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California sales tax
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Seth
Feb 8, 2012, 3:36:03 PM2/8/12
to
I live in Minnesota. Last week, I purchased some items (DVDs, digital
downloads, and admission to a seminar) from someone in California.
The seminar will take place in California.
Payment was made when I phoned him (from Minnesota) and provided a
credit card number.
He said his accountant said that the full sale is taxable, including
both the stuff mailed to MN and the digital downloads, based on a
recent (last few years) change in California's sales tax.
I was under the impression that interstate sales were taxed at the
purchaser's end, and he doesn't have nexus with Minnesota to be
required to collect Minnesota Sales Tax. (I know that I have to pay
Use Tax.)
Who is correct?
Seth
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downloads, and admission to a seminar) from someone in California.
The seminar will take place in California.
Payment was made when I phoned him (from Minnesota) and provided a
credit card number.
He said his accountant said that the full sale is taxable, including
both the stuff mailed to MN and the digital downloads, based on a
recent (last few years) change in California's sales tax.
I was under the impression that interstate sales were taxed at the
purchaser's end, and he doesn't have nexus with Minnesota to be
required to collect Minnesota Sales Tax. (I know that I have to pay
Use Tax.)
Who is correct?
Seth
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
Katie in San Diego
Feb 9, 2012, 7:29:59 PM2/9/12
to
On Feb 8, 12:36 pm, se...@panix.com (Seth) wrote:
> I live in Minnesota. Last week, I purchased some items (DVDs, digital
> downloads, and admission to a seminar) from someone in California.
> The seminar will take place in California.
>
> Payment was made when I phoned him (from Minnesota) and provided a
> credit card number.
>
> He said his accountant said that the full sale is taxable, including
> both the stuff mailed to MN and the digital downloads, based on a
> recent (last few years) change in California's sales tax.
>
> I was under the impression that interstate sales were taxed at the
> purchaser's end, and he doesn't have nexus with Minnesota to be
> required to collect Minnesota Sales Tax. (I know that I have to pay
> Use Tax.)
>
> Who is correct?
>
> Seth
>
I'm not aware of any such change. I can see how the hard copy
> I live in Minnesota. Last week, I purchased some items (DVDs, digital
> downloads, and admission to a seminar) from someone in California.
> The seminar will take place in California.
>
> Payment was made when I phoned him (from Minnesota) and provided a
> credit card number.
>
> He said his accountant said that the full sale is taxable, including
> both the stuff mailed to MN and the digital downloads, based on a
> recent (last few years) change in California's sales tax.
>
> I was under the impression that interstate sales were taxed at the
> purchaser's end, and he doesn't have nexus with Minnesota to be
> required to collect Minnesota Sales Tax. (I know that I have to pay
> Use Tax.)
>
> Who is correct?
>
> Seth
>
materials could be subject to California use tax because they are
purchased, presumably, for first functional use at the seminar in
California (see Reg. Sec. 1620(b)(3)). However, it seems to me that
the true object of the contract here (see Reg. Sec. 1501) is the
service to be provided at the seminar, and the tangible and intangible
(downloaded) materials are incidental to providing that service.
I'd love it if you'd ask the guy to cite chapter and verse. There may
be something I'm not aware of here.
Katie in San Diego
Stuart A. Bronstein
Feb 9, 2012, 8:51:50 PM2/9/12
to
Katie in San Diego <katie...@yahoo.com> wrote:
> se...@panix.com (Seth) wrote:
>> I live in Minnesota. Last week, I purchased some items (DVDs,
>> digital downloads, and admission to a seminar) from someone in
>> California. The seminar will take place in California.
>>
>> Payment was made when I phoned him (from Minnesota) and
>> provided a credit card number.
>>
>> He said his accountant said that the full sale is taxable,
>> including both the stuff mailed to MN and the digital
>> downloads, based on a recent (last few years) change in
>> California's sales tax.
>>
>> I was under the impression that interstate sales were taxed at
>> the purchaser's end, and he doesn't have nexus with Minnesota
>> to be required to collect Minnesota Sales Tax. (I know that I
>> have to pay Use Tax.)
>>
>> Who is correct?
>
> se...@panix.com (Seth) wrote:
>> I live in Minnesota. Last week, I purchased some items (DVDs,
>> digital downloads, and admission to a seminar) from someone in
>> California. The seminar will take place in California.
>>
>> Payment was made when I phoned him (from Minnesota) and
>> provided a credit card number.
