Question for people in the US: Does Digi-Key charge you sales tax? - Page 1
Forum section: electronics / general

author: MaximRecoil
author_rank: Regular Contributor
timestamp: January 30, 2017, 06:42:56 pm
content: I asked one of their CSRs why they charge me sales tax, because, as far as I know, they don't have a physical presence in my state (Maine). She asked their accounting department, and they said something like, "We have to charge sales tax because we have online ordering." I told her that neither Mouser, Jameco, MCM Electronics, nor anyone else I could think of charges me sales tax, and I asked her again if they have a physical presence in Maine. She said that, as far as she knows, they only have a physical presence in Minnesota, and when she first started working there they didn't charge sales tax, but now they do and she doesn't really know why.This is from a U.S. federal government website:Quote

author: iaeen
author_rank: Regular Contributor
timestamp: January 30, 2017, 07:22:17 pm
content: Yes, they charge me sales tax as well.A 1993 ruling is all well and good, but with the prominence of online shopping today, this isn't going to last. States like Oklahoma (where I previously lived) have laws requiring residents to pay tax on online orders, and as more states go that route, larger online retailers are starting to charge sales tax across the board.I seem to remember some legal fight around Amazon's sales tax policies relatively recently. That was probably when the winds shifted in favor of charging tax.

author: james_s
author_rank: Super Contributor
timestamp: January 30, 2017, 07:29:46 pm
content: Digikey started charging me sales tax a few years ago. Amazon has always charged tax for me since they're located in the state where I live.Technically we're supposed to pay local sales tax on goods ordered from out of state and always have been, but it isn't well enforced so nobody ever does.

author: MaximRecoil
author_rank: Regular Contributor
timestamp: January 30, 2017, 07:35:52 pm
content: Quote from: iaeen on January 30, 2017, 07:22:17 pmQuoteSo they are definitely not required to collect sales tax from me, but what I would like to know is if they are even legally allowed to do so.

author: IanB
author_rank: Super Contributor
timestamp: January 30, 2017, 07:39:09 pm
content: Quote from: MaximRecoil on January 30, 2017, 07:35:52 pmIf they collect sales tax, who do they pay it to? And if they pay it to Maine, does Maine have the mechanism to receive it?(I am strongly inclined to believe that Maine law requires all residents to pay sales tax on their purchases, including out of state purchases.)

author: MaximRecoil
author_rank: Regular Contributor
timestamp: January 30, 2017, 07:42:01 pm
content: Quote from: IanB on January 30, 2017, 07:39:09 pmI'm wondering the exact same thing. And that same question applies to every other state that doesn't have "Amazon laws" (which I believe is most of them). It seems that Digi-Key is collecting sales tax from everyone in the U.S.QuoteNot sales tax, but rather, "use tax":Quote

author: RGB255_0_0
author_rank: Frequent Contributor
timestamp: January 30, 2017, 07:51:46 pm
content: Louis Rossmann spoke about this in a video about a week ago as he's selling some Crest Ultrasonic cleaners. Crest wanted to charge him sales tax but he questioned it and Crest backed down from it.Who knows whether Digikey are pocketing the difference?

author: rrinker
author_rank: Super Contributor
timestamp: January 30, 2017, 08:13:34 pm
content: Most states have similar deals. There's even a form on our state (PA) income tax for to list things you purchased on the Internet or out of state (large purchases like cars are already handled by the registration process, so it does no good to cross the border to DE where there is no sales tax and buy a car there). Pretty much an honor system at this point. Only online place that charges me sales tax is Amazon, and then only if they are the provider - items sold and fulfilled by another seller in a different state have no tax, just Amazon fulfilled items, because they do have a presence in my state, several in fact, including one almost within drone delivery distance.

author: retrolefty
author_rank: Super Contributor
timestamp: January 30, 2017, 09:02:58 pm
content: I'm sure the sales tax laws in the US will keep changing as on-line sales takes more and more revenue from the brick and mortar retailers.

