
Connecticut Hunting Down Online Shoppers Who Didn't Pay Sales Tax - mhb
http://www.courant.com/politics/hc-pol-online-sales-tax-20180214-story.html
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k2enemy
_“Usually we don’t have the data, but in several cases companies have said …
we’ll squeal on our customers and you can beat up on them,” Sullivan said.
“The people who sold to them have ratted them out.”_

Seems like a weird thing for the commissioner of the tax department to say if
the tax department is trying to solicit the cooperation of said companies.

~~~
giarc
I agree, I had to read that sentence a few times to make sure I wasn't missing
some end quotes.

I imagine this is a case of a tax guy not used to the spotlight, finally
getting in the spotlight and not using PC language.

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heartbreak
If you come to the comments without reading the article, just know that
Newegg.com is the last place you want to go the next time you need a part for
your PC. They turned over at least 4 years of customer sales data to the State
of Connecticut evidently without any real pressure applied by CT, and now CT
residents who made purchases on Newegg as far back as 2014 have received a tax
bill.

~~~
DoofusOfDeath
Only sounds like a problem for people who want to break the law.

~~~
larrik
It's a stupid and relatively unknown law.

~~~
lostcolony
Stupid, yes, unknown, no. Every piece of tax software I've used has asked "Did
you make purchases online without paying state sales tax?", and in saying
"Yes", will ask you how much you spent. Now, obviously, I don't keep receipts,
so I just estimate, but paying an extra $30-50 at tax time just to ensure that
it looks good to the IRS, -and- if something like this happens it looks like I
paid, is worth the piece of mind.

~~~
js2
The IRS doesn’t care about state sales tax. Your state agency is probably
called something like the Dept of Revenue. Overpaying taxes “just in case”
seems like an odd strategy to me.

It’s hard to believe anyone doesn’t know they are responsible for paying their
own sales tax on out of state transactions. It’s on the state tax forms, the
tax software asks about it, your tax preparer will ask about it, etc. It was
also big news when the states were going up against Amazon for collecting
sales tax. Besides that, ignorance of the law is never an excuse for breaking
it.

Anyway, NewEgg has to have known that some consumers were purchasing from them
to avoid sales tax and that this will lead to reduced sales.

~~~
dgzl
> It’s hard to believe anyone doesn’t know they are responsible for paying
> their own sales tax on out of state transactions.

I really wish you were being facetious. I get the feeling you'd be very
surprised to learn about your fellow citizens and their knowledge of American
tax laws.

> Ignorance of the law is never an excuse for breaking it. I disagree. From
> the perspective of someone who doesn't know the law, how are they supposed
> to follow it? Even an intelligent and competent person doesn't know all the
> laws, especially in America. I would wager that every person in this forum
> has broken at least one law without knowing it.

~~~
js2
I wasn't making a moral/ethical argument. Ignorance of the law is generally
not a defense you can use in court.

------
AdmiralAsshat
> _“Newegg Inc. has provided the Department of Revenue Services records of
> your online purchases during taxable years 2014, 2015 and 2016,” the letter
> reads. “According to these records, you made purchases from Newegg in at
> least one of these years but were not charged Connecticut sales tax.
> Therefore, you owe state use tax on the items you purchased because you did
> not pay sales tax to a retailer.”_

Well, that's the last time I'm using NewEgg.

~~~
dahdum
Yeah...they used to be the good guys fighting against bs patents. Now they are
ratting out their customers?

~~~
chimeracoder
> Yeah...they used to be the good guys fighting against bs patents. Now they
> are ratting out their customers?

I'm pretty sure the state of Connecticut is to blame here, not NewEgg. It's
not NewEgg's job to violate tax laws on its customers' behalf. If Connecticut-
based customers dislike the actions of the state (which I hope they do), it's
on them to make that known to the state.

The only language that makes NewEgg look like they are proactively giving up
this data comes from a spokesperson for Connecticut itself, who has a vested
interest in making it look like NewEgg is to blame, not the state.

~~~
devinl
No this is an issue with Newegg. They had the option to either "Begin
collecting sales tax from Connecticut customers going forward and send that
money to the state, or turn over the records."