>>
>> He said his accountant said that the full sale is taxable,
>> including both the stuff mailed to MN and the digital
>> downloads, based on a recent (last few years) change in
>> California's sales tax.
>>
>> I was under the impression that interstate sales were taxed at
>> the purchaser's end, and he doesn't have nexus with Minnesota
>> to be required to collect Minnesota Sales Tax. (I know that I
>> have to pay Use Tax.)
>>
>> Who is correct?
>
> I'm not aware of any such change. I can see how the hard copy
> materials could be subject to California use tax because they
> are purchased, presumably, for first functional use at the
> seminar in California (see Reg. Sec. 1620(b)(3)). However, it
> seems to me that the true object of the contract here (see Reg.
> Sec. 1501) is the service to be provided at the seminar, and the
> tangible and intangible (downloaded) materials are incidental to
> providing that service.
First of all, it's not that the transaction isn't subject to sales
> materials could be subject to California use tax because they
> are purchased, presumably, for first functional use at the
> seminar in California (see Reg. Sec. 1620(b)(3)). However, it
> seems to me that the true object of the contract here (see Reg.
> Sec. 1501) is the service to be provided at the seminar, and the
> tangible and intangible (downloaded) materials are incidental to
> providing that service.
tax. It is (at least the law claims it is). It's just that it's
normally thought that a state has no jurisdiction over someone out
of state, and can't demand tax from him because of that.
It looks like this issue would be governed by 18 CCR §1620. It's
fairly long, but it appears to say that sales tax is applies on
every sale unless the US Constitution prohibits it, or the sale is
to a foreign country, or there is some other explicit exemption.
Or it might be that internet downloads aren't "shipped" out of
state, so it's not clear where they will be used or delivered, and
they tax it on that basis because it might be used in California.
I agree with you that in many cases program material might be
incidental to a class, and as a result might not be taxable,
similar to how a document drafted by a lawyer is considered
primarily services and the document itself is incidental and not
taxable.
But if the material isn't a product of the seminar but something
that can be used independently from the seminar, it seems to me
that the material might be subject to tax if purchased or received
separately from the seminar.
I don't know why they would try to tax both, though. There is the
general rule that when you purchase goods and also services to make
or improve those goods, the entire sale is taxable. Perhaps it's
some incorrect application of that.
___
Stu
http://DownToEarthLawyer.com
Seth
Feb 10, 2012, 12:20:39 AM2/10/12
to
In article <90d59cea-3efe-49c0...@i18g2000yqf.googlegroups.com>,
of a different seminar that took place several years ago). Similarly,
the downloads are recordings of still other past seminars.
> However, it seems to me that
>the true object of the contract here (see Reg. Sec. 1501) is the
>service to be provided at the seminar, and the tangible and intangible
>(downloaded) materials are incidental to providing that service.
The items are all reasonably independent; I could have purchased any
combination of them I chose (or other such items, which I chose not
to).
Seth
Katie in San Diego <katie...@yahoo.com> wrote:
>On Feb 8, 12:36 pm, se...@panix.com (Seth) wrote:
>> I live in Minnesota. Last week, I purchased some items (DVDs, digital
>> downloads, and admission to a seminar) from someone in California.
>> The seminar will take place in California.
>> I live in Minnesota. Last week, I purchased some items (DVDs, digital
>> downloads, and admission to a seminar) from someone in California.
>> The seminar will take place in California.
>I'm not aware of any such change. I can see how the hard copy
>materials could be subject to California use tax because they are
>purchased, presumably, for first functional use at the seminar in
>California (see Reg. Sec. 1620(b)(3)).
I wasn't clear. The DVDs were snail-mailed to me (they're a recording
>materials could be subject to California use tax because they are
>purchased, presumably, for first functional use at the seminar in
>California (see Reg. Sec. 1620(b)(3)).
of a different seminar that took place several years ago). Similarly,
the downloads are recordings of still other past seminars.
> However, it seems to me that
>the true object of the contract here (see Reg. Sec. 1501) is the
>service to be provided at the seminar, and the tangible and intangible
>(downloaded) materials are incidental to providing that service.
combination of them I chose (or other such items, which I chose not
to).
