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Amazon is retroactively charging taxes to all South Carolina customers. WTF?

iruuliruul
edited February 2012 in Everything Else
I currently live in SC and a few days ago Amazon sent out an email to all the customers in my state who had any purchased items shipped here. It basically says "By the way, you need to pay taxes on all purchased items from us the last year to SC. We were suppose to do it, but we decided to let you guys deal with it."

Here's the email they sent to us:


"Hello from Amazon.com,

As you may or may not be aware Amazon.com LLC is not required to collect sales or use taxes in all states, including the state of South Carolina.

The South Carolina Department of Revenue requires us to provide the following notice to you:
You may owe South Carolina use tax on purchases you made from Amazon.com LLC during the previous calendar year. The amount of tax you may owe is based on the total sales price of the items you purchased during the previous calendar year. The total sales price of only purchases you had shipped to South Carolina in 2011 was $XXXX.XX. This is the amount that you may include on your South Carolina income tax return to calculate the appropriate use tax owed unless you have already paid the tax.

While Amazon.com LLC does not report this information directly to the state of South Carolina we are required to provide this information to you based on South Carolina law Section 12-36-2691(E)(3).

As purchases from Amazon.com LLC can be made through various sales channels, we have included directly below your breakdown of purchases from the various channels.

Total sales from www.amazon.com $XXXX.XX

Please note the following:

The total sales represent all orders that were shipped to South Carolina during 2011.
Your purchases are subject to use tax unless an exemption exists under state law or you have already paid the tax.
A sale is not exempt under state law because it is made through the internet.
This information should not be used for any federal income tax reporting purposes.
We are required to provide this notice in accordance with South Carolina law Section 12-36-2691(E)(3).
Notifications were sent to customers that had purchases delivered to South Carolina. If you are not a resident of South Carolina, the most common reason for receiving this notification is that you may have sent a gift to a recipient in the state.

In addition, the South Carolina Department of Revenue requires us to provide you with the following links that you can use to get more information and pay any taxes due:

Use Tax Page: http://www.sctax.org/Tax+Information/Sales+and+Use+Tax/use_tax/UseTaxHome.htm

How Do I Pay my Bill: http://www.sctax.org/Tax+Information/Sales+and+Use+Tax/use_tax/UseTax+Payment.htm

For more information you may also view our South Carolina Use Tax Notification Page at:
http://www.amazon.com/gp/help/customer/display.html/?nodeId=200863730

Sincerely,

Customer Service
Amazon.com"


The site says:
“The use tax, which is another name for the sales tax, is applied to out-of-state purchases when another state’s sales tax is not paid or when the out-of-state retailer does not collect a sales tax for South Carolina. When that happens, it becomes the responsibility of the purchaser to report and pay the use tax to the South Carolina Department of Revenue."
From my understanding, Amazon opened up a warehouse in SC and was exempt from collecting taxes for 5 years. This 5 years ended last year and they were suppose to start charging SC residents tax. Instead of doing so, they did not charge tax and instead surprised everyone with this email telling their customers that they now have to report it themselves. Since pretty much no one knew about this, we now have to retroacively pay taxes on purchases that we thought we didnt have to. Additionally, while Amazon tells you the total amount you spent last year, certain items like school supplies and textbooks are exempt from taxes and we will have to manually search through all the things we bought and subtract those items from the total to report.

This seems kind of lame to me. Amazon purposely did not charge taxes to make their prices more attractive and then surprises everyone that they do indeed have to pay taxes afterall.

Post edited by iruul on
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Comments

  • AprecheApreche
    The sales tax is not part of advertised prices at the vast majority of stores online and off. Even if they do charge tax on Amazon itself you wouldn't see that tax until the end of checkout. The same as every major store in the country.

    Whether you pay the tax at the time of purchase or all at once, what's the difference?
  • HMTKSteveHMTKSteve
    Blame your state lawmakers not Amazon.
  • SquadronROESquadronROE
    Yeah, I got the same email a few days ago and we were talking about it at work (nice to see another FRC'er in SC). I think it's kind of a normal way to do things, as Amazon probably doesn't have the infrastructure to add sales tax in for certain states since it can get crazy complex (for instance, Amazon offers groceries which are taxed at a different rate... then there's municipal taxes as well as state), so they probably negotiated a deal where we only have to pay the Use tax (not sure what that rate is) and we self-report our online purchases.

    I don't particularly like it, but I can understand the reasoning.
  • Anthony HemanAnthony Heman
    Two thoughts...

    Sounds incredibly lame but legal...

    ... and the state will probably not go after individual consumers to collect small amounts of sales tax.
  • SquadronROESquadronROE
    You're supposed to estimate your online purchases anyway, this just makes it easier to do such. It's like getting a 1099 (or 1098, I can't remember..) from a life insurance disbursement or whatever. Just pop it into the right fields on the form and you're clear.