They chose to give their records to the government which causes a major hassle
for those users (and increases the likelihood that those records get breached,
infringing on users' privacy). They did this at the expense of potentially
hurting future Newegg sales because they'll have to honestly show users the
tax while they are buying things, rather than having the government hunt down
users later on.

~~~
oldandtired
The problem is not Newegg. The problem is the system of federal, state and
local tax regimes that are in play. Since there is no uniformity at any level
across the board, you will have these problems rise up.

Newegg and all companies that exist within the confines of the US national
borders have a legal requirement to do certain things. This is no different to
what the citizens are legally required to do.

If the state imposes a "use tax" on your purchases then you are required to
follow that up. If the legal requirements are that companies are to give the
purchase records to the state authorities, then that is what will happen.

Just because you find it objectionable is irrelevant.

However, if you want to start a grass-roots objection to these tax regimes
then start with your local, state and federal politicians. Make it plain that
they will no longer be getting the popular vote and that their cushy jobs will
be taken from them permanently.

But, as you most likely know this will not happen and the situation will not
change as the general populous has no interest in the matter.

------
Sir_Cmpwn
Why isn't CT going after NewEgg for failing to incoporate sales tax into their
checkout process? No one expects to be personally responsible for sales tax,
considering all of the transactions they're used to have the seller
incorporating sales tax into the price paid. Pushing that burden to the
consumer and surprising them with a demand for unpaid taxes they didn't know
existed is unethical.

~~~
giarc
RTA

>The issue of imposing sales tax on out-of-state purchases ultimately may be
settled by the Supreme Court.

>In a 1992 case dealing with a mail-order office supply company, the court
ruled that states could not require companies that did not have a physical
presence in their state to collect sales tax.

It goes on to say that South Dakota has passed a law saying out of state
retailers need to collect state sales tax, but that the supreme court has
agreed to hear a challenge to the case.

~~~
Sir_Cmpwn
Right. What I'm arguing is that if they can't make the sellers collect sales
tax, then they _can 't collect sales tax at all_. Expecting consumers to keep
track of sales tax themselves for every little purchase (often hundreds per
year!) is nuts.

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neverminder
Maybe this sounds naive, but as a European I'll never understand this, why
doesn't US just implement country wide VAT?

~~~
gph
This is about state-level tax revenue, not federal-level. Plenty of states
don't have a sales tax.

~~~
neverminder
I guess what I was trying to say why don't they just scrap all state sales tax
in favor of one country wide tax like VAT.

~~~
ergothus
US attitudes and logic about taxes are quite different, particularly in the
last 30 years. In my mind, the main difference is the attitude about the role
and benefits of govt - see the "you didn't build that" debate, that I believe
would viewed as obvious in most European countries and yet was used as fodder
for political attacks in the US.
[https://en.m.wikipedia.org/wiki/You_didn%27t_build_that](https://en.m.wikipedia.org/wiki/You_didn%27t_build_that)

~~~
nybble41
The "you didn't build that" debate is an excellent example of why the role of
so-called "public goods" should be minimized at all costs. Normally, when
someone else has a good or service you'd like to use, you negotiate a price
and—assuming you reach a mutually agreeable accommodation—pay them for the
privilege at the time of use. That's the end of it; the books remain balanced.
Contrast this with the "you didn't build that" argument, which amounts to "we
think you once may have benefitted from something we did without consulting
you, so you owe us a share of your profits from now until the end of time". As
a _moral_ argument (i.e. saying that an individual _should_ contribute back
voluntarily) this claim is tenuous at best; as a justification for simply
_taking_ a share of the profits (i.e. taxation) it falls completely flat.

~~~
ergothus
Interesting. I see it as a bit orthogonal: Even if you negotiate with private
parties, you are still dependent upon the system and should support the
system. In many cases this is public goods, but any system (free market, a
positive anarchy, socialism) has actions you can take to support or oppose
(make harder) the system.

In essence: Unless you're in the woods fashioning your own clothes, tools,
shelter, education, communication, transportation, health care, using only
natural resources that fully replenish, you're dependent on some system. The
level of dependency varies, and the nature and level of support varies, but it
is present.

> which amounts to "we think you once may have benefitted from something we
> did without consulting you, so you owe us a share of your profits from now
> until the end of time".

A fairly biased-sounding interpretation, particularly the "once may have
benefitted". The whole point of the argument is that there are so many assets
that are not of your making: Educated workers. Healthy workers. Means of
transportation. Educated customers. Healthy customers. Ways to communicate. I
can see arguing if these are more/less efficient or reliable via free market
vs another system, but to say "once may have benefitted" is pretty
disingenuous. Heck, living to be old enough to MAKE the clever decisions,
being educated enough at that time (oh, you were home schooled? How did your
instructor learn what they learned?) and healthy enough (how do we know what
IS healthy? One need only look at certain remedies that are still passed
around today to see we can't just count on our own opinions on cause/effect)
and had customers likewise, and a common currency, not to mention not having
someone with enough friends and weapons take everything away from you - these
didn't manifest because someone is just that awesome, they are the result of a
system.

