Connecticut DRS Moves to Collect Back-Taxes on Newegg Customers

Discussion in '[H]ard|OCP Front Page News' started by Kyle_Bennett, Feb 14, 2018.

  1. Kyle_Bennett

    Kyle_Bennett El Chingón Staff Member

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    If you live in CT and have purchased from Newegg, you are likely aware that no type of sales tax was charged. However, CT has a law that states that customers have to self-report and pay a "use-tax" in lieu of a sales tax at the time of purchase. As you might guess, not a lot of folks do this either through ignorance or simply flaunting the law. Also, as you might guess, there has been little evidence the state had to enforce this. A source told us that Newegg has turned over 5 years of purchase history on customers to the state and that individual users and businesses are possibly on the hook for the 6.35% tax. The Connecticut DRS is reportedly sending out tax bills based on this information turned over by Newegg. If you live in Connecticut and are not already aware of this, I would highly suggest reading up on what is going on at the IRS Medic site that goes into great detail on this. Thanks Cresponia Rises.


    There is a supporting article here from last year that goes into the Connecticut Department of Revenue Services issuing demand letters to "remote sellers."

    For remote sellers with no physical presence in Connecticut that don’t wish to voluntarily collect and remit sales and use tax (consistent with the US Supreme Court’s precedent in Quill and Bellas Hess), they are given only one option–provide DRS with a semi-colon delimited text file containing 16 fields of data–including customer names, customer addresses, ship to addresses, item descriptions and quantities sold. But supplying such personal data about customers intrudes upon the privacy and First Amendment rights of the customer, and unconstitutionally deprives remote sellers of their property right in the data set without due process of law. Of equal concern, some sellers question whether DRS is appropriately limited in its ability to disclose or share the customer data it seeks.

    "Once you know, you don't Newegg."
     
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  2. trick_m0nkey

    trick_m0nkey I jump for cash, bitch!

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    Newegg.com is a fabulous search tool for Amazon.com.
     
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  3. JStamsek

    JStamsek [H]ardForum Patreon

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    I hope this doesn't become a trend where B&H does the same...
     
  4. James21

    James21 Limp Gawd

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    New egg is probably going down in flames for any buyers in CT
    Unless New Egg has a location in CT I'm not sure why they are turning over any information at all.
     
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  5. atarione

    atarione [H]ard|Gawd

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    or don't live in Connecticut that is going to tax the p*ss out of you?

    and / or now the tax laws of the place you live so u don't get socked with 5~yrs of back taxes

    blah blah blah.... I see amazon started charging sales tax in Connecticut years ago... it also dosn't seem to be a newegg thing but that Connecticut has decided to go after taxes for online sales aggressively.

    http://www.ct.gov/drs/cwp/view.asp?Q=591496&A=1436
     
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  6. Chance_P

    Chance_P Gawd

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    If amazon did this in a certain state, SIK would be f'd.
     
  7. U-238

    U-238 Limp Gawd

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    Every company is going to do the same sooner or later. The golden era of "tax free" sales online is coming to a close. They (the states) are going to get their money one way or another.
     
  8. otherweeb

    otherweeb Gawd

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    this won't be the popular comment, but Newegg shot itself in the foot. An astounding number of companies that aren't internet business platforms understand tax law and sold enough products in other states to know to just collect the taxes. Your only getting around paying sales tax if you live in a NO SALES TAX STATE.

    Amazon does collect tax, the little vendors that serve them skate past and ignore it.
     
  9. nutzo

    nutzo [H]ardness Supreme

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    If I start selling on ebay again, I'm going to have to refuse to ship to states like Connecticut.
    Maybe a large portion of companies stop shipping to Connecticut, the people will finally get the message and vote out the money grubbers.
     
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  10. DigitalGriffin

    DigitalGriffin [H]ardness Supreme

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    It's not like I told you guys, "Even though you don't have to pay state taxes at new egg, if you don't claim them, and get audited, your butt is grass"
     
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  11. DigitalGriffin

    DigitalGriffin [H]ardness Supreme

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    Before the internet, that money came from retail stores where they could collect that tax. The internet was lost revenue for the state and hurts the local economy. Is it no surprise the state is going after people who don't pay tax?
     
  12. Gigus Fire

    Gigus Fire 2[H]4U

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    One question. Was there a court order to hand over that data? That's the most important thing.
     
  13. Biznatch

    Biznatch [H]ard|Gawd

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    That's the case with most states. You're supposed to self report out of state purchases for tax. States typically just go after the huge companies and force them to start collecting. But it sounds like they are now going after retailers for records to start enforcing proactively for the buyers.....

    I'm surprised it was started in Taxifornia.... Right in line with a lot of the stupid shit my state does..... I'm sure we're next after they see how well this works in CT...


    Guess it's time to start purchasing with prepaid cards and sending to a PO box or something. Not about to be paying 10% on my online purchases to this shit state that can't function with the already obscene amount of tax dollars they have coming in.
     
