6 ms·

I live in an Illinois border community, and work in Iowa. I wonder what tax would be collected if I close an Ebay transaction in Iowa, but have the products shi

by chasil 8y ago

I live in an Illinois border community, and work in Iowa. I wonder what tax would be collected if I close an Ebay transaction in Iowa, but have the products shipped to my address in Illinois.

honest_george 8y ago
While I can't speak for US law, most of the time it's the delivery address that matters - if the location you're at when purchasing matters, you could do all of your expensive on-line shopping when on holiday in some place with low taxes (or using a VPN...).
- BorgHunter 8y ago
  This is one of those "it depends on the state" questions. In general, a seller is going to calculate and remit tax based on the delivery address, but the laws are actually a bit more complicated than that. chasil, who lives in Illinois but is close to Iowa, might start having packages delivered to a P.O. Box in Iowa, for example. However, legally speaking, s/he must still pay Illinois use tax on that item provided it is "for use or consumption in Illinois" and less than the current Illinois use tax rate of 6.25% was collected originally. See http://www.revenue.state.il.us/Individuals/FAQs-Use-Tax.htm http://www.revenue.state.il.us/Individuals/FAQs-Use-Tax.htm Practically speaking, of course, few people keep detailed enough records to even calculate the correct use tax owed at the end of the year, and any tax that might have been owed goes uncollected and unnoticed. Which is the problem that led to this Supreme Court case in the first place.
  - chasil 8y ago
    One particular question is my use of Page Plus, my phone carrier. It was the first Verizon MVNO to get 4g. I was on an automatic payment with them, and they announced that they were adding 911 taxes. I canceled the automatic payment and started getting refills at pincheap.com (a dealer with no presence in either Iowa or Illinois), avoiding both sales tax and the 911 tax. There is no "delivery" of any physical product, so I wonder if the tax status of that arrangement changes.
  - vanadium 8y ago
    It's for this reason Illinois residents don't buy a car in Wisconsin or another neighboring state with a more advantageous tax structure; you'll get nailed post-haste. But if you're driving up to buy a few cases of New Glarus beer, chances are you're vastly unlikely (at or nearing 0%) that you'd be held to account for that purchase for Illinois tax purposes.
- jethro_tell 8y ago
  Soon: AWS launches new 'Guaranteed to be in Oregon' VPN endpoints! Free for use while shopping on Amazon.com.
xienze 8y ago
Technically you're supposed to pay your state's tax, even for a purchase where you were physically in another state. Even if that other state actually charges its own sales tax!
- RightMillennial 8y ago
  I thought with use taxes you owed the remaining difference in tax. Say I purchase a $100 widget in Kenosha, WI with a sales tax of 5.5%, and I live in MI with a sales and use tax of 6%. I would owe MI the 0.5% difference on the $100 which would be $0.50.
  - xienze 8y ago
    No my understanding is that the state wants their full X% -- the whole point of the use tax is "you paid that guy but you're supposed to pay me." If you paid a higher tax rate in another state do you think your home state would be happy with 0% or even reimburse you the difference? IIRC you're expected to get the out of state retailer to reimburse you at a later time and then when you're paying your income taxes you include any purchases subject to use tax.
    - ghaff 8y ago
      It probably depends on the state. In Massachusetts, oddly, if you paid less than the Mass sales tax rate of 6.25%, you owe 6.25% use tax. It's not the delta you owe, it's the full amount. But you don't owe it at all if you paid more than the Mass rate.
    - RightMillennial 8y ago
      I think it depends on the state. At least in MI, you only have to pay the difference [1] [2]: > Use Tax on the Difference > If you paid at least 6 percent to another state on your purchase, you do not owe use tax to Michigan. If you paid less than 6 percent, you owe the difference. > NOTE: The full 6 percent use tax is also owed on purchases made in a foreign country. [1]: https://www.taxslayer.com/support/1153/michigan-use-tax https://www.taxslayer.com/support/1153/michigan-use-tax [2]: https://www.michigan.gov/documents/taxes/MI_1040_Instruction_Book_Instructions_Only_609092_7.pdf#page=8 https://www.michigan.gov/documents/taxes/MI_1040_Instruction...

by chasil 8y ago

I live in an Illinois border community, and work in Iowa. I wonder what tax would be collected if I close an Ebay transaction in Iowa, but have the products shipped to my address in Illinois.

honest_george 8y ago

While I can't speak for US law, most of the time it's the delivery address that matters - if the location you're at when purchasing matters, you could do all of your expensive on-line shopping when on holiday in some place with low taxes (or using a VPN...).

