BS: Native Americans & Sales Tax?

Subject: BS: Native Americans & Sales Tax?
From: wysiwyg
Date: 23 Jun 04 - 11:44 PM

On the local news it was mentioned that NY State will now be expected (by the feds I think they said) to collect sales tax from purchases made at Native stores by non-Natives. Does this mean Natives have or will have to have ID cards, and are the Native store owners going to recognize the state's regs and do the paperwork?

Any other info?

~Susan

Subject: RE: BS: Native Americans & Sales Tax?
From: JohnInKansas
Date: 24 Jun 04 - 01:16 AM

There has been a rather widespread move throughout the country to define the "sales tax" as applying at the "point of delivery" or "point of use" rather than at the "point of sale." The primary purpose of this is to set in place the ability to collect "sales taxes" on internet purchases.

Of course, if the tax is a "point of use" tax, one must show a valid "address" (which usually is on your driver's license) and the tax must be collected accordingly. If the agent who sells you something does not collect the tax for the jurisdiction in which you live, of course as a loyal and honest citizen it is your responsibility to report to your local tax collection authority and pay the tax on any purchases you may have made elsewhere.

While there are serious ramifications in this, with respect to that Constitutional prohibition against any law in restraint of the free commerce between the states, undoubtedly greed will prevail, and it appears that it is not just in New York that this is happening.

Since the Indian excemption from local sales taxes rests on the status of the tribes as "sovereign nations," collection of this tax amounts to the application of an "import duty" by the state - something that has been held illegal in past actions in Federal courts, but undoubtedly greed again will prevail.

This is NOT a Federal mandate so far as I've heard, and it seems unlikely that the Federal government would have a part in it. There are NO Federal sales taxes on any domestic sales. It is a State "money grab." It is more likely that New York asked the Fed to make the Indians collect it for them, since the state has no authority to make the Indians collect it. The Fed most likely said "ain't our problem, you'll have to do it yourself."

John

Subject: RE: BS: Native Americans & Sales Tax?
From: Rapparee
Date: 24 Jun 04 - 09:34 AM

I wouldn't want to be the one to go tell the Shoshones and the Bannocks -- whose joint reservation is just a couple of miles away -- that they had to collect sales taxes and such. And YOU go tell that to the White Mountain Apache or the Navahoes or the Ojibway or the rest who are finally getting their own back. After years and years of being ripped off by the white man, finally the red man is doing the ripping.

As a Shoshone attorney said here recently, "It's not your scalp you have to worry about, it's your reputation, because you'll have to associate with paleface lawyers."

(I'm using the term "Indian," as it is used by members of every Nation I've been associated with.)

As for "point of use" taxes, I assume then that if I bought a bottle of wine in Idaho (and there are some fine vineyards here) and drank it in Washington state at a picnic, I'd have to pay taxes in Washington too? I don't think so, nope.

A national sales tax would solve the problem, but such would have less than a snowball's chance in Hell of passing this or any other Congress (unless there was a declared war).

Subject: RE: BS: Native Americans & Sales Tax?
From: Jim Dixon
Date: 24 Jun 04 - 12:09 PM

As I understand it, it's not "point of use" but "point of delivery" that determines where taxes are owed.

My brother-in-law owns a furniture store in La Crosse, Wisconsin, which is just across the Mississippi River from La Crescent, Minnesota. One day someone called him on the phone and said, "I live in Minnesota. If I buy a bed from you, will you deliver it to me?" My brother-in-law answered, "Sure! I do it all the time." The caller replied, "OK, then, you owe Minnesota sales tax." The caller was a Minnesota tax auditor.

They audited the store's books, with my brother-in-law's full cooperation, and calculated what he owed them. The rule they applied was, if a customer picked up the furniture himself, it was a Wisconsin sale, but if the store delivered the furniture to Minnesota, it was a Minnesota sale. They charged him with the unpaid tax and interest, but no penalty, because they figured it was a good-faith mistake on his part. (It was.) Proof of good faith was the fact that he had collected and paid Wisconsin sales tax on all those sales. (I don't know if there is any difference in rates, but I doubt that he made any significant profit by paying to Wisconsin instead of Minnesota.)

Of course, that meant he had overpaid Wisconsin, and he should have been entitled to a refund from them, but he told me he wasn't going to bother applying for it. (This seems foolish to me, but it's his business.)

In the case of Indian tribes, treaties might be a factor. There might be a treaty or contract in which the tribe agreed to collect sales tax in exchange for some other privilege (or at least, someone is interpreting the treaty that way), even if the law wouldn't normally require them to collect sales tax.

