Change to Netflix Taxes

Discussion in 'DVD Video' started by RobMac, Dec 30, 2005.

  1. RobMac

    RobMac Guest

    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, Dec 30, 2005
    #1
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  2. RobMac

    Justin Guest

    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.
     
    Justin, Dec 30, 2005
    #2
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  3. RobMac

    Stan Brown Guest

    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.
     
    Stan Brown, Dec 30, 2005
    #3
  4. RobMac

    GMAN Guest

    Just one more thing the US is adapting from european countries.
     
    GMAN, Dec 30, 2005
    #4
  5. RobMac

    RobMac Guest

    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.
     
    RobMac, Dec 30, 2005
    #5
  6. RobMac

    Stan Brown Guest

    Then go back and read again. It's either-or, not both.
     
    Stan Brown, Dec 31, 2005
    #6
  7. RobMac

    RobMac Guest

    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?
     
    RobMac, Jan 1, 2006
    #7
  8. RobMac

    sed Guest

    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.

    =----
     
    sed, Jan 4, 2006
    #8
  9. RobMac

    Stan Brown Guest

    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
     
    Stan Brown, Jan 4, 2006
    #9
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