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My new CPA wants me to add up internet purchases for the year and pay tax. Previous one didn't . Curious what percent of people do this . Do you pay taxes on your internet shopping?
Yes
No
I have Amazon.com in my pants...

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My new CPA wants me to add up internet purchases for the year and pay tax. Previous one didn't . Curious what percent of people do this . Do you pay taxes on your internet shopping?

I assume you are talking about your state's use tax. Here we have the option of either adding up our out-of-state purchases or pay a percentage of our taxable income.

PSU
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I have been reporting online purchases for several years. I don't want to cross the CA FTB when they have the law clearly on their side.

Now that Amazon is collecting sales tax, the amount Amazon has already collected applies. For our taxes this year, Amazon had already collected about half.

We make a couple of international purchases a year. This year international purchases were around $400. International purchases are reported to customs and are likely easily traced.
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I try to pay my New Jersey End Use Tax each year. My friends think I am crazy, but I wonder what would happen if they were audited and could not even come up with a good-faith attempt at paying tax due.

My biggest supplier is Amazon.com, but there are others too. The tax in NJ is 7% for most things. If I buy something from out of state, and the selling state collects no sales tax, I must pay 7%. If the state collects less than 7%, I need pay only the difference.

The biggest trouble with paying the tax is knowing what items are taxable and what ones are not. Long ago, I got a booklet from the state with the rules that are too ambiguous to follow. They include two tables; one is taxable items and the other is nontaxable items. Both were labeled as being incomplete. There may be rhyme to it, but no reason. Books are taxable, magazines are not, unless you have a subscription, in which case they are. (I may not have this straight.) But what about the items not in either table?For example, is a toy piano a toy, or a musical instrument? For most people, it is just a toy, but for some, it is definitely a musical instrument. A friend of mind has played toy piano at Carnegie Hall.

https://www.youtube.com/watch?v=-Sr8YP1zWl8

That is no kid banging on a toy. (I think she is actually playing two toy pianos.) She also is a serious player of adult pianos. Here she plays a Modern Love Waltz that she arranged from a piece of the same name by Philip Glass. with the left hand on a Steinway and the right on a Schoenhut.

https://www.youtube.com/watch?v=fPUg0OIbkc4

(Satie Blues, by Toby Twining)

And I notice Amazon.com charges NJ tax on some items and not on others. But I can find no current list of taxable items or nontaxable items. So it is pretty much hopeless.
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I have to say no because I live in a state with no sales tax.
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I have to say no because I live in a state with no sales tax.

You can vote either way and be correct.
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It seems to me that end-use taxes are unconstitutional. Not that I have a ghost of a chance of persuading a court with suitable jurisdiction of this. Because it is a duty that must be paid to import something from one state to another. Sections 9 and 10 of Article I.
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Do you pay taxes on your internet shopping?

There needs to be a "Sometimes" in the poll.

Some vendors charge the tax, some don't. I pay when I'm charged, and don't otherwise.

Eric Hines
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it is a duty that must be paid to import something

Or it's a (sales) tax on a purchase made from within the State charging the tax, just like it charges on any other purchase. Since the State isn't charging more than the difference between its own sales tax and the sales tax charged by the State from which the purchased item is sold, you really will have a hard time convincing the court it's a duty and not a sales tax.

And there's the added complication that States are allowed to charge explicit duties on other States' exports or on imports into the charging State, so long as the duty is used exclusively to satisfy the importing State's inspection requirements (see, for instance California and plant inspections), with any "profit" on the duty turned over to the Federal Treasury. Good luck here, too, in the accounting contest to show a State is over charging its Duty and not turning over the excess.

Eric Hines
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there's the added complication that States are allowed to charge explicit duties on other States' exports or on imports into the charging State, so long as the duty is used exclusively to satisfy the importing State's inspection requirements

That is true and accepted in the Constitution. But since New Jersey does not inspect stuff imported into the state from New York State, they do not have any inspection costs, so thy should be turning over their entire revenue from the end use tax to the U.S.Treasury. What do you suppose the chances are that Governor Cristie is doing that?

