The sales tax on purchases made on the internet or out of state are to be reported and paid on the current year (year of purchase) income tax return.

If you have a store in the area, taxes are charged anyway. Some websites that don't fit this also charge. Some don't. It's up to your "friend" to keep up with the receipts total.

Why would someone call her concerning this, after a recent purchase?

I found this interesting.

Here is a link that might be useful: Sales or

Most likely the state has somehow figured out that you made the purchases and is calling you to inform you that you owe "use" tax. If you made the purchases recently you probably will just owe the taxes themselves and no penalty. Frankly, I'm amazed at the number of people who brag on boards like this that they saved sales tax by buying on the internet - I'm sure that's one way states find out about such purchases.

Weissman, ahem, it is a friend we are talking about...not me!

Honestly, I think if the state wants sales tax, they need to hire a computer programer to design some software to make it collectable at the time of purchase. This is a headache. For my friend. Who doesn't save receipts. And also has no more money.

Since we will assume this 'friend' lives in Florida, as a fellow Fl resident it is pretty well known that the state does collect taxes on internet purchases. Most online retailers include the tax in their prices along with a disclaimer about it to the effect that the tax is added to purchases shipped to FL.

If friend bought a lot of pricey appliances, I'm not too surprised to hear the state knows about it. Maybe even via the online retailer.

And you can always reassure your friend that s/he is getting a second chance to live up to his/her stated ideals. Indeed, a win-win for everyone.

States have a number of ways of finding out about out of state purchases.

Truck freight companies are state regulated, and their records are a common source.

When folks starting purchasing large amounts of expensive furniture in North Carolina and having it shipped to Virginia the state found it worth the money to go after the purchasers.

The law is that a business with no 'point or presence' in a state is not required to collect sales tax for out of state sales.

With all the different taxing jurisdictions it would be a nightmare or sellers to collect based on the purchasers shipping address.

Some states (often high sales tax states) have tried to sue out of state companies in federal court to force them to collect taxes.
So far the cases have been beaten back, mostly as an undue burden on the sellers and lack of 'point of presence' in the taxing locality.

But can't the state just send my friend a bill?

Did your "friend" return the call from the state Dept. of Revenue? They may be able to tell her how much they think she owes. Of course, she may know that she owes more than what the state knows about :-). Sorry your friend is out of money - she may have to borrow to pay the tax - the same thing happens when people owe income tax.

As brickeyee said, it's often too hard for out-of-state retailers to figure out the sales tax - some cities have their own sales tax on top of state sales tax.

In MA, we pay sales tax on clothing over $175 but only on the amount over $175. A few years ago I ordered a sports jacket from an out-of-state branch of a local store because they had my size. When I got the bill, it included tax on the full amount - they claimed their computer program computed it that way. I had to get them to call their local store to find out the actual rules.

Also, I'm surprised your friend didn't keep her receipts. How is she going to get warranty work done on her purchases?

Dude. As a hopeless hippi who finds the new era of "the man" creepy and strange I think the government is pretty nuts. I don't know if Weisman is right that the we (our government) pays people to wander the internet looking for people who bought fridges online but the whole concept is so out there it makes my head hurt.

AND I think enough of us agree with weisman to the extent that when we have the "permits or no permits" conversation here on the boards not a single person speaks up for no permits... which is long odds.

And I feel bad for your friend.

If I were the friend, I'd call, listen to what they had to say and plead ignorance of any details. Get a list of what they know before offering any information.

If the friend is supposed to self report the tax (and who does that?!) then it wouldn't happen until the end of this fiscal year so I can't see that anyone would be on the hook for having screwed up yet. They would have had to take delivery on the items 8 or so months ago?

In other words, if they are calling her she is going to end up taking some lumps. We live in a country where you have to fight for privacy, period.

On the hopefull side, maybe they just want to ask you about a certain company. It's not totally out of line that they are investigating a company or brand and are looking for leads.

As Morgne says, that sales tax isn't due till you do your state taxes unless the stuff was purchased in 2009. Are you sure someone isn't leaving crank calls to wind you, um, I mean, your friend, up? Sounds like something one my friends would do to me.

