Associated Press ran a story the other day about a “new” Illinois law that, “allows people who didn't pay sales tax on items bought online, through the mail or over the phone between June 20, 2004, and the end of 2010 to pay what they owe without penalty. The tax amnesty runs from Jan. 1 through Oct. 15.” The story also said, “Illinoisans can often dodge sales taxes by shopping online, but the state is hoping to collect on those taxes next year by offering a sales tax amnesty.” This position of this statement is so wrong as to be quite ludicrous!
First, Illinois law requires online companies with an office or any kind of presence, including brick-and-mortar stores, in the state, to remit sales taxes for products delivered in Illinois. The companies must collect the tax.
Second, Illinoisans do NOT DODGE taxes by shopping on-line. It is not the buyer’s responsibility to pay sales taxes; it is the retailer’s obligation to collect them. Big difference!
Third, how can there be a NEW LAW giving a tax amnesty when no OLD LAW existed requiring the buyer to be responsible for the payment of the online sales tax.
Fourth, how is a buyer to know if an online company has an Illinois presence and should be charging a sales tax? If one is buying from Amazon, there is no information that the selling company has an Illinois location.
Fifth, how can buyers know back to June 20, 2004 what companies did not collect sales tax from them on a purchase? I can’t tell you what I bought last week, much less six years ago! If I don’t know what I owe, how is the Illinois Department of Revenue supposed to know what I owe, if anything?
The AP story concluded with, “Department of Revenue spokeswoman Sue Hofer tells the (Springfield) State Journal-Register that Illinois also plans to offer a more detailed worksheet on state income tax return forms to get taxpayers to pay up.”
Can you hear my laughter through the computer? Could anything be more stupid? Are taxpayers going to “turn themselves in” and declare they were cheating by avoiding sales taxes that were not their obligation to pay??
I just hope this blog does not make the Illinois Department of Revenue mad and I am audited for spite. I’ll let you know next year.
Karen writes:
ReplyDelete"Kathy ... as you are so honest ... and great at math ... I'm certain you've pulled every receipt from 2004 and have calculated your 'fees'! Do you know where to send the money?
What if I used to live in Illinois and purchased quite a lot of things online then moved to another state without online sales tax then moved to another state without online sales tax then moved again to another state with sales tax (which I dutifully paid) then moved back to Illinois then moved to another state without online sales tax?
ReplyDeleteJust saying.
Kaz writes:
ReplyDelete"Since I don’t live in Chicago, I can’t vote for the mayor there…however, I’m hoping your candidate of choice (Chico) wins…and then appoints you to head the newly created Department of Logic and Reason.
If only…it would be a Holiday Miracle!!!
Bob M. writes:
ReplyDelete"Philosophically, I feel online (and mail- and phone-order) companies to collect sales taxes wherever they are applicable. However, those companies know that not paying sales tax is an added bonus for customers. Additionally, these companies don’t want to bother of collecting and remitting separate different taxes from scores of jurisdictions, even though technology makes it easy to do."
You are correct in saying that under the current law, only businesses that have an economic presence in IL are required to collect IL sales tax. However, you are incorrect in stating that the customer does not owe the taxes. When an IL customer purchases from an out-of-state business that does not collect the tax, the customer is REQUIRED by IL law to report and pay the equivalent amount as USE tax. Unfortunately, many consumers do not know this and have not been reporting and paying these taxes. The Amnesty program is intended to raise awareness that these taxes are do, and to raise the amount of sales tax collected.
ReplyDeleteThe Main Street Fairness Act now pending before Congress would ensure that local businesses do not have to continue competing over price with internet-only retailers that are escaping their obligation to collect sales tax.
Still no one has said how the .... I should know if the companies I buy from pay sales tax?! Does this include phone downloads, Netflix, Kindle? Will they tell me if I overpay? Do I pay for shipping too?
ReplyDelete.
Texas requires one to self-report all goods and services purchased that didn't have sales tax collected and then pay any applicable taxes on it. I pretty much think that this is the case in all states with sales taxes.
ReplyDeleteWho in their right mind would do that though? I usually don't purchase anything online unless I don't have to pay sales taxes. Free shipping is a big plus too!
The other side of the coin is the fact that the online retailers like Dell, HP, Sam's Club, Gander Mountain, Cabela's and many more routinely charge the WRONG sales tax amount on one's purchases. And then the customer has to try to get the overcharged amount kicked back. It ranges from relatively easy from Sam's Club to next to impossible with HP and Cabela's.
I live in a rural unincorporated area in Texas. The state of Texas sets it's sales tax rate at 6.25%. But more often than not I get charged 8.25% because cities and municipalities have the option to add 2% to the rate (and most do). So I get charged the sales tax rate that my post office is in even though I am about 20 miles from that location.
Sales tax is supposed to be based from one's physical location as in MY address, not where one's Post Office is located, and certainly not the rate of the location of the company doing the shipping.
2 percent may not seem like a lot to some people but it can seriously add up. Not to mention that KNOWINGLY overcharging ANY amount, and also knowing the flaws in their tax collection system is criminal. It's called 'stealing' by any other name. Who gets that money? Who gets to keep the overcharge amount? The seller or the state? Or do they split the ill-gotten loot?
I have pointed out the error numerous times and Sam's Club, HP etc.. continues to ignore it. They claim ignorance but they are not really that stupid.
Kohl's online gets it right as do many other online companies. They either use the zip+FOUR code which pinpoints one's exact location (each side of your street has a different plus-FOUR) or they have a popup window when you plug in your zip code that lets you choose from "rural unincorporated Podunk USA" or "City of Podunk USA". Sure, the honor system there but it's honest on their part.
So in my mind it's war! The state of Texas doesn't care about this. I have contacted the State Comptroller's Office numerous times. They don't go after the companies that are routinely overcharging sales taxes. They are largely apathetic. They are not even very clear on the tax laws itself.
So I try to pay as little (ZERO is best!) sales taxes as I can. That's what happens when state governments become socialistic blobs that spend TOO MUCH money and then start milking it's citizenry with TOO HIGH of sales and other taxes and when people get fed up from being ripped off with being overcharged.
Sign me as a Tax Rebel.
Cheers!
Grimes County Texas