I believe according to currrent federal law, states are enabled to make agreements with tribes.

Subject: RE: BS: Native Americans & Sales Tax?
From: Bev and Jerry
Date: 24 Jun 04 - 02:30 PM

We live in California and have been long time customers of Lands End who ships to us from Wisconsin. On our last order, we had to pay sales tax at the rate applicable in our county.

We're not sure if, as John said, this is due to "...a rather widespread move throughout the country to define the 'sales tax' as applying at the 'point of delivery' or 'point of use' rather than at the 'point of sale.'"

Another possibility is that Lands End now markets through Sears as well as through direct mail and there is a Sears store in our county so, in theory, we could have made our purchase there and we would have had to pay the sales tax.

Bev and Jerry

Subject: RE: BS: Native Americans & Sales Tax?
From: JohnInKansas
Date: 24 Jun 04 - 03:54 PM

As is their custom, Kansas has gotten into this, and it is their contention that the seller must collect the sales tax according to the place of residence of the purchaser, even if the buyer "receives" the item at the place of business of the seller. Because there is a uniform state sales tax, and most but not all counties impose an additional county sales tax, and some municipalities impose an additional city sales tax, and in addition some school districts have an additional sales tax... you can see that the bookkeeping is something of a problem.

The state, of course, hired consultants to come up with a computerised bookkeeping system to make the calculations for all the retailers in the state - at an estimated cost of $30M; but has recently admitted that the system actually cost them "more than double" the estimates. One probably reliable estimate says they paid a little over $90,000,000 in actual cost to implement the program.

Since the maximum difference in the sales tax to be collected is about 4%, this means that residence of the highly taxed areas must spend $2,250,000,000 on purchases outside their local taxing district, that would otherwise have escaped their local higher tax, just to pay for the program. Of course, since they now must pay their local tax instead of the "point of purchase" tax, there is no incentive for them to shop outside their local area, so retailers in small communities with lower tax rates will lose all of their out-of-district business.

Of course, those who live in a low tax area now will pay only their local tax regardless of where (in Kansas) they make a purchase, so they are free to go to the large metropolitan areas where the selection is presumed to be better, thus further moving sales from the small retailers to the dealers in the two or three large metro areas.

The specifically stated purpose in this change to "point of delivery" tax, which in this case means "place of residence" tax, was to enable collection of sales taxes on internet purchases. The actual purpose, and real result, of the change is to give large sellers in the major metro areas an advantage over smaller retailers in the small communities - or at least to "erase" the advantage of locating in a low tax area.

Many small communities in Kansas consist essentially of a local bank, only sometimes a post office, and an auto dealership. Often somewhere out in the country nearby there may be a fairly large furniture/appliance store. Many of these towns with an auto dealer may not even have a gas station. These retailers have located to "low tax" areas specifically to be able to compete, and now no longer have any advantage by which to attract customers from the high tax areas. They will be out of business within a couple of years, and the towns will be nothing but "bedrooms" for the nearest larger metro area (which many of them already are) - if they survive at all.

The unrecognized (thus far by the public) effect is that once you cannot escape the local sales tax it can be increased at will by your local "taxing authorities," since there's no longer the lobby from businesses that increased local taxes will cause them a loss of competitive advantage. And since the small towns will now receive taxes on all purchases made by their residents, they don't need local businesses in order to have a tax "base," so why bother.

Just a personal evaluation...

John

Subject: RE: BS: Native Americans & Sales Tax?
From: Rapparee
Date: 24 Jun 04 - 04:08 PM

According to my wife the lawyer, if you buy something over the Internet from a company which has a business presence in your state (not county), then you have to pay sales tax. Land's End sells through Sears and as far as I know there is a Sears in every single state. But if I something over the Internet from a company which does NOT have a business presence in my state, sales tax isn't charged.

HOWEVER! If your state charges sales tax and you have purchased stuff over the Internet from companies which do not have a business presence in your state, you must declare how much sales tax you would have paid on the stuff and remit said amount to the state.

Example: I buy a wiffler from Best Wifflers over the Internet. Best Wifflers has an outlet in my state, so I have to pay the state sales tax. I also buy a nixerler from New York Nixerlers, which only has offices and stores in New Jersey -- I don't pay sales tax (unless there is some sort of compact between New Jersey and my state) but I'm required to tell my state that I spent $4,534,985.12 on the nixerler and remit to my state the appropriate sales tax.

Since we are all good citizens I'm sure that we all do this.

