A California retailer shouldn’t be charging me CA sales tax for wine that will be delivered to Washington, DC, correct?
Depends.
Though there is no controlling Federal Law I can find, there are several ways retailers are dealing with the laws to cover themselves. In addition to the “non-taxable” sales to the military, government and people in other states, there are some states that require their state sales tax be paid in order for the retailer to do business in their state. Another option is to charge CA sales tax, indicating the purchase occurred within the retailer’s store and local tax paid. Now the property is yours and can be shipped to a number of states that have outlawed internet sales by out of state retailers. Only ABC licensed retailers, wineries and fulfillment centers may ship wine through Fed Ex and UPS. A number of states are leaning on Fed Ex and UPS to stop shipments of wine into their states. The states claim they want the taxes and/or are protecting the retailers within their state who are being unfairly undercut in pricing by out of state retailers. Wholesalers are pushing hard to stop all interstate sales of wine so they can control the market. Their shtick is retailers are selling to children.
Not to get all political, but another reason to have a national “flat tax” on consumtion.
As Randy said it varies. Here in Texas, I cannot purchase from a retailer but can directly from the winery. Some wineries have a Texas license and I pay 6.25% which goes to Austin. In other cases, I pay the California tax and the agreement says that I take possession in CA and authorize the winery to ship on my behalf. I do purchase from a winery or two that I don’t pay any tax on the purchase. I hope that doesn’t come back to bite them somewhere down the road.
Monte
A national sales tax does not preclude local or state taxes
Write a 2% federal tax on interstate internet transactions, that includes cutting out the states and their BS, opening up the market to all and paying down the fed debt. Covers all sales on-line, LL Bean, Amazon, etc. No more singling out anybody or commodity.
had 1 store on long island that wanted to charge me tax on a shipment to Illinois. Never mind.
Yep, if the deal is that the buyer takes possession in CA, you have to collect the tax. If you don’t, the state may come calling or someone may say title did not pass in CA. And that could get sticky.
It may be form over substance, but if you don’t collect the tax, you have no viable argument.
Best, Jim
The “cleaner” way, if one desires to avoid this problem, is a federal law that overrules the limitations that limit a state from collecting sales taxes on out-of-state purchases sent to that state.
No need for a national sales tax, an internet sales tax or some other tax–simply allow each state to impose its sales tax (if one exists) on its residents, regardless of where or how they make a purchase (and I don’t mean by expecting people to self-report and pay a “use” tax as the law is in pretty much all states).
Anyway, as others say YMMV. I have received many shipments of wine in DC from California and elsewhere in which the sender did not charge DC or local sales tax, leaving to me the obligation to pay DC use tax.
Still you can not mandate that states charge their own tax.
Appreciate the thoughts.
The retailer who charged me the tax said it was done so incorrectly…
And I found this clear-ish explanation on California’s Board of Equalization website…
“Sales tax generally does not apply to your transaction when you sell a product and ship it directly to the purchaser at an out-of-state location, for use outside California. Your sale is not taxable if you:
Ship the product directly to the purchaser, using your own delivery vehicle or another means of transport that you own; or Ship the product by delivering it to a common carrier (including the U.S. Postal Service), contract carrier, customs broker, export packer, or forwarding agent;”
Amazing! You mean that the state taxes will just magically disappear? How convenient!
There is no sales tax in Oregon at all, yet any sales made over the phone or internet and then shipped to a state that does have sales tax becomes a taxable event for the recipient state. Chaps my hide.
I had an interesting experience dealing with interstate tax collections on a wine purchase a while back. Living in Nebraska I’ve purchased the vast majority of my cellar from west coast wineries or wine retailers based on either coast or in the Chicago area. I’ve never had an internet wine retailer charge sales tax but most California wineries collect Nebraska sales tax. Nebraska has a state wide 6% sales tax and local municipalities can charge up to an additional 1.5% sales tax. My mailing address is in Bellevue, which charges a 1.5% sales tax, but my residence is actually outside the Bellevue city limits.
When one winery attempted to collect 7.5% (6% state + 1.5% city) sales tax on a fairly large purchase I called them on it. Most wineries use a commercial product to help them calculate the proper sales tax to collect from purchasers all over the country. Well the product this winery was using was incorrectly indicating they should collect the Bellevue city sales tax though my actual residence was outside the city limits. Well to make a long story short after about a half dozen emails and phone calls the winery finally admitted I was correct and subtracted the 1.5% from the purchase. I never asked for anything other than the tax correction but the winery decided they would send me an extra bottle for free to make up for the inconvenience.
The winery was Kosta Browne and the “free” bottle was the 2009 Sonoma Coast Pinot Noir.
New York used to ask you on the income tax form to list your out-of-state purchases for the year and then calculate and pay NY sales tax on them.
That’s the use tax mentioned above. California has been doing the same thing. Last year, they offered the option to estimate your use tax based on income level. In my case, my use tax based on actual purchases was less than the estimate. And, yes, I’ve been paying the use tax.
-Al