I called the Florida DOR on behalf of my friend. According to the guy I talked to, he had no knowledge of the state tracking people's purchases and said it is up to individuals to self report and that the use tax, like all taxes people have to self report, works on the honor system.

As far as not keeping receipts, I, like my friend, don't do it. I have had a Swiss Army Watch repaired under warranty, have returned a $300 broken food processor back to Sears for a gift card full refund and also received three replacement lights recently for a shipment never received.

It has been my experience that your warranty is still valid, even without the receipt or filling out the warranty card. All I've had to do is provide the serial numbers. Since I always pay by credit card, they have the name on the card associated with the serial number.

So why did the DOR leave a message for your friend if not to say she owed taxes?

If your friend paid by credit card, she can figure out how much she paid for the items and how much tax she owes.

You guys are kidding, right? Why bother combing the internet when you can just ask FEDX or UPS for a list? They are the government and have access for that kinda stuff.

To me... this screams SCAM. Someone trying to get some personal information from you..... maybe bank account access to pull your taxes?

We don't live in Florida, but there was a story earlier this week on our state (one of the high sales tax states, with a self-reported use tax in place for online purchases) cracking down on this, too, so I could definitely believe that it's legit. (And, if your state gov't is anything like ours---and I hope there aren't many that are as dysfunctional!---I could believe that the people on their end are not communicating well either, so the one guy might not know about the other person calling you...) But, like everyone said, you don't need to report 2010 purchases until the end of the year anyway, so they won't/can't do much about it right now. It might just be that they get a list of large purchases and routinely make calls so that people will report it and they don't have to audit.

That said, we are making a point of buying through local retailers wherever possible specifically so that the sales tax does stay in our county---where we live, it funds a lot of critical services, including most of our transportation projects. Since we don't make $10K+ purchases very often (ever!!) it was really important to me that the county get those tax dollars. (If we buy online and report it as use tax, it just goes straight to the state, as far as I know.) So just something to think about!

To me... this screams SCAM. Someone trying to get some personal information from you..... maybe bank account access to pull your taxes?

Artemis...glad to hear that you bought local!!! I wish more people would think about that....like you did.

I have lost out to smaller add-on items, like sinks, faucets, and hardware, to the online retailers, primarily because of no sales tax. Most people don't report this or even know they are supposed to. Think of the $$$ that is lost in tax revenue.....and lost revenue to local stores. Spend your money where you live!

Read this from the 3/50 Project website: (see link below)

*****"For every $100 spent in locally owned independent stores, $68 returns to the community through taxes, payroll and other expenditures. If you spend that in a national chain, only $43 stays here. Spend it online and NOTHING COMES HOME."*****

Support your local business!

Here is a link that might be useful: 3/50 Project

For me, it wasn't about the sales tax, but about the *selection*. My local stores simply didn't carry the things I wanted and their mark up was ridiculous. I did buy my appliances locally (with a small family run business) but things like sinks, lights, and what nots, I got online. I couldn't get my contractor's discount on "special order items" so I took my business where I got the merchandise at a better price and with a better lead time.

Also, the customer service I got from all the online retailers far surpassed any treatment I got locally.

The other thing was the shipping. My local plumbing supply house wanted me to pay shipping on top of their higher prices when I could get free shipping by ordering online. That alone saved me in excess of $2K during my renovation because their freight rates were not cheap.

If they left a number on the message I would Google the number and figure out if it is really a DOR number. Personally, I am skeptical that the DOR would call and not send a letter.

That said, I have lived in Mass and Maine. Both states have a sales tax and border NH which does not. Both also require that you pay taxes for internet/out of state purchases where no sales tax was collected. ME is more aggressive about actual enforcement, from what I can tell. When I do my taxes there is a formula used where they assume I purchase a certain amount out of state based on income. They recommend you pay this amount, but you may pay less. I consider it a form of audit prevention, I always pay the amount recommended. It's not a lot, maybe $100 or so.