Not only would any New Jersey Court I tried to bring such a case to it throw it out, unheard, I could probably not find a lawyer to take the case unless I paid his fees and costs up front. Even then, he might risk getting disbarred for bringing a frivolous case to court. And it is not a state issue anyway, since if it is an issue, it is a Constitutional one anyway.

I cannot be the first person to have thought about this, and since end use taxes have not been deemed by the Supreme Court to be unconstitutional, I pay the tax. But I grumble.
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I don't know where you live and the amount of enforcement in that location might make me feel differently, if I lived where you do.

That said, if my CPA ask me that question:

#1 I would tell my CPA I made no internet purchases this year without paying tax.
#2 I would get a new CPA for next year.

Many online places now charge sales tax and what your CPA would be asking me to do is determine which online purchases have and have not charged sales tax. I pay these bills with credit card and I don't keep sales receipts for either online or any other routine purchases. I do scan my receipts for items that I might need to know the value of in the event of a theft for example.
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That said, if my CPA ask me that question:

#1 I would tell my CPA I made no internet purchases this year without paying tax.
#2 I would get a new CPA for next year.

==============================
Why? Any decent CPA SHOULD be asking the question.
We include it on our organizer/questionnaire.

In Wisconsin, you cannot e-file your state return without entering an amount of use tax due, OR checking a box to affirmatively state that you had no taxable purchases on which use tax was not paid.

Bill
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That said, if my CPA ask me that question:

#1 I would tell my CPA I made no internet purchases this year without paying tax.
#2 I would get a new CPA for next year.


Part of my job as a tax professional and CPA is to make sure my clients are informed about various laws that apply to them. There are way too many laws to tell everyone about everything, so I ask questions to help guide me on what to talk about with clients. This would be one of those potential questions.

Now perhaps you already know about the law and choose to lie to me to get the results you want. If, however, I find out about those lies, I'll probably look for a new client next year.

--Peter
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Many online places now charge sales tax and what your CPA would be asking me to do is determine which online purchases have and have not charged sales tax. I pay these bills with credit card and I don't keep sales receipts for either online or any other routine purchases. I do scan my receipts for items that I might need to know the value of in the event of a theft for example.

I found it easy to determine use tax due on online purchases. I get an email receipt with purchase confirmation. It is easy to set up a folder to move those receipts until tax time. The email account I use also has excellent search capabilities.

Also, Amazon purchases are the bulk of my online purchases. I can look up all my purchases under the account tab and add up the amount to be taxed.

I prefer to go through the trouble rather than risk being audited and/or having to pay an estimate based on income. I checked actual vs estimate and it is definitely lower.

- zol
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Peter do you ask your clients about any non-internet services or products they purchase during the year on which they have not paid sales tax? Some jurisdictions have taxes on services - so would you ask about the kid who shovels someone's snow or mowers someone's lawn? What about garage sales? Some how I think not.

I do not advocate breaking the law. But I so not accept the idea it is my duty to collect and pay sales tax. If government wants money there are plenty of clean, efficient ways to collect that do not require citizens to sort out the hundreds of receipts. Income tax is clean. Sales tax collected from sellers is clean. Property Tax is clean. Inheritance tax is not so clean in my view, but it is a one time time.
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Peter do you ask your clients about any non-internet services or products they purchase during the year on which they have not paid sales tax?

Yes. It's a question on my standard questionnaire.

And I don't ask this question to be some collection goon for the state. I'd prefer not to have to deal with it. But I can't just ignore the issue, either.

Mainly, I ask to protect myself. If I have a client that gets nailed for sales/use taxes on out of state purchases, they're going to look to me and ask why I didn't inform them of this tax and help them report it. I can then drag out the questionnaire THEY filled out and say look - you said you didn't have any so we didn't report any on your tax return.

--Peter
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Peter do you ask your clients about any non-internet services or products they purchase during the year on which they have not paid sales tax? Some jurisdictions have taxes on services - so would you ask about the kid who shovels someone's snow or mowers someone's lawn? What about garage sales? Some how I think not.

Tax prepare's need to ask about local taxes, whether it is city, county or state. Paid preparers can't just ignore taxing agencies, and hope that their clients won't be caught. If you choose to lie to your tax preparer that is your option, but your tax preparer can also choose not to keep you as a client.