Re: Taxation, here's a libertarian-friendly argument: Let's imagine a group of
people get together and agree to a set of rules. They agree on consequences
for breaking those rules. Now you have a govt and taxation. "But _I_ didn't
choose these!" you declare. True. I support that people should be able to
revoke their citizenship and leave. "But it's not fair to have these rules
forced upon me! I should be able to stay, or..." It totally isn't "fair". Or
is it? How do you define "fair"? Regardless, there are number of ways to set
your own rules that have been proven to work: negotiate a price in a mutually
agreeable accommodation with enough people to enforce the rules you want. We
call this government, and one of the rules is taxation. Most agreed-upon sets
of rules define additional ways to change the rules, but with or without those
changes, all governments are such systems.

I truly do support the idea that people should be able to revoke their
citizenship, because being born and early childhood are a place where you have
no choices - but you don't get to keep "your" land and "your" property when
they ARE the result of the system you are rejecting. An investment manager
doesn't get to keep all the profit they generate because THEY increased the
value - a 200% return is still 0 if you start with 0. But yeah, if anyone
wants to leave that isn't a criminal, I think the system should support it.
They are welcome to find some place to live that isn't already under the
control of a group of free-thinkers that have leveraged their natural talents
to be able to enforce their rules. Good luck to them.

Outside of that, I don't understand the argument that governments are somehow
inherently evil when they are the direct result of the very principles that
argument is arguing in favor of.

~~~
nybble41
_Even if you negotiate with private parties, you are still dependent upon the
system and should support the system._

What "system"? You don't need any "system" to negotiate with another private
party for mutual benefit. I have something you want, you have something I
want, we agree to trade—done. No one else can take any credit for that.

 _A fairly biased-sounding interpretation, particularly the "once may have
benefitted"._

I disagree, but it works just as well if you drop the "once may have" part and
abbreviate it to "we think you benefitted from something we did without
consulting you". Doing something which you think benefits someone else does
not entitle you to compensation. Compensation must be negotiated and mutually
agreed to _in advance_. If you don't have an agreement like that in place then
you have effectively chosen to grant the other party a gift. You may argue
that they _should_ reciprocate (though they can reasonably disagree—what you
see as beneficial to them may appear otherwise from their point of view) but
you are not _entitled_ to compensation for your unilateral action.

 _Let 's imagine a group of people get together and agree to a set of rules.
They agree on consequences for breaking those rules. Now you have a govt and
taxation._

No, what you have at this point is a voluntary club with membership dues. You
don't have government and taxation until you start enforcing those rules on
people who never agreed to them. At that point your club turns into a criminal
organization, similar to the Mafia. When your criminal organization grows a PR
branch and starts claiming that it's criminal actions are "legitimate" and
"for the public good", _then_ you have become a government (but that doesn't
mean you're no longer a criminal organization).

 _" But _I_ didn't choose these!" you declare. True. I support that people
should be able to revoke their citizenship and leave._

Why should they leave? They have every right to stay. That citizenship was
forced on you without your consent. You never agreed to give anything up as a
condition of rejecting it.

 _you don 't get to keep "your" land and "your" property when they ARE the
result of the system you are rejecting_

Your property rights are your by natural law, created by the mixing of labor
and unowned land and subsequently transferred between private individuals by
mutual consent, and not the result of any "system". No government has any
right to take them away.

 _I don 't understand the argument that governments are somehow inherently
evil when they are the direct result of the very principles that argument is
arguing in favor of._

Clearly you have no idea what principles those are, or you wouldn't have made
that mistake. The one thing all governments have in common is that they employ
force against people who never agreed to those rules and did not first use
force against them. That is _diametrically opposed_ to the principles that
argument is in favor of—in particular the Non-Aggression Principle.

------
zrm
This is incredibly ham-fisted. If you're going to go through the trouble of
doing the accounting and submitting the numbers to the state, just _collect
the sales tax and remit the money_.

Doing it this way has no apparent advantage at all and several disadvantages.

It's worse for privacy, because if you remit sales tax then the state knows
your total for the state, not who your customers are and how much they spent
with you (obviously a problem for specialty retailers).

It's worse for bureaucracy and waste, because instead of automatically paying
at the time of purchase, everyone has to fill out separate paperwork and pay
separately.

And it's worse for small businesses, who now retroactively have to waste time
unscrewing this because Newegg just told the state that they owe a bunch of
sales tax they may not actually owe, because the parts they bought were either
resold to customers not in Connecticut or resold in Connecticut where the
small business itself already collected the sales tax.

~~~
giarc
The advantage to Newegg is that they don't have to add 6.75% to their prices.
Things look cheaper.

~~~
zrm
Disguising the true cost of a purchase is not something I would file under
_advantages_ , and neither will Newegg when their customers stop doing
business with them after discovering that they've unnecessarily foisted this
accounting burden onto the customer.