    Hell, I'm actually a huge fan of increasing taxes here in SC. Hopefully services will improve as a result, although I'm doubtful.
  • ApsupApsup
    The sales tax is not part of advertised prices at the vast majority of stores online and off. Even if they do charge tax on Amazon itself you wouldn't see that tax until the end of checkout. The same as every major store in the country.
    That's one of the many things I don't understand about you Americans, how hard it is to include the tax to the price tag and have a little note tax included. Customer is only interested of how much they have to pay, there is no need to tell how much of the money goes to the government and how much to the shopkeeper.

  • RochelleRochelle
    edited February 2012
    I am a Washington state resident, and since Amazon is located here I always pay sales tax. Our current tax rate is 9%. Your state is 6% from my quick Google searching. It seriously isn't that bad.

    Whenever I purchase anything online, I assume there is going to be a sales tax on it. If there isn't, it's a bonus.

    This was a discussion on some GeekNights episode a while ago along with a possible forum discussion. You should always go in assuming that somehow you pay a sales tax on any online purchase and you should be safe.

    Also as Steve/TheTick says, it's your state's law. Blame them. Amazon is following what they imposed on them.
    Post edited by Rochelle on
  • iruuliruul
    The sales tax is not part of advertised prices at the vast majority of stores online and off. Even if they do charge tax on Amazon itself you wouldn't see that tax until the end of checkout. The same as every major store in the country.

    Whether you pay the tax at the time of purchase or all at once, what's the difference?
    It's not paying it the time of purchase or at once, it's that I was purchasing items with the misunderstanding that I would not have to pay taxes at all.

  • George PatchesGeorge Patches
    I filled out my use tax this year.
  • AprecheApreche
    edited February 2012
    The sales tax is not part of advertised prices at the vast majority of stores online and off. Even if they do charge tax on Amazon itself you wouldn't see that tax until the end of checkout. The same as every major store in the country.

    Whether you pay the tax at the time of purchase or all at once, what's the difference?
    It's not paying it the time of purchase or at once, it's that I was purchasing items with the misunderstanding that I would not have to pay taxes at all.

    That's your problem! You obviously have to pay sales tax. Ignorance is no excuse for breaking the law. It's not like Amazon told you that you didn't have to pay it. This is all your bad. Don't try to blame it on Amazon. It's not their job to teach you tax law.
    Post edited by Apreche on
  • George PatchesGeorge Patches
    edited February 2012
    That's your problem! You obviously have to pay sales tax. Ignorance is no excuse for breaking the law. It's not like Amazon told you that you didn't have to pay it. This is all your bad. Don't try to blame it on Amazon. It's not their job to teach you tax law.
    What he said.
    Post edited by George Patches on
  • SquadronROESquadronROE
    That's your problem! You obviously have to pay sales tax. Ignorance is no excuse for breaking the law. It's not like Amazon told you that you didn't have to pay it. This is all your bad.
    What he said.
    Also, most tax software will provide examples of "Use tax" things when it's having you fill out the box. The stuff I use clearly says "online purchases". So I estimate them.

  • Anthony HemanAnthony Heman
    I don't know the specifics, especially not in your state, but there's usually a line item deduction on your income taxes for sales tax paid. But I think that's a seperate thing from actually filing a sales tax return.
  • RymRym
    This is a product of your state being lame, not Amazon.
    It's not paying it the time of purchase or at once, it's that I was purchasing items with the misunderstanding that I would not have to pay taxes at all.

    You were wrong from the start. Even if you're not charged sales tax by an out-of-state entity, you have to pay a use tax on anything you buy from said entity. If you weren't planning on reporting the use taxes for the items, nor were you planning on paying the sales taxes, then you were planning to violate your state's tax code.
  • iruuliruul
    edited February 2012
    My gripe is that this tax has recently come into effect and that there was no clear warning about this. 2010 no taxes were needed, 2011 taxes are now needed but nothing on Amazon gave an indication of this until after the year's purchases were done.
    Post edited by iruul on
  • RymRym
    My gripe is that this tax has recently come into effect and that there was no clear warning about this. 2010 no taxes were needed
    No use tax either? Are you sure? Or were you just committing tax fraud?

  • AprecheApreche
    My gripe is that this tax has recently come into effect and that there was no clear warning about this. 2010 no taxes were needed, 2011 taxes are now needed but nothing on Amazon gave an indication of this until after the year's purchases were done.
    Unless you live in Delaware, sales tax is not new.
  • TheWhaleSharkTheWhaleShark
    edited February 2012
    My gripe is that this tax has recently come into effect and that there was no clear warning about this. 2010 no taxes were needed, 2011 taxes are now needed but nothing on Amazon gave an indication of this until after the year's purchases were done.
    Nope. From the links that Amazon provided:
    WHAT IS USE TAX?
    This is the tax due on purchases made outside of South Carolina for use, storage, or consumption in South Carolina. The USE TAX is paid to the S.C. Department of Revenue when the State Sales and Use Tax has not been collected by the Seller. USE TAX IS NOT A NEW TAX, IT WAS ENACTED IN 1951. The use tax puts in-state sellers on a level playing field with sellers from outside South Carolina.
    Post edited by TheWhaleShark on
  • AprecheApreche
    I just click the "pay estimated use tax and most likely avoid getting audited" button in TurboTax. I could maybe save, or lose, money with a more accurate accounting of my use tax, but the time and effort required is not worth any potential savings.
  • iruuliruul
    edited February 2012
    My gripe is that this tax has recently come into effect and that there was no clear warning about this. 2010 no taxes were needed
    No use tax either? Are you sure? Or were you just committing tax fraud?

