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Cellular Phone Forum / Providers / Cingular / August 2003Cingular Stores Pocketing Sales Tax?
When I upgraded my phone recently, the sales tax was calculated on the "retail" value of the phone (249.99), not the actual (discounted) price (149.99). I have never encountered this. The state only requires tax on the transaction amount, not a fictitious "suggested" amount. I'm sure that state doesn't mind collecting the extra taxes, but is that what's happening? Is the store keeping the extra $7.75 as pure profit? Bullet Penn <bullpen@ctsx.com> wrote in article <12jhkv0fah7ka6n8p3pf9vu6ui068l44q6@4ax.com>: > When I upgraded my phone recently, the sales tax was > calculated on the "retail" value of the phone (249.99), not [quoted text clipped - 4 lines] > but is that what's happening? Is the store keeping the extra > $7.75 as pure profit? In California tax is charged on the unbundled price of the handset, they have a specific policy on this: "http://www.boe.ca.gov/pdf/reg1585.pdf" I suspect that other states have something similar. In a way it's grossly unfair because these stores always put unrealistic "retail values" on the phones, but in another way, the state should be getting sales tax on the actual value of the phone. In California, tax is calculated on the full selling price of items purchased with manufacturer's coupons (considered a rebate), but on the actual price if it is purchased with a store coupon (considered a discount). "http://www.boe.ca.gov/pdf/pub113.pdf" Steve  Signaturehttp://nyccell.com New York City Cellular Comparison http://sfbacell.com San Francisco Bay Area Cellular Comparison http://socalcell.com Southern California Cellular Comparison http://earthroam.com International Roaming Information Bullet Penn <bullpen@ctsx.com> wrote in article ><12jhkv0fah7ka6n8p3pf9vu6ui068l44q6@4ax.com>: > [quoted text clipped - 6 lines] > > but is that what's happening? Is the store keeping the extra > > $7.75 as pure profit? CellAcademician@NOXXhotmailXXNO.com (Cell Academician) wrote in article <vkhl7qrfssh513@corp.supernews.com>: > In California tax is charged on the unbundled price > of the handset, they have a specific policy on this: > > "http://www.boe.ca.gov/pdf/reg1585.pdf" In Massachusetts, we had a similar deal. Phones with "instant rebates" were charged tax on the full amount. This left a tricky point of explanation when we had to ask customers to pay tax on their "free" phone. Now, apparently, the pricing people have figured out that it's less awkward to set the price at $0 for a free phone, and leave the tricky explanations for someone in Accounting. Of course, now we have to charge sales tax on prepaid cards. Win some, lose some. > Bullet Penn <bullpen@ctsx.com> wrote in article > [quoted text clipped - 31 lines] > > [posted via phonescoop.com - free web access to the alt.cellular groups] in my experience, that's how most rebates work. you pay tax on the purchase price, not price after rebate. >Bullet Penn <bullpen@ctsx.com> wrote in article ><12jhkv0fah7ka6n8p3pf9vu6ui068l44q6@4ax.com>: [quoted text clipped - 27 lines] > >Steve But the "unbundled price" (the price if I had simply bought the phone without a contract) was already $149.99. (Trade-in and rebate reduces the price even further.) The BOE clause (thanks, Steve) remarkably requires an 18% markup in determining a fair retail value. This is an egregious dictate by the state at fixing prices artificially high (higher than what the market sells for) and then collecting a tax on their artificial price. What happened to taxes due simply on the amount of money changing hands? Where are the tax revolt activists when we really need them? PA is good old 6% on what you paid.....a $99.99 phone comes to 105.99 after tax. >Subject: Re: Cingular Stores Pocketing Sales Tax? >From: Bullet Penn bullpen@ctsx.com [quoted text clipped - 42 lines] >amount of money changing hands? Where are the tax revolt activists >when we really need them? Jeff Ream "I'm the drummer your guard captain warned you about" Bullet Penn <bullpen@ctsx.com> wrote in article > But the "unbundled price" (the price if I had simply bought the phone > without a contract) was already $149.99. (Trade-in and rebate reduces [quoted text clipped - 5 lines] > amount of money changing hands? Where are the tax revolt activists > when we really need them? You are supposed to pay tax on the unbundled price, not the MSRP. If you could walk into the store and they would sell you the phone for $149.99 without signing up for service, then that's the taxable amount. However it's possible that the $149.99 price still requires signing up for service, but does not require a contract. If this is the case then they would be charging tax on the $249.99 price. I think that the 18% "markup" is only if the store does not have a retail price for the handset available, then they have to find out what it sells for elsewhere and mark it up 18%. |
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