If she owes the money then the state will likely be willing to enter into an installment payment agreement with her.

Thanks so much for your responses.

Sue36--it is interesting to hear how your state deals with this.

Grlpwrs--I understand about the selection. We live in a semi-rural area adjacent to a college town. Most of the stuff I purchased is not available around here. And it is much easier to find what you want online. With two little kids, going to school and working, I didn't feel like I had the time (other than 11pm!) to go shopping.

However, I do support buying locally as much as possible. It just didn't work out that well for me when we did our remodel. We did buy a lot of stuff from the Lowes down the street, which is a big business but it is also a big employer for our town, so I didn't feel bad buying from them.

Scam....it is possible. I also thought it was totally weird not to get a letter but to get a phone call.

I have to say, at the risk of making enemies, that this is the third post I've done on the forum about something financially related and, even though it just might be me with my back up, I have felt that with each post, there are one or two responders who are...just not nice.

Basically, even though I am going on very little information, it seems that class issues tend to come up on here in a really unpleasant way for me. I don't appreciate condescending remarks, snideness or the bourgeois attitude that accompanies some responses.

Just want to say, I don't really think being mean is in good taste.

I've never heard of the "use tax" before, come to find out our state has one too.

I love our little town and agree buying locally is the way to go when possible. The problem I ran into was that the things we ordered would have cost 30-50% more if we had bought locally. A couple of items weren't even available. We're not in an urban area where stores have the volume or demand so they just can't afford to offer much.

((((HUGS))))

Unfortunately, even on "nice" boards, there are times when claws, or just schadenfreude, come out. :( It's very sad, and I'm so sorry you've felt people being mean to you. I know it doesn't help at all to think "it's about them" when you were looking for a "safe" (or as safe as a public forum can be) place to discuss a delicate subject.

((((HUGS))))

States complain about lost revenue from sales taxes not being recouped, but they don't complain about the amount of commerce in general, even if it's the gas spent by the delivery trucks. When they start discussing this on the Federal level (interstate commerce), and start thinking about levying tax on internet purchase (other than the instate tax that people are used to paying), there's such an uproar, and the constituencies, both sellers and buyers, are so upset, that they drop it.

The world is changing, and it's taking some time for people and modalities to catch up. Sometimes it's easier to buy a roll of masking tape online than have to hike around a big box store looking for it. People don't do that to avoid the tax! Still, sales tax is regressive. People with the least money spend the largest portion of their incomes on sales tax. They order out of state, take trips into bordering states that have no sales tax, into bordering countries where they have no tax or give it back, etc., etc. Sales tax is onerous.

It's always been the law in most places that collect sales tax that you have to pay it on things brought in from out of state. In my state, it has mostly been enforced on really big items like cars. Unfortunately, a new kitchen is pretty much the equivalent of a car.

But if it's in the news about your state collecting on Income Tax filings, and you've received a phone call immediately after, I agree it's probably a scam. And I agree that you would most likely have received a form letter rather than a phone call. In fact, the normal way it should happen is that first you'd receive a form letter from your state's revenue agency telling you that you were obliged to report, and then if you didn't report and they had reason to think you should have, they'd send a reminder of the things you should have reported and an option to pay the back taxes plus interest. Then you'd receive a form letter telling you about a hearing scheduled. And on like that.

If your friend received a call, it should have been a recording. Live person calls are too expensive for chasing a pittance (and the amount of tax owed, even if your friend's new kitchen is even nicer than yours, is a pittance to the state coffers).

You could check with the department of frauds to see if this is a known scam, and a lawyer to see if it's possibly real.

Tax entities don't call to tell you you owe tax. They send letters and documentation. If the person calls again, it's simple enough to ask them to send you something in writing. Then, if they do, you can take that to the tax office and find out if its bonafide.

If you don't want feedback that veers off-topic to the personal, then don't include OT comments like, "Theoretically, the friend supports taxes ... and was not upset about not being charged sales tax. "

Your original question itself was fine.

We'd all be interested to hear what you find when you call the number.