    From my understanding, when Amazon set up a warehouse in SC they were given a 5 year tax exempt status which recently ran out.

    Post edited by iruul on
  • George PatchesGeorge Patches
    Oh wait, I bought that case of beer in Pennsylvania.
    Because you paid PA sales tax you're fine.
  • HMTKSteveHMTKSteve
    Oh wait, I bought that case of beer in Pennsylvania.
    Because you paid PA sales tax you're fine.
    Some states will even refund you the difference if you paid sales tax at a higher rate elsewhere.

  • TheWhaleSharkTheWhaleShark
    Oh wait, I bought that case of beer in Pennsylvania.
    Because you paid PA sales tax you're fine.
    I'll have to check the specific New York tax law on that, but you're right, I should be fine. I think PA sales tax is at a lower rate than NY sales tax, though.

  • George PatchesGeorge Patches
    Oh wait, I bought that case of beer in Pennsylvania.
    Because you paid PA sales tax you're fine.
    I'll have to check the specific New York tax law on that, but you're right, I should be fine. I think PA sales tax is at a lower rate than NY sales tax, though.
    Sales tax was paid, my understanding is you are the good.

    I've just thought of something, if you buy something in Delaware, do you have to pay use tax on it in your home state?
  • TheWhaleSharkTheWhaleShark
    edited February 2012
    I'm not positive about that. New York's use tax bulletin is somewhat confusing:
    When you purchase taxable property from a seller who is located outside of New York and you use that property in New York, you are required to pay use tax.

    Example: You buy furniture in Massachusetts and you bring it to New York State to use it in your home. You owe use tax on the furniture.

    Example: While on vacation in Myrtle Beach, South Carolina, you purchase a set of golf clubs that are delivered to your home in New York State. You owe New York State and local use tax on the cost of the golf clubs, including any charge for shipping and handling.
    Neither of these examples seem to care about whether or not I paid tax in the other state, and there's also this statement:
    If a sales tax has not been collected by the seller on a taxable sale, or when taxable items or services are used in New York and the New York sales tax has not been collected, you must report and pay tax directly to the Tax Department.
    So I probably have to pay a use tax on top of the already-paid sales tax for that $40 case of beer.
    Post edited by TheWhaleShark on
  • George PatchesGeorge Patches
    The real question is did you use that case of beer in the state of NY.
  • HMTKSteveHMTKSteve
    Credit for sales taxes paid on purchases outside of New York State

    If you paid state or local sales taxes on your purchase of property or services outside of New York State, you may be eligible for a credit against your New York State use tax for the tax paid to the other state or local jurisdiction. To determine whether the tax you paid qualifies for a credit against New York State and local tax, see Publication 39, A Guide to New York State Reciprocal Credits for Sales Taxes Paid to Other States.

    Federal excise taxes, customs duties, and taxes and fees you paid in foreign countries are not allowed as a credit against any New York State or local sales or use tax that you owe.
  • SquadronROESquadronROE
    Where are you seeing that they were given a 5 year exemption? Even if so, I'm not seeing that this is unfair at all. So they were given a 5 year exemption and now (very early in the tax season still) they are telling you how much you have to account for.

    Nothing about this seems unfair in the slightest. I live in your state and don't see anything wrong with it, you just pay the Use tax like you would any other year. The only difference is that Amazon is giving you a specific number, unlike Newegg or eBay or whatever where you have to figure it out yourself.

    All in all, I think it's actually a good thing! They're doing me a favor.
  • TheWhaleSharkTheWhaleShark
    The real question is did you use that case of beer in the state of NY.
    Do you know me? Of course!

    Now, do I only owe the use and sales tax on the portion of the beer that I used in New York? If so, I think I'm actually owed money!

    @The Tick: Yeah, I saw that publication. It's pretty straightforward math. Of course, the really irritating part is that if I've purchased something outside of my local jurisdiction in New York at a lower combined tax rate, I still have to pay the difference based on the local tax rate in my primary residence.

    So if I purchase something out in Syracuse (~7% effective tax rate), and bring it back to Albany (8.25% effective rate), I have to pay that difference too.

  • Luke BurrageLuke Burrage
    Where in South Carolina do you all live? I'm visiting Charleston tomorrow, and want some travel/tourist advice. Are there any good second hand bookshops in the city?
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