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> The key word I believe was "nexus," or a business presence. It came up
> in a Supreme Court decision either late last year or early this year.
> I think the decision was that states could collect sales tax only if
> the seller had a business presence in that state. Otherwise it's
> interstate commerce and the states can't touch it.
I believe what it was, as one poster put it, is a "use tax"--
and the state, while not having a right to demand the seller collect it
(unless the seller has a physical presence in the state), DOES have a
right to demand that the purchaser--a resident of the state--pay it.
As a side note, this came up a year or two ago when Gateway 2000
started charging sales tax on sales from California, New York, and Texas
(and perhaps some others now). Apparently, California (and NY, etc.)
made the argument that the extended on-site service warranties that
Gateway offers (by contracting with another company whose name escapes
me) constituted this "physical presence" in the state, obligating them
to collect the sales tax from buyers.
Now personally, I don't think they could make this argument
stick--a contractual agreement with a whole seperate company doesn't not
(IMO) constitute a physical presence on the part of the other contractor.
I guess Gateway 2000's lawyers thought it would be cheaper to just collect
the sales taxes than to fight this one out in the courts. Personally,
I think they made a mistake--the fact that they now charge sales tax
significantly erodes their price edge and in a few cases--such as with
myself--has practically guaranteed that I won't purchase another machine
from them (my desktop is a Gateway and I like it--but I don't know that
I'll buy another, as I'm not fond of paying for hundreds of dollars in
sales tax on top of the system price). Hence, I and others will look
at their mail-order competitors that do *not* charge that ugly 8.25%
California sales tax to save a lot of money.
> So I guess the solution is to get rid of taxes. :-)
Bingo.
----- ____________________________
Randy Whittle whittle@usc.edu | Making South-Central |
USC Graduate School of Business (Fight on 'SC!)| L.A. a better place by |
-Counselor, USC Business Expansion Network | helping small businesses |
| help themselves. |
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