Seth
Katie in San Diego
Feb 10, 2012, 1:10:55 PM2/10/12
to
On Feb 9, 9:20 pm, se...@panix.com (Seth) wrote:
> In article <90d59cea-3efe-49c0-96a8-9c2145458...@i18g2000yqf.googlegroups.com>,
California sales or use tax, and not Minnesota use tax? If the seller
has nexus with Minnesota, the tangible property would be subject to MN
use tax, and the seller would be obligated to collect and pay it over
to Minnesota. Whether the fee for the seminar, which I presume was
separately stated, would be subject to MN tax seems a stretch to me,
but I haven't looked at the Minnesota statutes.
Katie in San Diego
> In article <90d59cea-3efe-49c0-96a8-9c2145458...@i18g2000yqf.googlegroups.com>,
> Katie in San Diego <katiej_1...@yahoo.com> wrote:
>
> >On Feb 8, 12:36 pm, se...@panix.com (Seth) wrote:
> >> I live in Minnesota. Last week, I purchased some items (DVDs, digital
> >> downloads, and admission to a seminar) from someone in California.
> >> The seminar will take place in California.
> >I'm not aware of any such change. I can see how the hard copy
> >materials could be subject to California use tax because they are
> >purchased, presumably, for first functional use at the seminar in
> >California (see Reg. Sec. 1620(b)(3)).
>
> I wasn't clear. The DVDs were snail-mailed to me (they're a recording
> of a different seminar that took place several years ago). Similarly,
> the downloads are recordings of still other past seminars.
>
> > However, it seems to me that
> >the true object of the contract here (see Reg. Sec. 1501) is the
> >service to be provided at the seminar, and the tangible and intangible
> >(downloaded) materials are incidental to providing that service.
>
> The items are all reasonably independent; I could have purchased any
> combination of them I chose (or other such items, which I chose not
> to).
>
> Seth
>
Well, that does change the facts. Are you sure you were charged
>
> >On Feb 8, 12:36 pm, se...@panix.com (Seth) wrote:
> >> I live in Minnesota. Last week, I purchased some items (DVDs, digital
> >> downloads, and admission to a seminar) from someone in California.
> >> The seminar will take place in California.
> >I'm not aware of any such change. I can see how the hard copy
> >materials could be subject to California use tax because they are
> >purchased, presumably, for first functional use at the seminar in
> >California (see Reg. Sec. 1620(b)(3)).
>
> I wasn't clear. The DVDs were snail-mailed to me (they're a recording
> of a different seminar that took place several years ago). Similarly,
> the downloads are recordings of still other past seminars.
>
> > However, it seems to me that
> >the true object of the contract here (see Reg. Sec. 1501) is the
> >service to be provided at the seminar, and the tangible and intangible
> >(downloaded) materials are incidental to providing that service.
>
> The items are all reasonably independent; I could have purchased any
> combination of them I chose (or other such items, which I chose not
> to).
>
> Seth
>
California sales or use tax, and not Minnesota use tax? If the seller
has nexus with Minnesota, the tangible property would be subject to MN
use tax, and the seller would be obligated to collect and pay it over
to Minnesota. Whether the fee for the seminar, which I presume was
separately stated, would be subject to MN tax seems a stretch to me,
but I haven't looked at the Minnesota statutes.
Katie in San Diego
Stuart A. Bronstein
Feb 10, 2012, 3:15:06 PM2/10/12
to
> Well, that does change the facts. Are you sure you were charged
> California sales or use tax, and not Minnesota use tax? If the
> seller has nexus with Minnesota, the tangible property would be
> subject to MN use tax, and the seller would be obligated to
> collect and pay it over to Minnesota. Whether the fee for the
> seminar, which I presume was separately stated, would be subject
> to MN tax seems a stretch to me, but I haven't looked at the
> Minnesota statutes.
Do California and Minnesota have a sales tax compact?
> California sales or use tax, and not Minnesota use tax? If the
> seller has nexus with Minnesota, the tangible property would be
> subject to MN use tax, and the seller would be obligated to
> collect and pay it over to Minnesota. Whether the fee for the
> seminar, which I presume was separately stated, would be subject
> to MN tax seems a stretch to me, but I haven't looked at the
> Minnesota statutes.
___
Stu
http://DownToEarthLawyer.com
Seth
Feb 10, 2012, 3:32:04 PM2/10/12
to
In article <a296c634-9165-4c1c...@eb6g2000vbb.googlegroups.com>,
> If the seller has nexus with Minnesota,
He doesn't.
