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Posted by Stan Brown on 12/30/05 16:17
Fri, 30 Dec 2005 07:39:17 -0500 from RobMac <rpmccartney@gmail.com>:
> 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" ?
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, Oak Road Systems, Tompkins County, New York, USA
http://OakRoadSystems.com/
DVD FAQ: http://dvddemystified.com/dvdfaq.html
other FAQs: http://oakroadsystems.com/genl/faqget.htm
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