CDBaby Question

[chocularok]

Not sure I understand why the heck I'm being charged sales tax from a company in Oregon when I live in Tennessee. I thought that was illegal? Am I wrong, or have the laws changed about this?

[whiplash1972]

Well, as best I can tell, it would have to be a Tennessee tax law causing it, as Oregon has no sales tax:

 

http://www.sedcor.com/pdfs/demographics/taxes.pdf

 

I'd just fire 'em off an email and ask 'em what's up.

[sharatan]

Not sure I understand why the heck I'm being charged sales tax from a company in Oregon when I live in Tennessee. I thought that was illegal? Am I wrong, or have the laws changed about this?

 

you could always ship them to me

[SUICIDE]

No. CD Baby is not trying to screw you. It is a good idea to question additional fees sometimes as you have but this fee is legit and not illegal. CD Baby is complying with your states online seller sales tax law that has become the standard for many online sellers these days to avoid putting you at risk of evasion of your tax laws when you purchase items from them. When you buy from an online selller that has no state sales tax (such as Oregon) but your state requires one, it becomes your obligation to pay your state sales tax for the item on your own. Of course many probably do not do this but with the tracking of online activity by your country's government officials and other agencies very common these days, things like this can come and bite you later if they accumulate. (ie. a bigger company buying product from another state that doesn't have sales tax).

 

From your states tax law info:

 

"Many Tennessee businesses and consumers are unaware that use tax is owed on items they have imported into this state without paying sales tax to the seller. The use tax has been in effect since 1947 and is the counterpart to the sales tax. When someone buys merchandise online or through a catalog and the seller of the merchandise does not collect sales tax, the consumer who bought the item has a legal obligation to file and pay use tax on the merchandise. The use tax is levied at the same rate as the sales tax.

 

Some businesses located in other states voluntarily register to collect Tennessee sales or use tax to eliminate the customers obligation to file a consumer use tax return."

[chocularok]

Wow...you learn something new every day. That's odd how 99% of the other places I buy from don't charge sales tax (NEH, Wishing Well, Amazon, half.com, Deep Discount, etc). I've just gotten used to not paying sales tax from online purchases.

[SUICIDE]

Yes. It is not required of an out-of-state company to collect these taxes for your state unless they have a physical presence in Tennessee or other state that requires sales tax be paid, such as having a warehouse or division in Tennessee.

But, by voluntarily collecting the state sales tax for you when you buy from them, it covers both of your asses. In CD Baby's case, it acts as a buffer incase someone, like you or another, gets busted for evasion and then tries to place blame on CD Baby for not notifying you of this evil tax requirement.

[chocularok]

Yes. It is not required of an out-of-state company to collect these taxes for your state unless they have a physical presence in Tennessee or other state that requires sales tax be paid, such as having a warehouse or division in Tennessee.

But, by voluntarily collecting the state sales tax for you when you buy from them, it covers both of your asses. In CD Baby's case, it acts as a buffer incase someone, like you or another, gets busted for evasion and then tries to place blame on CD Baby for not notifying you of this evil tax requirement.

 

Strange how a small "mom & pop" type online store like CDBaby does this, when an internet monster such as Amazon doesn't, though, isn't it?

[SUICIDE]

Yes. Very strange. But I guess CD Baby wants to be looked at as a good faith complying online company in regards to Tennessee Law, they probably comply with other states also voluntarily. It doesn't surprise me that monster online sales companies such as Amazon and others wouldn't comply since they have a bigger foothold on business and tend to think they can do what they want. In the end, it is always the smaller companies who get busted 98% of the time while the bigger ones just pay their out of court settlements quickly and go on doing business.

[chocularok]

Well, thanks again for all the input...very informative.

[chocularok]

I guess the next question is, anybody here on the board live in Oregon?

[heaven&hell]

Wow...you learn something new every day. That's odd how 99% of the other places I buy from don't charge sales tax (NEH, Wishing Well, Amazon, half.com, Deep Discount, etc). I've just gotten used to not paying sales tax from online purchases.

 

When I lived in Illlinois I was always charged sales tax from Impulse Music(since at the time they were in Illinois but they've now relocated to Colorado), but when I've lived in other states I'm not charged sales tax from them, of course I rarely order from them anymore.

[chocularok]

Update...CDBaby isn't charging the "use tax" to be in complience with federal laws. They told me they have an office in Tennessee.

 

Suuuurrre they do.

[sharatan]

well, the last 3 orders i got from them came from different areas, even from canada....go figure....

[heavyharmonies]

Actually this is only the tip of the iceberg, and it's likely to get messier over the next few years for several reasons:

 

1. Proposed legislation to do away with the online/mail order sales tax loophole. At some point expect to have to pay sales tax on ALL online purchases regardless of what state you live in and what state the merchandise is ordered/shipped from.

 

2. Due to the governments (federal and state) being so strapped for cash, the implementation of a VAT here in the U.S. (a national sales tax similar to what Europe has, that would be IN ADDITION to any state sales tax you pay). Never mind that a lot of people will simply stop buying shit.

 

3. An absolute clusterfuck for eBay sellers if it is mandated that sales tax must be charged, collected, documente, and reported.

 

In some ways, forcing states to all operate the same would make things much easier and streamline the process. Right now you have some states that have state sales tax, but at different rates; some states that charge no sales tax; and some states that have "reciprocal agreements" in place with *some* other states (e.g., here in Illinois, if we sell goods within the state we have to collect IL sales tax, and for about 8 other states we have to collect THEIR sales tax rate). It's a pain in the butt.

 

In addition, here in Illinois, we're looking at a 50% increase in the state income tax being proposed by the governor.

 

We're going to be taxed to death so that a few people can line their (already wealthy) pockets.

[SUICIDE]

Yes. VAT really sucks. But paying VAT plus an additional sales tax is even worse.

I suppose people all over will be arguing over these new rules but only deaf ears will be listening as usual.

[chocularok]

Well, I just had my order shipped to my aunt in Kentucky...apparently they don't have an office there.

[stormspell]

As it is at the moment I'm positively sure that collecting sales tax by merchants on out-of-state online transactions is not required (unless as Dan says there is an interstate agreement). It is the buyer's responsibility to report all out-of-state purchases as used tax on their tax returns.

 

Right now, the only way I can think of collecting and reporting taxes from other states would be to fill separate tax returns to all states board's of equalization? Just imagine what a bureaucratic nightmare that would be! I don't think anyone would impose themselves on such chore if it is not required. Cdbaby must have an office in the state they are collecting sales tax or something is glitchy in their system.

 

P.S. just finished reading the entire thread. Cdbaby must really have an office in Tennessee. It would be extremely lame to try make extra buck on collecting fake sales taxes.