I can't imagine why mass society in this country think it's O.K. for the government to just keep on taking and intruding. Or is it just apathy setting in? Or the assumption that certain things "could never happen here" thinking. I have some close friends, who escaped (barely) from Romania when the communists took over. They are now citizens of the United States, and Romania is no longer communist. They are cringing at what is taking place here, as they went through the same exact things in Romania that are going on here, before things REALLY got bad.

The founding, and fighting for, of the United States was based on freedom from burdensome taxes. And that includes the whole permit process for building a home on one's own property. Why don't more people say enough is enough and demand that our constitution to be upheld. We are overtaxed and overregulated, and much of it goes contrary to what is really our legal document here....the constitution.

I find it ridiculous that this issue even exists.

Sandy,

Watch out, the black helicopters are coming to get you. I can't imagine why anyone believes it is ok for those who who cheat on their taxes to think they are entitled to cheat just because they made a half hearted, and legally unsuccessful, attempt to outwit the sytem. And please, do not compare the US to communist Romania. That is utterly ridiculous. Do a little reseatch on Romania before you make such statements.

It is a matter of fairness. Our legislatures (whom we elect) enact tax laws. They are not taking or intruding when they enforce those laws. Enforcement of tax laws ensures that not just the honest pay their share.

If the government didn't check up on people ("intrude") even more people would cheat than already do. And the easier it is for people to cheat, the more they do. That is why the percentage of self employed people cheating is very high and the percentage of salaried people cheating is comparatively low. You must believe in a world where people pay taxes the way people give at church, putting whatever they feel like into a cup with no one but God to judge what was given?

Paying a sales tax on appliances purchased online is not burdensome anymore than paying those taxes when buying those appliances in a store is. If you don't like sales taxes then live in NH, Delware, Montana or Oregon.

The founding of the US was not based on avoiding burdensome taxes. In fact, the average colonist paid far less in taxes than the average British citizen in England. The Revolution was partially based on issues regarding taxation without representation as well as other burdens placed on the colonists (not to mention a strong desire to self rule, historically colonies eventually tug at the leash).

Regarding your belief that people "demand that our constitution to be upheld", what part of the constitution are you concerned about? The constitution allows taxes. And if you want to live somewhere without building codes, I believe there are counties in Texas like that. Building codes exist for many reasons, not the least of which are the preventation of injury and loss of life including those of public servants. I personally know police and firefighters injured due to building violations. Any idea how many of your tax dollars went to paying them for the months they were out of work, not to mention surgeries?

If you don't like it vote with your feet and move somewhere that meets your requirements. Scurry away.

Let's also do away with burdensome regulations on business. Who cares if Toyotas don't stop, BP oil wells leak into our waters, and toy companies import Chinese toys with lead paint for our children.

Phone calls from an entity that doesn't generally call are a red flag. You called the state, they don't have a record. They don't call and the tax isn't due. Red flag, red flag, red flag. Phish, phish, phish or possibly an innocent prank. Remind her not to give out personal information to folks who initiate the the call.

Consumers' Responsibility to Pay Sales or Use Taxes

Consumers who live in a state that collects sales tax are technically required to pay the tax to the state even when an Internet retailer doesn't collect it. When consumers are required to pay tax directly to the state, it is referred to as "use" tax rather than sales tax.

The only difference between sales and use tax is which person -- the seller or the buyer -- pays the state. Theoretically, use taxes are just a backup plan to make sure that the state collects revenue on every taxable item that is purchased within its borders. But because collecting use tax on smaller purchases is so much trouble, states have traditionally attempted to collect a use tax only on big-ticket items that require licenses, such as cars and boats.

fwiw, I have a friend who escaped from a communist country, fleeing to the U.S. She too has compared our present path with her past. All the reading in the world doesn't weigh much against living it.

sue36 & weissman .. so many people make comments that they don't seem to have a clue about what the resulting ramifications would be .. it is just soooo incredible & frightening.

I realize the topic veered away from internet sales tax; but thank you for taking the time to make some very intelligent, rational & valid points.