Ambiguous receipts cost thrifty couponers

refund of sales taxes

refund of sales taxes

PA-lgSales tax rules often confuse customers and businesses alike. Perhaps the only thing more perplexing is the process of seeking a refund of sales taxes from the state when customers are overcharged. A group of Pennsylvania customers of the popular BJ’s Wholesale Club learned this lesson recently when a state appeals court threw out their lawsuit seeking such a refund.

The BJ’s customers purchased various items from the wholesaler using coupons. But BJ’s assessed state and local sales tax based on the non-discounted price of the items. The total sales tax paid was relatively low – about $3.50 per item – but the customers argued they should have paid less after taking the coupons into account.

The customers initially filed a class action against BJ’s in a Philadelphia court. But in Pennsylvania, customers must take their case for a refund of sales taxes directly to the state’s Department of Revenue. Although the customers initially asked for a hearing before the department, for some reason they withdrew this request and instead sent a letter to the agency’s chief counsel, seeking clarification of the applicable sales tax rules.refund of sales taxes

The chief counsel responded the customers were not entitled to a refund. Under department regulations, the chief counsel said, “amounts representing manufacturer’s coupons or discounts shall be excluded from the taxable purchase price of a product if both the items purchased and the coupons are described on the cash register tape.” In other words, the coupon had to be linked to a specific item; otherwise, the customer owed sales tax on the full purchase price of the item. Here, BJ’s receipts only listed a “scanned coupon” without linking it to any particular item.

The customers asked the Board of Finance and Revenue, another agency within the department, to review and reverse the chief counsel’s determination. The board replied it was powerless to do so, as the chief counsel’s letter was merely a statement of “the Department’s position on an issue,” not a final administrative order subject to appeal. The customers then appealed to the Pennsylvania courts, which were similarly unreceptive. The Commonwealth Court of Pennsylvania, in a November 24 opinion, agreed with the department and a lower court there was no procedure under state law “for an appeal of an advisory opinion.” This means the customers must begin anew and directly ask the department for a refund of sales taxes, which the agency is likely to deny given its advisory opinion.

S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog PrivyCouncil.info

Feminine hygiene (tampon tax) sales tax exemption debated

“Tampon tax” on feminine hygiene necessities called unfair

tampon taxStarting July 1, Canada will exempt products “marketed exclusively for feminine hygiene purposes” from the federal government’s 5% goods and services tax (GST). Members of Canada’s Parliament had lobbied Prime Minister Stephen Harper’s government for years to abolish what they deemed an unfair “tampon tax” that discriminated against women. On May 25, the government responded by presenting a motion to Parliament to formally exclude “sanitary napkins, tampons, sanitary belts, menstrual cups or other similar products” from the GST. Parliament unanimously approved the motion on June 1. Subsequently, at least one Canadian province, Newfoundland and Labrador, announced plans to exempt feminine hygiene products from its provincial sales tax, which is currently 8% and scheduled to rise to 10% next year.

Fighting tampon taxes in the United States and around the world

According to a June 3 article by Taryn Hillin for the website Fusion, only five U.S. states  – Maryland,Massachusetts>, Pennsylvania, Minnesota and New Jersey – specifically exempt feminine hygiene products from state sales tax. Although most states exempt “necessities” such as toiletry and health care items from sales tax, the majority do not classify tampons as such. But as Hillin observed, “feminine hygiene products are not a choice; they’re a required part of being a woman.”

Canada’s recent action may spur some U.S. states to reconsider their own “tampon taxes.” For instance, on May 21, >New York Assemblyman David I. Weprin introduced a bill to exempt all feminine hygiene products from sales tax, which is as high as 8.875% in some parts of the state. It is unlikely, however, the full legislature will act upon the bill before the scheduled end of its session later this month.

The movement to abolish the “tampon tax” has also spread outside of North America. Joe Hockey, the Treasurer for Australia’s federal government, said in a May 25 interview he would support exempting feminine hygiene products from the country’s 10% goods and services tax. But Hockey’s boss, Prime Minister Tony Abbott, later said his government had no plans to push for an exemption at this time, adding GST rules are largely determined by the individual Australian states.

Meanwhile, in the United Kingdom, Prime Minister David Cameron said last April he would support exempting feminine hygiene products from the country’s goods and services tax, but his government could not do so unilaterally because of European Union regulations, which sets a minimum 5% tax on “sanitary products.”

S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog PrivyCouncil.info

As of November 2012, the following states tax shipping:

states tax shipping

states tax shipping

The following states tax shipping:

Arkansas
Connecticut
Georgia
Hawaii
Indiana
Kansas
Kentucky
Michigan
Minnesota
Mississippi
North Carolina
North Dakota
Nebraska
New Jersey
New Mexico
New York
Ohio
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Vermont
Washington
West Virginia
Wisconsin

Amazon’s vested interest in universal online sales tax

universal online sales tax

universal online sales tax

Marketplace-Fairness-Act
With the addition of a new Amazon distribution center in Kenosha, WI, the number one largest online retailer will soon be collecting sales tax from almost 50% of the American population.

Amazon will begin collecting Wisconsin sales taxes on Nov. 1 and the state expects to benefit to the tune of $30 million per year.

universal online sales tax

Beginning Nov. 1st, Wisconsin will become the 14th state Amazon collects sales tax for. The mega-retailer has arrangements to add at least 6 more states to that list over the next 3 years.

Amazon currently has nexus is 18 states. Nexus, a physical in-state business presence, has long been the determining factor behind which businesses have to collect sales tax. Nexus is created by brick and mortar stores, distribution centers or warehouses, call centers,  offices, sales people, and sometimes just by sending an employee to a convention.

The mega-retailer already collects sales taxes in Arizona, California, Georgia, Kansas, Kentucky, New Jersey, New York, North Dakota, Pennsylvania, Texas, Virginia, Washington and West Virginia. Amazon has a physical presence in all of those states except for Georgia and New York.

Georgia passed a law in January requiring all online retailers doing business within the state to collect sales taxes and Amazon complied starting last September. New York won a court appeal upholding the state’s right to claim nexus is created when an out-of-state retailer pays in-state affiliates a commission to promote their products or services. New York refers to this as “click-through nexus”.

Amazon shut down its Connecticut affiliate program back in 2011 to avoid click-through nexus in that state but may be thinking about restarting the program as it recently announced that it will begin to collect Connecticut sales taxes and invest $50 million over the next two years for a jobs initiative.

Amazon has distribution centers in New Hampshire and Delaware where neither state has a sales tax. It also has centers in Indiana, Massachusetts and Nevada and has agreed to begin collecting sales tax in these states in the near future.

Amazon has acknowledged that it has nexus in Tennessee and South Carolina, but made special deals with those states which allow it to postpone sales tax collections for a time. Tennessee Gov. Haslam agreed to hold off on an Amazon tax until 2014 if the retailer agreed to send notifications to all customers about how much tax they owed on their purchases going back through 2012. South Carolina made a deal that exempts the company until 2016 in return for a promised distribution center and its 1,200 jobs. The state left itself an escape clause saying the agreement would be nullified should the Marketplace Fairness Act pass and create a standardized set of federal regulations.

This patchwork of regulations, state-by-state agreements and endless legal battles seems to be the main impetus behind Amazon’s support for the Marketplace Fairness Act or universal online sales tax. This law would significantly ease Amazon’s burdens while simultaneously increasing the burden on other smaller online retailers. Amazon stands to significantly widen its lead over the competition.