California USE TAX?!

[theSoulfulMofo]

So check it....

California's so deep in the hole... for this year's state tax form, California is reinforcing USE TAX which has been in effect since July 1, 1935.

Basically, CA people must pay California use tax if you purchase an item out of state (e.g., by telephone, over the Internet, by mail, or in person) AND the seller does not collect California sales or use tax, AND you use, give away, store, or consume the item in this state.)

WTF?!

My state tax form just got 100x more complicated than federal EZ. Especially, since my online purchases are humongous...

WTF? I mean, people like me purchase online because you could save more and avoid paying sales tax... and now this bites us back in the ass!!!!

 

[melon]

Here's a little tip: figure out how they enforce the use tax. Most states have been digging up their 75 year-old "use tax" laws (cutting taxes, my ass), but have zero enforcement arms; thus, most people flat-out ignore the use tax section of the tax forms.

Melon

 

[ThatGuy]

Yeah, the California tax return booklets first mentioned the use tax last year, sort of as an afterthought. I ignored it, as I only noticed it after I had finished my returns. They're making a much bigger deal about it this year, but I ignored it again. I have no idea how I would calculate it, nor do I have any idea how they would enforce it. Although I will probably be more careful about it next year when I have to file returns for a new business I'm getting into that may be bringing in a lot of goods from out of state.

 

[nbcrusader]

Big ticket items (automobiles, for example) will capture most of the attention.

There is no way they can capture "imported" materials under the use tax. Imagine trying to track each Amazon.com package entering California alone.

Sacramento appears to have learned that you can't keep spending what you don't have. So instead of cutting spending, viola! We get the use tax hammer.

 

[melon]

But most states are doing this.

The reality is that Bush's federal tax cuts indirectly cost the states a lot of funding, and they are forced to pass the cost to you.

That's why Bush is nothing more than an a$$hole.

Melon

 

[theSoulfulMofo]

Big ticket items (automobiles, for example) will capture most of the attention.

Actually, the 540 Instructions says:

Do not report the following on your income tax return:
* Vehicles, vessels, and trailers that must be registered with DMV.
*Mobile homes or commercial coaches that must be registered annually as required by Health and Safety Code.
* Vessels documented with the U.S. Coast Guard.
* Aircraft.
* Leases of machinery, equipment, vehicles, and other tangible personal property.

There is no way they can capture "imported" materials under the use tax. Imagine trying to track each Amazon.com package entering California alone.

They could if they traded information with vendors like Amazon.com... Every Amazon.com customer has a order record which could be categorized by year. Add all that up, and you have your sales expense and then calculate sales tax.

 

[theSoulfulMofo]

Postscript:

I'm paying more state tax than what I'm getting back from federal.

 

[melon]

They could if they traded information with vendors like Amazon.com... Every Amazon.com customer has a order record which could be categorized by year. Add all that up, and you have your sales expense and then calculate sales tax.

But they have no jurisdiction under current laws, and, at that point, they wouldn't worry about "reporting requirements" to fulfill the use tax; they'd pursue vendors like Amazon.com to calculate the sales tax during the purchase.

In fact, that is what many states are trying to pursue currently, at the ire of the federal government, which is continually making it an obstacle. Until then, they are dealing with arcane laws that were never intended to deal with the internet. That shows how broke our states have become, and we pretty much have Bush to blame.

Melon

 

[nbcrusader]

The reality is that Bush's federal tax cuts indirectly cost the states a lot of funding, and they are forced to pass the cost to you.

That's why Bush is nothing more than an a$$hole.

I know you love Bush, but do you have anything to back-up your assertion?

 

[ThatGuy]

They could if they traded information with vendors like Amazon.com... Every Amazon.com customer has a order record which could be categorized by year. Add all that up, and you have your sales expense and then calculate sales tax.

Yeah, but they don't. You would hear something about it if they were. A state government organization asking a private out of state corporation to turn over their sales records? Not going to happen without some legal wrangling over privacy issues. And melon's right, the states are going after internet companies to make the companies charge sales tax at the time of purchase. Until they do that there really isn't anything to worry about.

 

[melon]

I know you love Bush, but do you have anything to back-up your assertion?

How the elimination of the federal estate tax affects state revenues:

http://www.sptimes.com/News/060101/State/State_tax_cuts_to_be_.shtml

How the Bush Administration has been dealing with the issue in general:

http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/04/27/MN303913.DTL

"Hidden taxes" for the rest of us, thanks, in part, to Bush's cut to state aid:

http://www.ndol.org/blueprint/2003_number_3/03_shakedown.html

Melon

 

[nbcrusader]

Thank you for the sources.

The elimination of the estate tax (or death tax) does have an impact on a few states - those with large retirement populations (like Florida).

The second article actually points to problems created by increased State spending during the dot.com boom. By the time the economy overheated and went into recession, states were not prepared to trim spending at the same pace.

Further, the article describes long-standing reductions in federal aid for states. Cuts made in the 80's continued through the 90's. The issue has always been there - a booming economy is what helps the states the most, not federal taxes.