~~~
giarc
It is an advantage since they, and their competitors are not required to
collect the sales tax. Therefore if a person is price comparing across two
sites, 1 with an extra 6.75% and 1 without, the person is likely to choose the
lower price, even if they are required to pay the tax personally down the
road.

~~~
zrm
The market value of putting off paying $18 in sales tax for six months at 2%
interest is $0.18. Not a lot of people will be signing up to fill out
paperwork for ~$0.18.

Especially when, because it happens at scale, it only means the state has to
raise the tax rate by that amount to raise the equivalent revenue to cover the
bond interest it has to pay because it didn't get the money sooner.

~~~
giarc
I'm not sure what you are arguing at this point. Newegg is not required to
collect sales tax, nor are they incentivized to do so either.

~~~
zrm
As far as I know they are not required to provide the state with this
information either, which they are incentivized to do _even less_ because
customers are very much going to hate it, even more than they would dislike
paying the sales tax up front.

~~~
giarc
The lawyer quoted in the article seems to imply it's an act of good faith
providing the records.

"I do think it’s an overreach, but the discussion we have every day with
clients is how much risk are you willing to take?” he said. “If you want to
tell Connecticut to go pound sand, we can do that. If you want to have a
discussion about when to begin collecting tax on your terms, we can do that as
well.”

------
throwaway2016a
I have a relative who lives in Connecticut and was telling me he got an email
from New Egg with three years worth of purchase history on it and a notice
saying that they would be sending a copy to the state.

Starting to collect new taxes is one thing but collecting back taxes for three
years just doesn't seem right.

This isn't behavior CT invented, though. I live in New Hampshire (that has no
sales tax) and would often hear stories of Massachusetts state police camping
out at the border doing spot checks to make sure people paid their taxes. No
idea if they were "boogey man" stories or real though.

The sales tax system in the US is horribly complex. That's why while companies
have popped up to help online retailers navigate it.

~~~
bsg75
If those troopers are the same state police who are primarily charged with
traffic enforcement and public safety, using them as revenue agents sure seems
like a misuse of public resources.

I wonder if they collect enough tax revenue to cover salary.

~~~
tlrobinson
> misuse of public resources

Is it still misuse if it’s net positive for the state?

~~~
bsg75
I guess it depends on perspective, and how the net is measured.

If net positive _revenue_, and your perspective is stage budget (or you
benefit from state funding) its a win.

If the net is a calculation of revenue, public safety, and overall community,
maybe not.

Troopers are generally traffic and criminal law enforcement agents - public
safety. Tax law enforcement may be the jurisdiction of state police in that
region, but its rare to use patrol to enforce those laws. There is typically a
division specific to revenue.

Taking focus from patrol away from the enforcement of criminal and traffic
laws and pivoting that to securing the state budget would be considered by
many to be a misuse.

If troopers are looking for unpaid taxes, who is looking for reckless or drunk
drivers? Who is conducting area patrols where visibility is a much a crime
deterrent as actual arrests?

What probable cause is used to stop any car at the state border and look at
receipts? Traffic violations do not provide for vehicle searches, and IIRC
there are no dogs that sniff out undocumented expensed.

Such divisions in jurisdiction are in place so that the "long arm of the law"
does not get too long.

------
tfandango
Oklahoma state tax always had a line item for internet purchases, where you
either had to tell them a total amount spent, a promise that you spent nothing
online, or an agreement to just pay a small percentage of your taxable income.
I always thought this was stupid as I buy a bunch of little things online. I
always grudgingly paid the percentage but recently the state stopped asking
this because something like 90% of people said they don't buy anything online.
Amazon does charge OK tax now.

------
DisgracedCarrot
The tiny little conspiracy theorist in me wonders if these records will be
used to establish probable cause to search for people who may be mining Crypto
and not reporting the income. Why else, of all places, would they start the
fight with Newegg?

Either way, this state is broke and will do anything to dig themselves out of
the grave they've dug.

~~~
giarc
RTA

"Newegg and other companies gave up their customer records in response to
letters that the state tax department sent last summer to about 150 online
retailers that have significant sales to Connecticut residents."

------
larrik
I was already pretty unhappy with both Newegg and Connecticut, and then I got
this email from Newegg.

It's very frustrating.

------
DanCarvajal
I mean, most states do have some sort of Use Tax, and if you don't pay it you
can get in trouble.

------
mhb
Is it possible to pay anonymously and ship to a non-home address (e.g., P.O.
Box or locker)?

~~~
ars
If you're going to do that, just ship to a state without taxes and then go
pick up the item.