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  14. bugleyman

    bugleyman Gawd

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    Excellent question.
     
  15. cyberguyz

    cyberguyz Limp Gawd

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    With this glimpse on how quickly they sell out their customers I guess it is a good thing I don't do much business with newegg.
     
  16. Dead Parrot

    Dead Parrot [H]ard|Gawd

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    The whole not collecting out of state tax thing could be rendered moot if SCOTUS reverses the Quill ruling. IIRC, they are in process of that review now.
     
  17. Kyle_Bennett

    Kyle_Bennett El Chingón Staff Member

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  18. SixFootDuo

    SixFootDuo [H]ardness Supreme

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    I don't know about you guys but maybe all of us need to reconsider our purchasing behavior across the internet.

    Not saying stop, I'm saying, can a gift card be used, or when you sell something on Facebook do you make it sold or just delete it?

    Is it plausible that Facebook could also release your information? Or other marketplace type situations?

    The possibilities of this happening now feel very real.
     
  19. nutzo

    nutzo [H]ardness Supreme

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    So the tax is collected to help pay for the roads and other infrastructure the business uses.
    Wait, it's an internet company that is located in another state and isn't putting any burden on the buyers state other than the road the delivery truck uses, and the delivery company pays gas taxes to pay for the roads.

    Maybe if the taxes weren't so high, people wouldn't go out of there way to avoid them.
    It's not just internet business either. People who live close to a boarder will other drive to a different state to save of taxes.

    Maybe the state could try and be more efficient with the taxes they collect instead of always trying to collect more?
    Businesses have to constantly improve their efficiency to stay competitive, yet government just keeps getting more bloated and expensive.
     
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  20. WabiSabi89

    WabiSabi89 n00bie

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    Author of the IRS Medic article mentioned in OP here. Not a court order, but Connecticut did apparently send out demand letters to online retailers last year, giving them the option to either register as a vendor in Connecticut (and thus subject themselves to the obligation to collect sales tax and remit to CT), or turn over customer data. What the recourse was if they didn't comply? I'm not sure. It would appear that Newegg is the only company that acquiesced. Interestingly, as Dead Parrot above mentions, the SCOTUS is scheduled to review a South Dakota law passed in 2017 that directly contradicted Quill by requiring out of state retailers with no physical presence to collect sales tax and remit to SD. Three online retailers challenged the law: Wayfair, Overstock, and... Newegg. I'm not sure what the motivation was behind turning over the customer data to CT, but one has to assume it's related to South Dakota v. Wayfair, Inc. It's looking like the SCOTUS will overturn Quill and all online retailers will be required to collect sales tax on all sales, regardless of physical presence. I just don't really understand Newegg shooting themselves in the foot like this in anticipation of the rule change. 3D chess from their legal team or something, idk.
     
  21. otherweeb

    otherweeb Gawd

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    Why?
    (selected state in America) says to Newegg 'you haven't paid taxes'
    Newegg 'but that's not our fault, the customer was supposed to !'
    state 'right, and who were they?'

    Interstate commerce does not have a right to privacy
     
  22. byusinger84

    byusinger84 Gawd

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    Yep. Their search is WAY better than Amazon for computer parts.

    And then I use this to buy everything as long as it's the same price or lower. Very rarely is Newegg cheaper than Amazon.
     
  23. Burticus

    Burticus 2[H]4U

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    Shhhhhhh.... don't let Texas hear you. They already got Amazon to charge sales tax.

    Seriously though... I shop fairly frequently from Newegg, but if I suddenly had to start paying sales tax, then it wouldn't be any better than Amazon (with Prime to boot). Newegg would lose most or all of my business. Let's hope that doesn't happen any time soon.
     
  24. Dekar12

    Dekar12 Gawd

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    I am not really sure why people are hating on Newegg, most states say that if you buy online and they do not collect sales tax, you are suppose to self report. Much in the same way, some states have the same laws when transporting large purchases between states. Amazon didn't collect taxes in a lot of states for a very long time, until they started putting distribution sites in a ton of states, etc. I think they now collect tax in every state, but they didn't for a very long time.
     
  25. Kyle_Bennett

    Kyle_Bennett El Chingón Staff Member

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    I think the bigger fact is that Newegg rolled over on them and disclosed all their personal information to the state.
     
  26. RealBeast

    RealBeast Limp Gawd

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    Good luck to anyone that tries to get my purchase data from the EBay seller in mainland China where I pick up Intel cards and cables and Dell OEM laptop parts. ;)

    And yeah, pretty much F you Newegg. Quit shopping there back when they got bought out and turned to crap.
     
  27. oldmanbal

    oldmanbal [H]ard|Gawd

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    Talk about sucking a big fat egg. Glad I don't live in that new england state. Not collecting taxes is just another way for newegg to give the semblance of a lower price for big ticket purchases. If anything, they should be required to pay some sort of fine. I can't imagine all of this hunting around to figure out who skipped out on paying taxes from them hasn't cost CT some money to research.
     