Subject: RE: BS: Native Americans & Sales Tax?
From: JohnInKansas
Date: 24 Jun 04 - 05:17 PM

Not to argue with the lawyer, but the current move to redefine the "sales tax" as a "point of delivery," or in some cases as a "point of use" tax, is an attempt to make you pay taxes to your local jusrisdiction on ALL purchases, regardless of the business presence, location, or method of doing business of retailers. The interpretation given is that generally used by interstate sellers, but only for the present; and it does depend on where you live. The laws do vary in the many different jurisdictions, but in all cases they come down to "whatever we can get." In some jusrisdictions the "point of use" concept seems to be succeeding. Ain't GREED wonderful!

And being all good citizens, no one in Kansas City Kansas drives the 15 miles across the river to Kansas City Missouri where the liquor taxes are 50% of Kansas rate and the stores are open on Sundays.

And our new Kansas system makes it unnecessary to drive 70 miles from Wichita to Hutchinson, where the local sales tax is about 4%, to buy a new refrigerator, since you'll now pay the 8.7% School District + Wichita City + Sedgwick County + State + Business Improvement District tax on it anyway.

For the present (sort of) the Kansas "point of deliver" change affects only in-state sales, but the intent is to extend it to, and collect on, all interstate sales (i.e. internet sales). They have attempted to write their new law so that the "business presence" condition will not apply.

There is a rather robust "semiofficial" organization dedicated specifically to obtaining taxation of internet transactions by local jurisdictions, and they have been "promised" a Federal law to enable it, and to require internet businesses to collect the tax at time of sale, "as soon as enough states pass consistent tax laws." The US Congress passed a prohibition against such taxation "until consistent state laws are produced." The original prohibition had a short duration, and to some extent permitted "existing rules;" but I believe it was extended in the last session.

The Kansas computer system encountered only a few (38,000? 0.47 per square mile?) distinct and different tax rates depending on purchasers' places of residence. I wonder how many there are in the entire US.

John

Subject: RE: BS: Native Americans & Sales Tax?
From: Rapparee
Date: 24 Jun 04 - 06:32 PM

And then there's Idaho, where the local jurisdictions are forbidden by state law to collect any sales tax -- theoretically they get a share of that collected by the State. Nor can they impose a local income tax.

Subject: RE: BS: Native Americans & Sales Tax?
From: wysiwyg
Date: 24 Jun 04 - 09:29 PM

More comments anyone?

~S~

Subject: RE: BS: Native Americans & Sales Tax?
From: Rapparee
Date: 24 Jun 04 - 09:35 PM

Once upon a time in Alaska a guy from Outside was touring. He and his wife stopped at an Anchorage B&B, where he managed to negotiate a deal swapping some of his computer savvy for a night's lodging. He did not report this to the IRS or anyone else. When he told a friend of his of it, the friend (a born and bred Alaskan) said, "Congratulations. You've achieved the True Alaskan Spirit and you will now fit right in."

Subject: RE: BS: Native Americans & Sales Tax?
From: JohnInKansas
Date: 25 Jun 04 - 06:36 AM

Well now Rapaire, the way folks 'round here would work that deal is that the lodging was compensation so was taxable, but the fact that he worked on this trip made the whole trip deductible as a business expense. So of course the lodging that he paid for by working was a direct offset of what he received - i.e. no tax; but by performing "compensable work" he made the whole trip a write-off.

Had he reported everything properly, he probably could have gotten a deduction for his transportation to (and maybe back from) Alaska as "business expenses" and maybe wiped out all of his taxes for the year. (I hear it's very expensive going to Alaska - if you want it to be.)

John

Subject: RE: BS: Native Americans & Sales Tax?
From: artbrooks
Date: 25 Jun 04 - 08:45 AM

At one time...and I'm not sure if its changed since I moved away...Oregon had a pretty robust state income tax, but no sales tax, while the opposite was true in Washington. People living in Portland's suburb of Vancouver, WA had the best of both states...they paid no income tax, but did all of their shopping across the river and beat the sales tax as well. Then the two tax jurisdictions got together and made sure that everyone was properly screwed, whether they worked and/or shopped in Portland or not.

More to the basic point, when I lived in Prescott, AZ, the major shopping center was on a narrow strip of reservation land (Yavapai nation) alongside the road to Prescott Valley. The city fathers were continuously propagandizing people to shop elsewhere, since they didn't get their local sales tax (I think it was 1%) on purchases there. Things didn't cost less, because the Yavapai charged just about the same amount of tax, but they got a lot of business because that's where Home Depot and Wally-World were. The city has since moved heaven and earth (LOTS of earth, not to mention concrete and asphalt) to get a mall built about half a mile south-off the reservation.

