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How do they plan to collect this tax? Virtually no-one pays the "use tax" for online purchases of physical goods from out of state unless the merchant is forced
by alexbock 10y ago
How do they plan to collect this tax? Virtually no-one pays the "use tax" for online purchases of physical goods from out of state unless the merchant is forced to collect sales tax. My understanding is that states can only compel companies to collect taxes up front when they have a physical presence in the state of the consumer. Amazon has warehouses everywhere, but I wouldn't expect Netflix, Hulu, etc. to have a physical presence outside of their home states (well, Netflix might have DVD distribution centers, but that's not something you would expect from streaming companies in the general case). If this is going to be self-reported like the current use tax, it won't accomplish very much unless they plan to step up enforcement of use-tax non-payment.
edit: Looking at the notice published by the state, it appears they're just going to lump streaming services in with the general use tax.
> Starting August 1, 2016, the sales and use tax specifically extends to items delivered to a customer electronically or digitally or by streaming
Does anyone know if Netflix has a physical presence in Pennsylvania and will actually be collecting sales tax when billing?
- jasonjei 10y agoIs there a federal lawsuit or question at play here? IANAL, but interstate commerce comes to mind. What punitive measures or recourse does a state have on an out of state vendor like Netflix?
- alexbock 10y agoIn Quill Corp. v. North Dakota, the Supreme Court very unambiguously ruled that a state cannot force out-of-state companies that have no physical presence in that state to collect sales tax. If Netflix has agreed to collect sales tax in Pennsylvania, I think they're either doing it voluntarily for political reasons or because they have some physical presence in Pennsylvania for some reason.
- cwzwarich 10y agoSurely there must be some Netflix equipment in a datacenter in Pennsylvania.
- gruez 10y agoI wonder if renting servers in a state counts as physical presence. What about using a CDN that has a PoP in that state?
- mikereedell 10y agoThey have a DVD center in Pheonixville, just west of Philadelphia.
- jeffmould 10y agoMy understanding is that Netflix, Hulu, Amazon, etc... will be responsible for charging, collecting, and reporting the tax. So if you live in PA, you will now pay a 6% tax on your monthly Netflix subscription.
- paulddraper 10y agoAnd what if Netflix fails to change, collect, or report? Does PA get to drag Netflix into court in a state they've never been to?
- the_watcher 10y ago> My understanding is that states can only compel companies to collect taxes up front when they have a physical presence in the state of the consumer. This used to be true (in fact, from what I understand, it's why Bezos chose Washington as his HQ, although the details are escaping me - did WA not have a sales tax in the early 90s?). However, a few years ago, this changed to having a "nexus", which is a more vague definition that takes into account amount of business done in the state.
- codemac 10y agohttp://dor.wa.gov/docs/reports/2010/tax_reference_2010/06taxhistory.pdf http://dor.wa.gov/docs/reports/2010/tax_reference_2010/06tax... Nope, they've had a sales tax since 1935
- the_watcher 10y agoYea, my family is from Seattle and I don't ever remember my grandfather complaining about a new sales tax up there. I'll have to find the source that describes why he chose Washington.