BorgHunter 8y ago
This is one of those "it depends on the state" questions. In general, a seller is going to calculate and remit tax based on the delivery address, but the laws are actually a bit more complicated than that. chasil, who lives in Illinois but is close to Iowa, might start having packages delivered to a P.O. Box in Iowa, for example. However, legally speaking, s/he must still pay Illinois use tax on that item provided it is "for use or consumption in Illinois" and less than the current Illinois use tax rate of 6.25% was collected originally. See http://www.revenue.state.il.us/Individuals/FAQs-Use-Tax.htm http://www.revenue.state.il.us/Individuals/FAQs-Use-Tax.htm Practically speaking, of course, few people keep detailed enough records to even calculate the correct use tax owed at the end of the year, and any tax that might have been owed goes uncollected and unnoticed. Which is the problem that led to this Supreme Court case in the first place.
- chasil 8y ago
  One particular question is my use of Page Plus, my phone carrier. It was the first Verizon MVNO to get 4g. I was on an automatic payment with them, and they announced that they were adding 911 taxes. I canceled the automatic payment and started getting refills at pincheap.com (a dealer with no presence in either Iowa or Illinois), avoiding both sales tax and the 911 tax. There is no "delivery" of any physical product, so I wonder if the tax status of that arrangement changes.
- vanadium 8y ago
  It's for this reason Illinois residents don't buy a car in Wisconsin or another neighboring state with a more advantageous tax structure; you'll get nailed post-haste. But if you're driving up to buy a few cases of New Glarus beer, chances are you're vastly unlikely (at or nearing 0%) that you'd be held to account for that purchase for Illinois tax purposes.
jethro_tell 8y ago
Soon: AWS launches new 'Guaranteed to be in Oregon' VPN endpoints! Free for use while shopping on Amazon.com.

xienze 8y ago

Technically you're supposed to pay your state's tax, even for a purchase where you were physically in another state. Even if that other state actually charges its own sales tax!

RightMillennial 8y ago
I thought with use taxes you owed the remaining difference in tax. Say I purchase a $100 widget in Kenosha, WI with a sales tax of 5.5%, and I live in MI with a sales and use tax of 6%. I would owe MI the 0.5% difference on the $100 which would be $0.50.
- xienze 8y ago
  No my understanding is that the state wants their full X% -- the whole point of the use tax is "you paid that guy but you're supposed to pay me." If you paid a higher tax rate in another state do you think your home state would be happy with 0% or even reimburse you the difference? IIRC you're expected to get the out of state retailer to reimburse you at a later time and then when you're paying your income taxes you include any purchases subject to use tax.
  - ghaff 8y ago
    It probably depends on the state. In Massachusetts, oddly, if you paid less than the Mass sales tax rate of 6.25%, you owe 6.25% use tax. It's not the delta you owe, it's the full amount. But you don't owe it at all if you paid more than the Mass rate.
  - RightMillennial 8y ago
    I think it depends on the state. At least in MI, you only have to pay the difference [1] [2]: > Use Tax on the Difference > If you paid at least 6 percent to another state on your purchase, you do not owe use tax to Michigan. If you paid less than 6 percent, you owe the difference. > NOTE: The full 6 percent use tax is also owed on purchases made in a foreign country. [1]: https://www.taxslayer.com/support/1153/michigan-use-tax https://www.taxslayer.com/support/1153/michigan-use-tax [2]: https://www.michigan.gov/documents/taxes/MI_1040_Instruction_Book_Instructions_Only_609092_7.pdf#page=8 https://www.michigan.gov/documents/taxes/MI_1040_Instruction...