Phony Florists Pay No Taxes

[LJVF]

Since I'm bored, I checked the two web retailers you mentioned.

bulbs.com should not have charged you a sales tax. From their terms of sale...



They didn't mention California.

I stand corrected.

buy.com correctly charged you sales tax. From their FAQ...

I wonder if they're based in California? If not, why do they charge sales tax?

I don't know about other small online retailers. But if they ever charged you a tax, it's possible that they made not just one, but two possible errors.

First, chances are that they shouldn't have charged you a tax (no nexus in CA) in the first place. Second, the tax table they used was most likely based on the retailer's locality, rather than that based on ship-to address. In fact, calculating a sales tax based on destination would have been a nightmare to configure in any e-commerce site. There are thousands of tax codes... Hint: do you know how much sales tax you should charge in our county? Take a look here, scroll down all the way to Suffolk county.

Far from a small online retailer, but took a look at my wifes Bath and Bodyworks online receipt in which they charged sales tax. GNC and Autozone are others that I'm 90% sure I was charged sales tax.

 

[CHR]

I wonder if they're based in California? If not, why do they charge sales tax?

From Buy.com's Company Info page:

Location
Buy.com
85 Enterprise Suite 100
Aliso Viejo, California 92656

Far from a small online retailer, but took a look at my wifes Bath and Bodyworks online receipt in which they charged sales tax. GNC and Autozone are others that I'm 90% sure I was charged sales tax.

Bath and Bodyworks, GNC and Autozone all operate B&M stores in CA, so they have a nexus and are required to collect & remit CA sales tax.

Another sales tax issue that doesn't get much exposure is the illegal practice of charging or overcharging sales tax when it isn't mandated by the government. I know of at least one dOG that uses it as a profit center.

 

[kt4ye]

Here is a question for any lawyers or CPAs (or wannabees.) Based on this statement:

The Supreme Court (so-called "Quill decision" 1992) has ruled that a state can only impose sales tax-collection obligation on an out-of-state retailer IF the retailer has a "nexus" with the state.

If a business entity is collecting sales tax from one class of customers (such as members of a Floral Wire Service receiving goods or services from the business) in a given state, can they refuse to collect sales tax in that state from another class of customers (such as the General Public purchasing flowers from the business) in that same state?

In other words, can the condition of NEXUS be selective?

Both FTD and TF charge sales tax on certain goods and services to their members, but not to the general public in NC.

BTW Is this ALSO true of 1-800-flowers/Bloomnet??

Bill

BTW Goldfish, you get a GREENIE!

 

[CHR]

Bill -

Here's the most recent documentation (PDF) from the Streamlined Sales Tax Project outlining the proposed sales tax sourcing issues, changes and options: http://www.streamlinedsalestax.org/...ommittee draft for SLAC meeting 9-18-07_1.pdf

Note the statistics about local florists quoted in the first paragraph. Scary, huh?

 

[CHR]

Take a look at page 137 of this document.

On April 2 of this year, the SST Governing Board Review Board was asked by SAF's Drew Gruenberg to clearly rule who the seller is on a wire order, the Accepting Florist (who takes the order from the consumer) or the Delivering Florist (who actually delivers the product.)

The board unanimously agreed that the Accepting Florist is the seller for sales tax purposes.

The sourcing rules as they apply to florists will not go into full effect in the SST participating states until Dec. 31, 2009.

But it looks like there's still no consensus since I read in the minutes from June 1 (page 7) of this year that the board is still grappling with the sourcing issue.

With respect to nearly every other type of merchant, the sourcing falls under the same rules as drop-shippers, putting the tax burden on the fulfillment company.

IMO WSs know that if the tax falls on local florists, they'll have even more drop out. You'll note in Goodman's proposal, the 'out-of-the-box' solution is to have the WSs collect & remit the sales tax (for a fee) on behalf of local delivering florists.

 

[CHR]

Also along the lines of this issue, local governments have been trying to sue online travel and hotel broker sites for what they claim are unpaid use and visitor taxes.

The booking sites collect sales tax (often bundled with convenience fees) on the entire amount of the sales, but only remit tax on what they actually pay the hotels for the rooms. The difference in the 'taxes' is a profit center for them.

Just this week, a judge threw out a suit brought by Lexington and Louisville against Orbitz, Hotwire, Expedia and Travelocity and others, saying their current laws do not cover the practice and that they need to amend their own laws first.

The web has truly upended sales tax collection all across the US.

 

[LJVF]

Here is a question for any lawyers or CPAs (or wannabees.) Based on this statement:



If a business entity is collecting sales tax from one class of customers (such as members of a Floral Wire Service receiving goods or services from the business) in a given state, can they refuse to collect sales tax in that state from another class of customers (such as the General Public purchasing flowers from the business) in that same state?

Not a lawyer or CPA, but I don't think it's a matter of the WS "refusing" to collect taxes, I think as I interpret the current law, it's a matter of they don't have to.

IMO WSs know that if the tax falls on local florists, they'll have even more drop out.

Interesting observation.

Bill, I admire your efforts, you could be the Eliott Ness of the floral industry.

 

[kt4ye]

Thanks CHR...

Most interesting reading and for archiving.

One interesting, and apparently not-considered, aspect of the meeting's "conclusions" is that it appears to ignore the growing role of non-traditional florist-to-florist transactions. This would include groups like Flowershopnetwork as well as florist-to-florist (credit card) transactions.

I'm giving out lots of greenies this week.

Bill

 

[kt4ye]

One additional thought:

It seems to me that all of the previous thoughts about whether or not OGs should charge (and PAY) sales tax becomes irrelevant IF the OG has a nexus in the state.

If they have a nexus, they MUST charge and pay taxes.

It seems that different states may have different definitions. Here in NC one of the criteria for a business having nexus is LOCAL ADVERTISING.

Bill