Seriously? Online tax?

[dukebound85]

Never used to be this way then I get this email.

Dear Colorado Customer,

Because your purchase through Motorcycle Superstore, Inc. was shipped to an address in Colorado, the state of Colorado mandates that we send you the following notification.

Order Number: xxxx
Merchandise Total: xxxx

Please see important tax information.

i. Motorcycle Superstore, Inc. is not obligated, and does not, collect Colorado sales tax;
ii. The purchase is subject to Colorado sales tax unless it is specifically exempt from taxation;
iii. The purchase is not exempt merely because it is made over the Internet or by other remote means;
iv. The State of Colorado requires that the taxpayer file a sales/use tax return at the end of the year reporting all of the purchases that were not taxed and pay tax on those purchases;
v. Retailers that do not collect Colorado sales tax are obligated to provide purchasers an end-of-year summary of purchases in order to assist purchasers in filing their tax report;
vi. Details of how to file this return may be found at the Colorado Department of Revenue’s website, www.taxcolorado.com;
vii. Retailers that do not collect Colorado sales tax are required by law to provide the Colorado Department of Revenue with a report of the total amount of all of a purchaser’s purchases at the end of the year.

Please contact the state of Colorado directly for further information.

Sincerely,

Motorcycle Superstore, Inc.

 

[r.j.s]

Actually, you have always been liable for Use Tax in lieu of sales tax in those situations, but most states never enforced it. It seems that company is just informing you of your obligation.

 

[GoCubsGo]

^ Exactly, how is this a surprise? What the company just did was uphold their fiduciary duty. Now that the ball is in your court they can easily say that they did everything they could to inform you of your responsibly, the IRS cannot hold them responsible for you not paying the tax.

This was very smart on their part.

 

[Hmac]

Actually, you have always been liable for Use Tax in lieu of sales tax in those situations, but most states never enforced it. It seems that company is just informing you of your obligation.

Yes. It is notoriously difficult to enforce. I asked my accountant about it. He recommended against trying to keep track and file my online purchases. This state turns a blind eye.

The only stores that are obliged to charge the buyer sales tax are those that have a physical retail presence somewhere in the state. It's the reason the Apple Store charges me sales tax, for example, whereas B&H Photo doesn't.

 

[mkrishnan]

The summary that they are providing you is the result of a new Colorado law that was signed in February.

http://www.huffingtonpost.com/2010/03/08/amazon-reacts-to-colorado_n_490028.html

The law initially sought to make the internet vendors collect the tax, but that got canned....

http://www.forbes.com/2010/02/25/colorado-internet-tax-technology-business-intelligence-shopathome.html

 

[dukebound85]

Actually, you have always been liable for Use Tax in lieu of sales tax in those situations, but most states never enforced it. It seems that company is just informing you of your obligation.

hmm, guess that is a good thing. Just never got an email like that before

Why can they not auto collect the tax when you check out?

 

[r.j.s]

hmm, guess that is a good thing. Just never got an email like that before

See Mohan's post ... it is apparently a new law in Colo.

Funny. I was just reading about this today in my Internet Commerce class.

 

[mkrishnan]

Funny. I was just reading about this today in my Internet Commerce class.

I actually hadn't heard about it, and just found out about it googling after reading Dukebound's post. I know almost every state has been talking about this, since online purchasing does essentially function as a loophole in sales tax law in many places.

What did your prof. have to say about it? Does he/she think it's actually going to work at collecting the money?

 

[r.j.s]

What did your prof. have to say about it? Does he/she think it's actually going to work at collecting the money?

Oh, it's an online class ... so no lecture. And, it wasn't on the Colorado law, but Use Tax liability when purchasing on the Internet in general.

 

[Hmac]

I actually hadn't heard about it, and just found out about it googling after reading Dukebound's post. I know almost every state has been talking about this, since online purchasing does essentially function as a loophole in sales tax law in many places.

What did your prof. have to say about it? Does he/she think it's actually going to work at collecting the money?

OTOH, they've been talking about it since the 1970's when mail order first became a big deal.