Downloads Taxable in Wisconsin
- Thread starter Spiderman
- Start date
Oversoul
The Tentacled One
Sorry for another journalism gripe, but the headline (Wisconsin To Start Taxing Downloads in October) on this one is WAY off. If this becomes law, it won't be a downloads tax. It'll be a sales tax. When I first read the headline, I thought, "I guess I'm glad I don't live in the apparently totalitarian state of Wisconsin." Then when I read the actual article I realized that if I did live in Wisconsin, I wouldn't be affected by this at all: everything I download is free (and legal). I don't think this is pedantic. It's a huge difference. For example, where I live, both the state and the county have taxes on prepared foods (purchased at restaurants and such). That's not an "eating tax." It's a sales tax.
I agree; it says it's a sales tax in the article. I guess whoever wrote the headline thought the current would be more exciting though.
I guess the question is, how long will it take other states to follow suit (I think a couple already have a similiar law)? With the current budget woes of every state, they're gonna be looking at any possible source of revenue...
I guess the question is, how long will it take other states to follow suit (I think a couple already have a similiar law)? With the current budget woes of every state, they're gonna be looking at any possible source of revenue...
Mooseman
Isengar Tussle
Here's a question about this, "a 5% sales tax on all digital content purchased in Wisconsin", what if the selling company is in Ohio? Which state collects the sales tax? Do both? Seller state or buyer state? What if it's overseas? What if I sell my magic cards on ebay to someone in Wisconsin? I can see lots of problems with this type of taxation.
Oversoul
The Tentacled One
Good question. I know the state of Oregon has no sales tax. I've never bought anything there personally, but I guess it used to be that nothing a Washington resident bought there was subject to our sales tax. Then more recently I guess the state decided to start collecting on what they could and went after things that had to be registered, like cars. But I don't know about a situation where both states have sales tax. Maybe the issues with this are part of the reason taxes specifically on downloaded purchases haven't been done by other states already...Mooseman;279902 said:
And what if the major sellers of this content start refusing to sell to Wisconsin residents?
Mooseman
Isengar Tussle
I doubt that, those people just have to pay the tax.... I live in PA and there are some sites that charge sales tax on purchases in PA.....Oversoul;279956 said:
So if I sell something on E$bay to someone in Oregon, who collects the sales tax? PA, OR or both. I bet it gonna be both at some point......
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EricBess
Guest
A lot of the laws involving sales tax have to do with where businesses have a physical presence. I'm not sure exactly how those laws work or how they would apply to virtual goods.
The Washington/Oregon thing is pretty interesting. Technically, stores in Oregon are supposed to charge sales tax to people who live in Washington, but unless the product needs to be delivered or registered, nobody bothers and it isn't worth cracking down on. I spent 5 years in Vancouver, just north of Portland and there literally are no electronics stores in Vancouver because they wouldn't be able to compete.
On the flip side, stores in Washington still need to charge sales tax, regardless of where you live. Many stores in Vancouver have a policy that if you show an Oregon ID, they will pay the sales tax for you.
Income tax is similar. Washington has no state income tax. If you live in Washington and work in Oregon, however, you are required to pay Oregon state income tax. Likewise, if you live in Oregon and work in Washington, you still must pay Oregon income tax. Personally, something seems wrong with all of that to me, but it's the way they do things. I don't know if it is specifically some sort of agreement between the two states or if there are federal laws that require this sort of taxation.
BTW - I do know that in most cases, companies that sell to out-of-state people either aren't required to charge sales tax, or are required to charge sales tax based on where the goods are sold. I'm not 100%, but I believe the not charging has to do with wholesale vs. retail sales. There are companies that make a decent living just selling software to calculate sales taxes because of this.
The Washington/Oregon thing is pretty interesting. Technically, stores in Oregon are supposed to charge sales tax to people who live in Washington, but unless the product needs to be delivered or registered, nobody bothers and it isn't worth cracking down on. I spent 5 years in Vancouver, just north of Portland and there literally are no electronics stores in Vancouver because they wouldn't be able to compete.
On the flip side, stores in Washington still need to charge sales tax, regardless of where you live. Many stores in Vancouver have a policy that if you show an Oregon ID, they will pay the sales tax for you.
Income tax is similar. Washington has no state income tax. If you live in Washington and work in Oregon, however, you are required to pay Oregon state income tax. Likewise, if you live in Oregon and work in Washington, you still must pay Oregon income tax. Personally, something seems wrong with all of that to me, but it's the way they do things. I don't know if it is specifically some sort of agreement between the two states or if there are federal laws that require this sort of taxation.
BTW - I do know that in most cases, companies that sell to out-of-state people either aren't required to charge sales tax, or are required to charge sales tax based on where the goods are sold. I'm not 100%, but I believe the not charging has to do with wholesale vs. retail sales. There are companies that make a decent living just selling software to calculate sales taxes because of this.
That seems strange. I would think that even though a state where you work collects tax, the state where you live (and file) has some way of offsetting/reclaiming it. I haven't been in that situation, but I use TaxCut and just recently prepared my taxes and with Maryland, I always get the question of "Have I had taxes withdrawn from my paycheck in another state" or "Have I worked in another state", something to that effect. I would think the same type of thing would be similiar to all states.
I don't think it's a federal thing - they just want a cut of your taxes no matter where you've worked
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rokapoke
Guest
Isn't it free to do your taxes online via the IRS? I know you can do PA taxes online for free.Mooseman;280041 said:
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BigBlue
Guest
This isn't new... other states are doing it too.
I believe that when you shop (online or via mail order) and it is across state lines you don't pay a sales tax in the majority (if not all) states... States don't have jurisdiction for intrastate commerce - only the US gov't does.
Of course, living in one of the last 1 or 2 states without a sales tax... it doesn't really apply to me.
EDIT - That's Interstate, not Intrastate.... Doh!
I believe that when you shop (online or via mail order) and it is across state lines you don't pay a sales tax in the majority (if not all) states... States don't have jurisdiction for intrastate commerce - only the US gov't does.
Of course, living in one of the last 1 or 2 states without a sales tax... it doesn't really apply to me.
EDIT - That's Interstate, not Intrastate.... Doh!
Mooseman: I don't know, I've always used Tax Cut. It's pretty straightforward to me, but then, I've been using it for the past 7 or so years. And I was especially glad when Turbotax apparently installed some malware or something on your computer one year
rokapoke: It's probably free if you meet certain criteria, like a certain income amount.
rokapoke: It's probably free if you meet certain criteria, like a certain income amount.