> the tangible property would be subject to MN
>use tax, and the seller would be obligated to collect and pay it over
>to Minnesota. Whether the fee for the seminar, which I presume was
>separately stated, would be subject to MN tax seems a stretch to me,
>but I haven't looked at the Minnesota statutes.
I would expect the seminar to be subject to California taxes (if they
tax such services), since that's where it will take place. I don't
see why the physical (snailmail) delivered items, or the digital
downloads, should be subject to California tax.
Would the answer change if the sale took place in California? (I know
there are stores in New York that advertise that they'll ship your
purchase to you out-of-state and thereby avoid collecting Sales Tax.)
Seth
Katie in San Diego <katie...@yahoo.com> wrote:
>Well, that does change the facts. Are you sure you were charged
>California sales or use tax, and not Minnesota use tax?
Yes.
>Well, that does change the facts. Are you sure you were charged
>California sales or use tax, and not Minnesota use tax?
> If the seller has nexus with Minnesota,
> the tangible property would be subject to MN
>use tax, and the seller would be obligated to collect and pay it over
>to Minnesota. Whether the fee for the seminar, which I presume was
>separately stated, would be subject to MN tax seems a stretch to me,
>but I haven't looked at the Minnesota statutes.
tax such services), since that's where it will take place. I don't
see why the physical (snailmail) delivered items, or the digital
downloads, should be subject to California tax.
Would the answer change if the sale took place in California? (I know
there are stores in New York that advertise that they'll ship your
purchase to you out-of-state and thereby avoid collecting Sales Tax.)
Seth
Stuart A. Bronstein
Feb 10, 2012, 4:15:19 PM2/10/12
to
se...@panix.com (Seth) wrote:
> I would expect the seminar to be subject to California taxes (if
> they tax such services), since that's where it will take place.
> I don't see why the physical (snailmail) delivered items, or the
> digital downloads, should be subject to California tax.
There is no sales tax on services in California, so there should be
> I would expect the seminar to be subject to California taxes (if
> they tax such services), since that's where it will take place.
> I don't see why the physical (snailmail) delivered items, or the
> digital downloads, should be subject to California tax.
no tax on the workshop per se.
As far as the materials are concerned, the only thing I can think of
is what Katie already mentioned - that since the materials go along
with the workshop, they will be "used" in CA, and the use tax (if not
the sales tax) will apply.
___
Stu
http://DownToEarthLawyer.com
Katie in San Diego
Feb 10, 2012, 5:52:20 PM2/10/12
to
On Feb 10, 12:32 pm, se...@panix.com (Seth) wrote:
> In article <a296c634-9165-4c1c-8f1b-2844fd534...@eb6g2000vbb.googlegroups.com>,
include it in the measure of the tax only if it was part of a bundled
transaction that included the tangible personal property, with the
latter being the true object of the transaction.
Of course if you had purchased the tangible items in California,
California sales tax would have applied. Neither California sales nor
use tax would apply to property shipped out of California for use
outside California. And digital downloads are still not subject to
tax in California as far as I know!
I wish you would go back to the vendor and ask him for a citation.
Tell him it's just out of curiosity <G>.
Katie in San Diego
PS - some of those NY stores have gotten into serious trouble by
shipping empty boxes to the out-of-state customer's home, while the
customer walked out of the store with the jewelry or whatever.
> In article <a296c634-9165-4c1c-8f1b-2844fd534...@eb6g2000vbb.googlegroups.com>,
> Katie in San Diego <katiej_1...@yahoo.com> wrote:
>
> >Well, that does change the facts. Are you sure you were charged
> >California sales or use tax, and not Minnesota use tax?
>
> Yes.
>
> > If the seller has nexus with Minnesota,
>
> He doesn't.
>
> > the tangible property would be subject to MN
> >use tax, and the seller would be obligated to collect and pay it over
> >to Minnesota. Whether the fee for the seminar, which I presume was
> >separately stated, would be subject to MN tax seems a stretch to me,
> >but I haven't looked at the Minnesota statutes.
>
> I would expect the seminar to be subject to California taxes (if they
> tax such services), since that's where it will take place. I don't
> see why the physical (snailmail) delivered items, or the digital
> downloads, should be subject to California tax.
>
> Would the answer change if the sale took place in California? (I know
> there are stores in New York that advertise that they'll ship your
> purchase to you out-of-state and thereby avoid collecting Sales Tax.)
