what you're saying. At the end of ATT 18 month the phone is completely paid off, whereas it is not with TMO.

Exactly. It really seems like no difference to the consumer but when questions arise such as this and we get into the nitty gritty, there is a difference.

 

[Aibocyrus]

Bottom line, signing a NEXT agreement and purchasing a phone through next, you're buyin the full device at that time. AT&T just fronts the money and let's you lay them back in installments. I see the point you are making, but I think the agreement was misunderstood

 

[Pspressart]

Like I said, I wish I could know if AT&T was actually handing over the full tax collected to the State.

Wow. You must have aced Assumptions 101! I graduated college with a bachelors in business, am a member of a international honor society, and have gotten an A in every economics & accounting class I have taken. But go ahead and assume away, whatever makes you feel like a big man on the internet. You can continue down this road all you want I really don't care what you have to say about me, just know I'm laughing at you!



That may be true... ...and I know merchants must collect sales tax. LMAO I've owned a "retail" establishment and have managed many other when I was younger.



As I have used the the Next plan for years I can tell you that they are not charging you tax monthly, they collect it upfront (which is kind of a big part of this thread lol)



I wish you would go away now.
lol j/k



I understand the difference between leasing, renting, and installment payments. The problem with what you said is that "the phone is not fully bought" until I make the last payment. I could make one payment and stop making payments. I would then have to turn in the phone because it is not "fully bought."



Yes, Thank you. In NY you must pay tax upfront.



Me (OP)? No, that is an incorrect assumption you've made.




Wow, thank you! One person can think and not attack me or want to give me a lesson on taxes!



Umm, actually no. It's not like that at all. If you can buy a TV and return in 6 months first of all amen to you. Second, you don't have a deal with Walmart that you may trade it in for a newer model after 6 payments. With AT&T the deal is I may trade in the phone after 12 payments.

So maybe it is like the car lease after all. I found an article about leasing cars in NY.



This leads me to believe (as I originally assumed) I should be due a refund or credit of sales tax.

I think others are right though that this is not a lease, it is an installment loan so I should be due all sales tax upfront. So, should I be due a refund of sales tax if we both agree I can trade in the item at month 12 and not pay the full retail price and agree to buy a new model? To tell you the truth I haven't googled it that far yet.

I now think AT&T may have set this "installment plan" with 20 payments, allowing customers to trade in their phone at 12 payments knowing iphone fans would jump at it and they (AT&T) could pocket millions in pre collected taxes for months 13-20 not used. Conspiracy theory? Of course! I wouldn't put anthing past this company, would you? Especially after this whole throttling data thing. Like I said, I wish I could know if AT&T was actually handing over the full tax collected to the State.


That was only 2 pages! I can't to see people insulting me, telling retail businesses must collect, and looking forward to reading how taxes for car loans are collected in other states. As much fun as it has been reading the last two pages of this thread I think I'll take a nape, get drunk, then watch trailer park boys instead of reading anymore tonight.

I live in Florida, so this takes it out of the California, Texas, New York, etc. contexts. I am an accountant and some of my firm's clients have had sales tax/use tax audits. The state will examine the firm's books to see if the tax has been assessed properly and remitted properly. If AT&T has been charging sales tax on the phone and not remitting that amount to the appropriate state, I am sure that we would have heard about it by now. I am not a fan of AT&T, but when it comes to taxes, I believe they are charging it properly and remitting it properly. Why should they want to act otherwise if the failure to do so is a fine and penalty?

 

[stulaw11]

I agree it's being done correctly. The CARRIER determines how they do their books, not you. Dont like paying the whopping $45-60 of tax up front? Move to Tmobile who from what is said finances that for you. It's a stupid reason but go right ahead no one is holding anyone back.

If the carrier dictates that a Next phone is a sale upon giving you the phone (since it is financing at 0%), then tax is due that tax year when you get the device in hand. Period. Don't like it? Talk to the IRS who make the tax laws or change carriers.

The carrier also needs 1 policy that fits ALL state tax laws as well. So it goes with 1 policy that can be acceptable to all 50 states.

 

[Pspressart]

I agree it's being done correctly. The CARRIER determines how they do their books, not you. Dont like paying the whopping $45-60 of tax up front? Move to Tmobile who from what is said finances that for you. It's a stupid reason but go right ahead no one is holding anyone back.

If the carrier dictates that a Next phone is a sale upon giving you the phone (since it is financing at 0%), then tax is due that tax year when you get the device in hand. Period. Don't like it? Talk to the IRS who make the tax laws or change carriers.

The carrier also needs 1 policy that fits ALL state tax laws as well. So it goes with 1 policy that can be acceptable to all 50 states.

Your answer is correct generally, but is is not the IRS that handles sales tax, but each individual state. Just a gentle correction.
It has been interesting to read this thread, with its comparisons to automobile leasing, etc., but the one important thing to remember is this. Sales tax involves a third party, a state. The state will do its best to make sure that AT&T is complying with the regulations that the state has in place.

 

[stulaw11]

Your answer is correct generally, but is is not the IRS that handles sales tax, but each individual state. Just a gentle correction.
It has been interesting to read this thread, with its comparisons to automobile leasing, etc., but the one important thing to remember is this. Sales tax involves a third party, a state. The state will do its best to make sure that AT&T is complying with the regulations that the state has in place.

Well of course, as I said we have 50 different states and laws at play The carriers have to cater to all meaning it's easier to just collect and pay it up front likely.

Sales tax means nothing to the customer (us). It's between the carrier and the state; as long as you paid it to the carrier it's their problem.

 

[deeddawg]

I graduated college with a bachelors in business, am a member of a international honor society, and have gotten an A in every economics & accounting class I have taken. ... I really don't care what you have to say about me

You should have added Reading Comprehension 101 to your coursework. I didn't say anything about you but instead addressed your education. Your response that you have a bachelors in business and achieved an A in all your econ and accounting classes merely serves to emphasise my statement about the standards of education.

I understand the difference between leasing, renting, and installment payments. The problem with what you said is that "the phone is not fully bought" until I make the last payment. I could make one payment and stop making payments. I would then have to turn in the phone because it is not "fully bought."

There's where you've gone sideways in your understanding of the transaction.

The phone is fully "bought" the minute you sign the screen. It is also security for the loan you just financed. This isn't an "installment plan" of increasing ownership percentages, it's an outright purchase transaction with the capital being fully financed by the carrier. No different from any 100% financing automobile purchase.

It it fundamentally different from a lease transaction in which ownership of the object transfers to the leasing company. In this instance ownership transfers to you.

 

[capitanbuzo]

You should have added Reading Comprehension 101 to your coursework. I didn't say anything about you but instead addressed your education. Your response that you have a bachelors in business and achieved an A in all your econ and accounting classes merely serves to emphasise my statement about the standards of education.


There's where you've gone sideways in your understanding of the transaction.

The phone is fully "bought" the minute you sign the screen. It is also security for the loan you just financed. This isn't an "installment plan" of increasing ownership percentages, it's an outright purchase transaction with the capital being fully financed by the carrier. No different from any 100% financing automobile purchase.

It it fundamentally different from a lease transaction in which ownership of the object transfers to the leasing company. In this instance ownership transfers to you.

I thought we already beat this thread to death?