  28. Gigus Fire

    Gigus Fire 2[H]4U

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    It sure as shit does, especially if it's not a court order. Who the fuck is some state official demanding the accounts and data from a company in a different state?
    And a demand to create a presence in the state is straight up strong arming. You can't do either.
     
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  29. Nytegard

    Nytegard 2[H]4U

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    Eh, somehow this doesn't surprise me. My state is in dire straights fiscally, desperate for any money they can find, because of poor decisions made in the past. And our government is doing their best to run out every business and person who lives in the state.
     
  30. collegeboy69us

    collegeboy69us [H]ardness Supreme

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    If newegg doesn't have any physical warehouse/store/offices in CT... why should they pay a fine? Or even further why should newegg give a shit and cooperate? This is literally nothing but the state of CT being so desperate for money they are snooping around into another states business looking for dirt on it's own residents.

    If you are a resident of that state the law says you have to self report the taxes... that falls on you. newegg shouldn't have to do YOUR job for you. Upon a little further research, it seems newegg has zero presence in CT, and handed over their records voluntarily so the state could carry out it's little hunt. From a business perspective, newegg just shot itself in the foot both by turning over it's records when it didn't need to.

    Just like everything else in the world - the motivator is money. The state wants it's cut despite doing nothing, contributing nothing, and producing nothing. Imagine you owned a business on the other side of the country and a state you have zero dealings with wants to fine you because it's residents aren't doing what they are supposed to do? Sound fair?
     
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  31. DigitalGriffin

    DigitalGriffin [H]ardness Supreme

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    I'm not disagreeing there is a lot of waste. But taxes go into one big pool. You just aren't paying for roads.

    You're paying for a state legal system to protect you. There's also state social services, parks, education, disaster support, inspectors, environment etc...

    And internet orders put brick and mortars under water. That's lost jobs. Raising the prices on goods through tax offsets that a tiny bit.

    But I seriously doubt any of you looked at your state budget and where the funds come from and go to.
     
    Last edited: Feb 14, 2018
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  32. Danny Dawg

    Danny Dawg [H]ard|Gawd

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    Ding Ding Ding we have a winner. Nail hit right on the head.
     
  33. Daarken

    Daarken [H]Lite

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    I live in Louisiana... Newegg does not have a store in this state, however this year they sent me this.

    IMPORTANT TAX INFORMATION

    Louisiana law requires that we send you an annual summary of your purchases from Newegg. This summary is a tax document which we are required to send to you by your choice of mail or email. To receive this summary by regular mail, please opt-in here by 01/10/2018.

    Then a couple of weeks ago I got this:

    YEAR-END NOTICE TO LOUISIANA CUSTOMERS

    Louisiana law requires that we send you the following summary of your purchases from Newegg.

    During 2017, you purchased $XX in items from us that you had shipped to the State of Louisiana.

    Louisiana use tax may be due on the purchases made from Newegg. Louisiana law requires the payment of your use tax liability on your individual income tax return or through other means as may be required by administrative rule.

    The following detailed notice is provided only to you.
    And a complete list of all my newegg orders and the total of each was provided.
     
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  34. kirbyrj

    kirbyrj Why oh why didn't I take the BLUE pill?

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    It's almost irrelevant because it's not that hard to get one, and I'm sure their "Auditor General" or whoever is pushing this has someone who can type one up and send it over to a Federal Court within a day. I don't think it would be difficult at all to establish that some sort of tax evasion took place as most states have a "use tax" provision for these cases.

    I'm betting some state threatened an Amazon style lawsuit. I didn't get one of these, but I did get a notice that as of December 7, 2017 they would be collecting PA sales tax.
     
  35. kirbyrj

    kirbyrj Why oh why didn't I take the BLUE pill?

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    You just better hope that they don't go crazy looking back through years of receipts.
     
  36. brentsg

    brentsg [H]ard|Gawd

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    Damn I just received a bunch of Newegg stuff. I'll be shipping it back by end of week.

    I'd rather than just collect the damn sales tax than do shit like this.
     
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  37. Nobu

    Nobu [H]ard|Gawd

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    Newegg sent me a summary of my purchases this and last year for tax purposes (as required by the state of Louisiana, apparently). Made reporting those purchases easy, at least.

    Amazon collects in LA, so that's no problem. I don't bother reporting the items from third-party sellers...don't tell anybody. :p

    I'll refrain from discussing the ethical points...
     
  38. panhead

    panhead Gawd

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    Move or try to get the tax policies changed; but please stop whining about how over taxed you are.
     
  39. Budzman

    Budzman Gawd

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    It's all a liberal democrat money grab to support illegals and welfare. MA has done something similar with PayPal.
     
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  40. umeng2002

    umeng2002 Gawd

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    Liberal states want more welfare, let them reap what they sow.

    Florida has no income tax, by the way. Sales tax is nominal, with no BS internet self-reporting. Although Amazon has locations here, so stuff from Amazon is usually taxed.
     
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