Locally, a resident can hold 2 garage sales a year and not be responsible for collecting sales tax or obtain a license. The enforce is that neighbors get annoyed with too many garage sales and report the offender to the city.
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I do not advocate breaking the law. But I so not accept the idea it is my duty to collect and pay sales tax.
====================================
But it is. If you buy an item in a store, you pay the tax. Instead, you have Amazon deliver it to your doorstep. (Which is probably where UPS will leave it, in plain sight for any interested thief.) Either way, you owe the tax.

If you think checking through your receipts is a pain, it saved you a trip to the store.

Bill
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Why? Any decent CPA SHOULD be asking the question.

I've used a CPA, I've used TurboTax. No one has ever asked me this question. Maybe because I don't file a state return? The fed gov't certainly has no interest in sales tax issues.
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you have Amazon deliver it to your doorstep . . . you owe the tax.

Bill Amazon happens to be the the 2nd or 3rd (depending on year) largest place I make retail purchases (I am neglecting car sales) and they do charge sales tax.

And yes receipts are the issue. My wife and I purpose literally hundreds of items on the internet each year. My feeling is over half of my purchases charge tax, but I don't know. Further with regard to those who charge sales tax, I do not have a clue if they charge me the correct amount - since we have state and local sales taxes.
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And yes receipts are the issue.

That is your and not the CPAs problem.

My wife and I purpose literally hundreds of items on the internet each year. My feeling is over half of my purchases charge tax, but I don't know. Further with regard to those who charge sales tax, I do not have a clue if they charge me the correct amount - since we have state and local sales taxes.

You don't need to know. Add up the purchases and sales tax paid, then report the amounts. Whether or not an individual purchase was correct isn't an issue.
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You don't need to know. Add up the purchases and sales tax paid, then report the amounts. Whether or not an individual purchase was correct isn't an issue.

You really would need to add up the taxable purchases, and the sales tax paid.
If it wasn't a taxable purchase, then I don't believe you have to pay use tax. (of course that probably varies by state - but I would *hope* that holds true)
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That said, if my CPA ask me that question:

#1 I would tell my CPA I made no internet purchases this year without paying tax.
#2 I would get a new CPA for next year.


I agree with Bill and Peter. All states that have a sales tax have a corresponding use tax to soak up the sales tax that would have been paid if the purchase was made in-state. Those states that ask about out-of-state purchases on their income tax returns all have jurat statements that the individual signs that affirm that all the entries on the return are truthful and are subject to prosecution under perjury laws.

Ira
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Peter do you ask your clients about any non-internet services or products they purchase during the year on which they have not paid sales tax? Some jurisdictions have taxes on services - so would you ask about the kid who shovels someone's snow or mowers someone's lawn? What about garage sales? Some how I think not.

I can't speak for Peter, but I doubt any of us tax professionals would since those services were performed in-state and, if subject to sales tax, the responsibility would lie with the vendor, not the purchaser. Use tax only comes into play with purchases made out-of-state.

Ira
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Peter do you ask your clients about any non-internet services or products they purchase during the year on which they have not paid sales tax? Some jurisdictions have taxes on services - so would you ask about the kid who shovels someone's snow or mowers someone's lawn? What about garage sales? Some how I think not.

I can't speak for Peter, but I doubt any of us tax professionals would since those services were performed in-state and, if subject to sales tax, the responsibility would lie with the vendor, not the purchaser. Use tax only comes into play with purchases made out-of-state.


Responding to my own post, (still waiting for that "edit post" feature) My answer was only with regard to asking about sales tax paid to kids mowing lawns or shoveling snow, not asking about non-internet taxable purchases in general.

Ira
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You really would need to add up the taxable purchases, and the sales tax paid.

True, Since I don't normally buy perishable items online, it isn't an issue for me. Last year, only one item wasn't taxable.
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I would get a new CPA for next year.

This mentality explains why my family members won't let me do their taxes.

"How much did you win on that scratch ticket?"
"I'm not reporting that!"

- Megan
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This mentality explains why my family members won't let me do their taxes.

Below is a reason not to help some family members with their taxes.

http://abcnews.go.com/US/wireStory/shot-detroit-fight-tax-re...
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