Why does Gamefly charge sales tax?

[Jackinbox]

I just ordered a pre-played game from Gamefly. They are in CA and I am in IN, yet they charged me sales tax. Are they owned by one of the big chain stores or something?

[eldad9]

http://www.gamefly.com/help/basics.asp?sec=9

Is there sales tax and how is it applied?

Your subscription rate of $21.95 may be slightly higher due to sales and/or use tax. Most states apply sales tax to GameFly subscriptions because GameFly rentals are defined as physical property sold or used within their state. Accordingly, sales tax is also applied to Keep It and Buy It purchases.

[Zing]

Note that even though not all online companies collect sales tax, you are responsible for paying the sales tax to your state. Some companies collect sales tax because they have a physical presence in the state, are operating in a state that has legal agreements with other states to collect sales tax, or are simply collecting sales tax on all customers, possibly in anticipation of a future legal requirement.

In my home state of Ohio, each year citizens must claim the total amount of mail order purchases and pay the appropriate tax. I doubt many people actually paid anything. I spent thousands on internet shopping each year and always claimed an amount of zero. :)

[Jackinbox]

Zing,

You are correct about the reporting to the state part. I'm just surprised that it was collected by GameFly. The only e-tailers I know that collect the sales tax are those with a prescence in the state, (Barnesandnoble.com, for example).

It was also interesting that when I went to check out, the sales tax didn't show up until after I had already been charged.

[dtcarson]

Places the rent stuff, because they ship to you and you ship it back, are deemed to have a 'presence in the state,' regardless of the type of transaction. Same with Netflix.
Now, they should show you the sales tax; but maybe it calculates it after you enter the billing/shipping address. There should definitely be a note saying 'You will be charged applicable sales taxes', at least.

[phammerz]

tax evaders!!! WAAAAAA thats why we have a 3908420984239842390 batrillion dollar debt =)

[PKRipp3r]

GFly is teh roxxorz

[MaxBiaggi3]

tax evaders!!! WAAAAAA thats why we have a 3908420984239842390 batrillion dollar debt =)

Well, thank goodness we have tax cuts for the wealthy in place. Heaven knows that helping to further line the pockets of the priviledged is more important than investing in social security, health care, education, the environment, etc.

[alongx]

Unless a company has a b&m location in a given state, they shouldn't require sales tax.

[Zing]

Unless a company has a b&m location in a given state, they shouldn't require sales tax.

I totally agree. The federal government has so far banned sales tax on internet sales, but I guess the states weren't happy with that. They decided to form a coalition of their own (I believe 32 states are currently members) and all agreed to collect each others sales tax. The logistics required to distribute the collected tax is mind boggling. I hate not knowing where my tax dollars are going.

[dtcarson]

Because GF rents items, that are sent to a certain state and then returned, in most states they are considered to have a 'presence' in that state like a B&M, and thus are required to collect [NOT 'charge'] sales taxes as directed by that state.
The feds have not banned sales taxes for internet purchases.
They have banned sales taxes on *internet access*.
Technically if you are in a state that collects a sales tax, on *every purchase*, in-state, mail order, internet, you should pay the state sales tax. Many states haven't bothered to enforce this however, because it's a PITA. But many states [NC for one] also have an 'estimated internet purchases' field on their state tax forms, where you pay at the end of the year the state sales tax for all your internet purchases that year.

http://www.ncpa.org/pi/taxes/pd030100a.html

http://www.pcworld.com/news/article/0,aid,118832,00.asp
"President George Bush on Friday signed into law a three-year moratorium on Internet access taxes."
"Internet access will not, for the most part, face taxes. More important, consumer purchases made on the Internet will not be taxed differently just because they were made using the Internet.""
Not be taxed 8differently*, ie, they are subject to the same sales taxes as anything else in the applicable state.

[scsg75]

for once, I'm glad I live in Oregon. No sales tax on anything online or in store.

[scottw57]

OK, so you guys are saying that in some states we are required to pay sales tax on internet purchases...In the case with GameFly how do I know if they are really sending the sales tax I'm paying to my state? If I'm responsible for sales tax on internet purchases then how can I be sure that GameFly is paying my State (Georgia) the sales tax? If they don't do it then I'm a required to pay it again? This is more of a hypothetical question/scenario...Thanks../

[paddlefoot]

Note that even though not all online companies collect sales tax, you are responsible for paying the sales tax to your state. Some companies collect sales tax because they have a physical presence in the state, are operating in a state that has legal agreements with other states to collect sales tax, or are simply collecting sales tax on all customers, possibly in anticipation of a future legal requirement.

In my home state of Ohio, each year citizens must claim the total amount of mail order purchases and pay the appropriate tax. I doubt many people actually paid anything. I spent thousands on internet shopping each year and always claimed an amount of zero. :)

I don't know if I would be repeating that too much.

As the Joker once said "I may be crazy, but not crazy enough to mess with the IRS." or something like that.