author: Seekonk
author_rank: Super Contributor
timestamp: January 30, 2017, 09:25:36 pm
content: Then there are private taxes. I bought something on ebay from another state. In checkout I noticed I was being charged tax. Not unusual, but noticed the rate was about 15%, $4.70 on a $31 item. That has to be about twice what any state charges. Canceled that order. I wonder how many people notice.

author: Fgrir
author_rank: Regular Contributor
timestamp: January 30, 2017, 10:48:01 pm
content: Looking through my old invoices Digikey started charging me sales tax (in NC) back in 2006, so this is hardly a new thing. For me as a business that would file and pay the use tax anyway I actually prefer that it is charged up-front so I don't have to do anything more.

author: rdl
author_rank: Super Contributor
timestamp: January 30, 2017, 11:18:07 pm
content: You can usually find a business's tax policy somewhere on their web site. The last time I checked (it's been a few years, so may have changed) Digi-Key charged sales tax no matter where you were. Newark is located in a state that required sales tax to be collected on all sales no matter where the sale is coming from or being shipped to. Mouser charged sales tax only for the states where it had a physical presence.

author: casinada
author_rank: Frequent Contributor
timestamp: January 31, 2017, 12:16:44 am
content: Online businesses are required to collect tax. This is to protect local businesses. There are less and less online businesses that still don't collect tax even if they're not established on your state. I don't know if there is a deadline date to fully comply with that measure. Who knows, now with the new government that might change yet again.

author: MaximRecoil
author_rank: Regular Contributor
timestamp: January 31, 2017, 12:46:19 am
content: Quote from: casinada on January 31, 2017, 12:16:44 amOnly from customers in states for which they have a physical presence. Digi-Key is not required to collect sales tax from me, nor from anyone else who doesn't live in Minnesota.

author: rstofer
author_rank: Super Contributor
timestamp: January 31, 2017, 04:06:01 am
content: Quote from: MaximRecoil on January 31, 2017, 12:46:19 amHere are the rules for all 50 states:http://www.nolo.com/legal-encyclopedia/50-state-guide-internet-sales-tax-laws.html

author: MaximRecoil
author_rank: Regular Contributor
timestamp: January 31, 2017, 08:21:19 am
content: Quote from: rstofer on January 31, 2017, 04:06:01 amYeah, I've already been there. I haven't clicked on all 50 states, nor even close, but as far as I know, there are no exceptions to the "physical presence" rule, except for states which have passed so-called "Amazon laws". As far as I can tell, Amazon laws apply specifically to Amazon, and not to "large online retailers" in general as that site suggests:https://en.wikipedia.org/wiki/Amazon_taxThe SCOTUS Quill Corporation v. North Dakota holding ...Quote... has not been overturned, so I don't know how those states are even getting away with "Amazon laws".

author: David Hess
author_rank: Super Contributor
timestamp: January 31, 2017, 11:49:39 pm
content: The states in which a company has no physical presence or nexus do not have legal means to force out of state sellers to collect and remit sales taxes. So instead they have "use" taxes which apply to their citizens but these are difficult to enforce.Some companies have gotten caught collecting the taxes but not remitting them to the state which could not make them do that anyway.

author: HP-ILnerd
author_rank: Frequent Contributor
timestamp: February 02, 2017, 10:55:53 am
content: I live in Minnesota, so yep!

author: jpanhalt
author_rank: Super Contributor
timestamp: February 02, 2017, 11:21:12 am
content: @MaximRecoilSimple answer: DigiKey signed a consent decree to charge sales tax and avoid an extremely costly lawsuit.There is a significant back story to that, and it is well documented. Politics were probably involved. Since it sells a commodity, price is usually the most important controlling factor for customers. Service is usually of secondary importance. The requirement that was selectively forced on DigiKey certainly tilts the playing field on which it competes with entities such a Mouser.John