>
> Seth
As Stu says, California wouldn't tax the seminar as such, and would
>
> >Well, that does change the facts. Are you sure you were charged
> >California sales or use tax, and not Minnesota use tax?
>
> Yes.
>
> > If the seller has nexus with Minnesota,
>
> He doesn't.
>
> > the tangible property would be subject to MN
> >use tax, and the seller would be obligated to collect and pay it over
> >to Minnesota. Whether the fee for the seminar, which I presume was
> >separately stated, would be subject to MN tax seems a stretch to me,
> >but I haven't looked at the Minnesota statutes.
>
> I would expect the seminar to be subject to California taxes (if they
> tax such services), since that's where it will take place. I don't
> see why the physical (snailmail) delivered items, or the digital
> downloads, should be subject to California tax.
>
> Would the answer change if the sale took place in California? (I know
> there are stores in New York that advertise that they'll ship your
> purchase to you out-of-state and thereby avoid collecting Sales Tax.)
>
> Seth
include it in the measure of the tax only if it was part of a bundled
transaction that included the tangible personal property, with the
latter being the true object of the transaction.
Of course if you had purchased the tangible items in California,
California sales tax would have applied. Neither California sales nor
use tax would apply to property shipped out of California for use
outside California. And digital downloads are still not subject to
tax in California as far as I know!
I wish you would go back to the vendor and ask him for a citation.
Tell him it's just out of curiosity <G>.
Katie in San Diego
PS - some of those NY stores have gotten into serious trouble by
shipping empty boxes to the out-of-state customer's home, while the
customer walked out of the store with the jewelry or whatever.
Seth
Feb 11, 2012, 10:29:27 PM2/11/12
to
In article <95c8d102-e5f4-4c49...@k40g2000yqf.googlegroups.com>,
>Of course if you had purchased the tangible items in California,
>California sales tax would have applied. Neither California sales nor
>use tax would apply to property shipped out of California for use
>outside California.
In fact, they came from a fulfillment house in another state (I don't
recall which, but not California or Minnesota).
> And digital downloads are still not subject to
>tax in California as far as I know!
>
>I wish you would go back to the vendor and ask him for a citation.
>Tell him it's just out of curiosity <G>.
I'll do that.
>PS - some of those NY stores have gotten into serious trouble by
>shipping empty boxes to the out-of-state customer's home, while the
>customer walked out of the store with the jewelry or whatever.
I know. The only time I did that, I was buying clothing that needed
alteration, so it had to be shipped.
Seth
Katie in San Diego <katie...@yahoo.com> wrote:
>On Feb 10, 12:32 pm, se...@panix.com (Seth) wrote:
>> I would expect the seminar to be subject to California taxes (if they
>> tax such services), since that's where it will take place. I don't
>> see why the physical (snailmail) delivered items, or the digital
>> downloads, should be subject to California tax.
>>
>> Would the answer change if the sale took place in California? (I know
>> there are stores in New York that advertise that they'll ship your
>> purchase to you out-of-state and thereby avoid collecting Sales Tax.)
>
>On Feb 10, 12:32 pm, se...@panix.com (Seth) wrote:
>> I would expect the seminar to be subject to California taxes (if they
>> tax such services), since that's where it will take place. I don't
>> see why the physical (snailmail) delivered items, or the digital
>> downloads, should be subject to California tax.
>>
>> Would the answer change if the sale took place in California? (I know
>> there are stores in New York that advertise that they'll ship your
>> purchase to you out-of-state and thereby avoid collecting Sales Tax.)
>
>As Stu says, California wouldn't tax the seminar as such, and would
>include it in the measure of the tax only if it was part of a bundled
>transaction that included the tangible personal property, with the
>latter being the true object of the transaction.
Nope, they were all independent purchases.
>include it in the measure of the tax only if it was part of a bundled
>transaction that included the tangible personal property, with the
>latter being the true object of the transaction.
>Of course if you had purchased the tangible items in California,
>California sales tax would have applied. Neither California sales nor
>use tax would apply to property shipped out of California for use
>outside California.
recall which, but not California or Minnesota).
> And digital downloads are still not subject to
>tax in California as far as I know!
>
>I wish you would go back to the vendor and ask him for a citation.
>Tell him it's just out of curiosity <G>.
>PS - some of those NY stores have gotten into serious trouble by
>shipping empty boxes to the out-of-state customer's home, while the
>customer walked out of the store with the jewelry or whatever.
alteration, so it had to be shipped.
Seth
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