Subject: RE: BS: Native Americans & Sales Tax?
From: Rapparee
Date: 25 Jun 04 - 09:00 AM

The feller who went to Alaska didn't have many other opportunities to work in the Alaska system. And since his in-laws had paid for the trip as a 25th wedding anniversary present it wasn't any skin off, ya know?

Yessir, shoulda been reported to the ol' IRS. I told him so. Warned him of possible tax consequences. But nope, he wouldn't listen. There was only this win-win situation.

He might do other things like that from time to time, too.

What I'm surprised about is the Rez here. They sell cigarettes, gasoline and such, but I'd think that if they'd put in a real mall they'd drive the local cities bankrupt. Of course, I don't know what sort of arrangements they might have with the Idaho state government -- I know that some sort of settlement was reached a year or so ago over cigarette taxes.

Subject: RE: BS: Native Americans & Sales Tax?
From: JohnInKansas
Date: 25 Jun 04 - 11:51 AM

For several decades now, the Kansas "revenooers" have staked out the Kansas-Missouri border, photographed and recorded Kansas vehicle tags at Missouri liquor stores, and made some attempts to stop, search, and sometimes arrest persons crossing the border into Kansas with "Missouri liquor."

Since there is the legal option of proceding to the Kansas Alcohol and Tobacco Tax Office and paying the Kansas tax, it was difficult for them to prove that you didn't intend to do so; but the usual result of being stopped was that the liquor was confiscated and a modest fine applied. Later on, the fine was made equal to the amount of the Kansas liquor tax and the booze was confiscated.

I don't know whether it is still done, but for several years, a number of the Missouri border stores offered to replace, at no additional charge, any liquor confiscated in this manner. They would not pay the fine (or "Kansas Tax"), and you did need to show both your "ticket" and your original purchase receipt. The "revenooers" soon learned to demand the receipt and "lose" it (or confiscate it as evidence) whenever they stopped someone.

With major brand cigarettes going for $38 to $52 per carton in Wichita, the 65 mile drive to the reservation in Oklahoma to get them for $26 to $28 can easily "pay off" even for only a few cartons. I expect stakeouts at the reservation stores soon - if they're not there already.

A similar situation prevailed in Wisconsin in the early '60s where colored margarine was still taxed at about $2 per pound. Butter, at the time, was about $1.25 a pound, and you could get white margarine for about $.90. (Some of the white stuff came with the dye pill that you could use if you wanted yellow, but the few people I knew who used it just left it white.) Colored margarine at the Illinois border was about $.80 per pound, and it was not uncommon for the "grease police" to stop people with 25 or 30 pounds of "illegal colored margarine." They were usually "fined" the amount of the tax, plus court costs, and the margarine confiscated.

In Cambridge MA in 1959-60 I worked with a group of General Motors employees who were "transferred" to Cambridge for "extended study" at the lab who learned that in order to register a vehicle you had to prove that you had paid the local and state sales tax on the vehicle or pay it at the time of registration. If you were unable to prove when, and for what price you had purchased the vehicle, regardless of age, it was taxed on the original "new" price.

Theoretically, it was possible to be credited for sales tax you had paid somewhere else at the time of purchase, but NONE of the fellows involved were able, so far as I know, to get this credit. Since these guys had all bought fairly new vehicles under the "Generous Mother" employee discount plan, most of them were taxed on imputed new retail values about 30% higher than what they'd actually paid for their cars. (Current employee discounts are much less generous, I understand.)

The "legal basis" applied by Massachusetts was that bringing a vehicle into the state, as a new or existing resident, constituted a "purchase" since a transfer of registration was involved.

Presumedly, a transfer between husband and wife, or from parent to child under this "interpretation" would mean paying sales tax at whatever value the "department" chose to impute for the "sale," a condition which has applied in several states where I've observed such transactions.

Kansas will not accept a valuation shown on a receipt for a vehicle sale, unless it is from a registered dealer, and assigns a "look-up" value for purposes of sales tax on the transaction. We even have a law that says they are "allowed" to appraise at up to 18% above market value for tax purposes - and that "tolerance" also applies to real estate appraisals for property tax purposes.

John

Subject: RE: BS: Native Americans & Sales Tax?
From: Rapparee
Date: 25 Jun 04 - 11:58 AM

Indiana charges a tax on the resale value of your vehicle every year. The tax declines as the vehicle ages. You effectively pay the sales tax over and over and over.

Subject: RE: BS: Native Americans & Sales Tax?
From: Jim Dixon
Date: 25 Jun 04 - 01:36 PM

That's what all property tax is like.