Change to Netflix Taxes

I just got an email from Netflix (not that I'll be using them much longer
anyway) that states the following :

"Thank you for being a Netflix member. We are writing to let you know that
on January 1, 2006, as required by your state and local tax laws, Netflix
will switch from collecting a sales tax to collecting a use/rental tax. The
price of your Netflix plan is the same, but this change in tax types may
change your full monthly subscription charge slightly and will start on your
next billing date."

My question is : "What the hell is a use/rental tax" ?

I can find no mention of one in a Google search within PAs tax laws.
Is it more or less than PA's State Tax?
Anyone have any clues? Any CPAs out there?

 

RobMac wrote on [Fri, 30 Dec 2005 07:39:17 -0500]:

You mustn't have tried very hard
http://www.google.com/search?q=pa+use+tax

Second or third article

http://www.paopen4business.state.pa.us/paofb/cwp/view.asp?a=3&Q=441227

It should be the same amount.

 

Most (or all) states that have sales taxes have use taxes on the
books at the same rate. The idea is that if you buy something
elsewhere and bring it in to your home state to use it, you should
pay your state the same tax you would have paid if you had bought it
in state.

We might argue about whether this is fair, particularly since most
use taxes don't give credit for the tax you paid in the other state.
(*) But it _is_ the law. New York State, for instance, has a line
item for this on page 2 of the IT-201 form (state equivalent of the
Federal 1040).

Retailers must collect sales taxes for goods sold in the state where
the retailer operates. On the other hand, if the item is being
shipped outside the retailer's state, the retailer has the option to
collect use tax or not collect it -- but if collected it must be paid
to the purchaser's home state.

So I guess that's what Netflix are talking about. But given that they
don't have to take on that administrative burden, I'm not sure why
they've decided to do it. You might want to contact your own state's
sales tax office and let them know Netflix are doing this, so that
the state can be sure to collect the money Netflix are taking on
behalf of the state.

(*) Some states do give credit for very-big-ticket items like cars
and boats.

 

Just one more thing the US is adapting from european countries.

 

So if I understand right, if Netflix is within my sate I pay sales tax
(which I've been doing) but now they want to collect use/rental tax instead,
because they're located outside my state, but if that's true why were they
charging sales tax in the first place if not in-state? And if they ARE
in-state how can they charge use/rental tax if it's to collect taxes from
importing into the state from elsewhere?

I'm still confused.

 

Then go back and read again. It's either-or, not both.

 

That's why I'm confused....
I know it can't be both, so - - -

If Netflix is IN my state they cannot change to collecting use/rental taxes
(since there's no importing from outside the state) in which case they
should still collect state tax, but the email I got says they won't any
more, so they must be OUT of state and are changing because PA is forcing
them to, but if that's true....they should not have been collecting state
tax from me all along, and they have, suggesting they're in-state, but they
can't be if they now want to collect use/rental tax....and the argument goes
on, and on, and on....

If they're not in-state, and have been collecting state tax from ME
illegally, do I get it back?

* I * know it can't be both, so that's why I'm confused, but Netflix can't
charge one kind of tax and change to collect the other since it can only be
an either-or choice for them, not a cake-and-eat-it-too choice......so which
is it?

 

Someone else said it but you are liable for the tax regardless of the
location of Netflix. Us New Yorkers if we drive to Connecticut or New
Jersey where the tax is lower we are suppose to remit the difference in tax
to our wonderful tax collectors. What Netflix is doing is saving you from
the burden of writing a check to the crooks in Scranton.

=----

 

It can be worse than that: in some cases we're supposed to remit the
_whole_ tax to our wonderful tax collectors, depending on the other
state's policy for purchases made in New York.

http://www.tax.state.ny.us/pdf/publications/sales/pub39_804.pdf