Aliexpress charges sales tax?

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TheIntruder
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Alibaba has a U.S. office in California, one of at least two states (NY being the other) known for loving their taxes and not being shy about pursuing them.

Given that, Alibaba not only has an economic nexus, but a physical nexus in that state.

California state law does not exempt foreign sellers.

Quote:

New Information – On April 25, 2019, California passed Assembly Bill No. (AB) 147 (Stats. 2019, ch. 5). AB 147 amended Revenue and Taxation Code (RTC) section 6203 to require retailers located outside of California (remote sellers, including foreign sellers located outside of the United States) to register with the California Department of Tax and Fee Administration (CDTFA) and collect California use tax if, during the preceding or current calendar year, the total combined sales of tangible personal property for delivery in California by the retailer and all persons related to the retailer exceed $500,000. A person is related to a retailer if they have a relationship with the retailer described in section 267(b) of title 26 of the United States Code and the related regulations.

IMPORTANT NOTE – In general, the requirements to register and collect California use tax prior to AB 147 remain in effect. That is, retailers with a physical presence in California are still generally required to be registered with the CDTFA. Examples of a physical presence in this state include, but are not limited to:

  • Maintaining inventory or office locations in California.
  • Having representatives in California for purposes of taking orders, making sales or deliveries, or installing or assembling tangible personal property.
  • Leasing equipment, including a computer server in California.

AB 147 also amended RTC section 7262 to require all retailers, whether located inside or outside of California, to collect district use tax on all sales made for delivery in any district that imposes a district tax if, during the preceding or current calendar year, the total combined sales of tangible personal property in California or for delivery in California by the retailer and all persons related to the retailer exceed $500,000. This new collection requirement is operative April 25, 2019 (see Special Notice L-684). Please see the General Info and Collection Requirement section for additional information about district tax and the new district use tax collection requirement.

Pragmatically speaking, if AX is so shady, why do so many sellers, and their buyers here, do business with them? There are no shortage of other marketplace options, but I think it’s fair to say that AX still have a big piece of the action.

Lightbringer
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TheIntruder wrote:
Alibaba has a U.S. office in California, one of at least two states (NY being the other) known for loving their taxes and not being shy about pursuing them.

Just my luck…

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scosgt
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Having an office does not mean they have any assets here.

pennzy
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My last purchase on Ebay was divided into two charges in my pay pal account. One charge to the Chinese company and one for the tax.

dangerous beans
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I too have been shopping Aliexpress for 6 years. I started being charged sales tax October 1, 2019. I live in Tennessee, and from what I understand, I should not be charged sales tax. Do you ever have any sellers refuse to remove the sales tax charge? It wasn’t too long ago that we also started getting charged for shipping too, and it is quite high. The shipping and sales tax charges take a pretty big chunk out of my small business profit. I am going to try to also ask for sales tax to be removed and see what happens. Thanks for posting as I have found little to no information on this topic.

RD

kat
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How much is this sales tax?

dangerous beans
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Right around 10%

RD

pennzy
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dangerous beans wrote:
Right around 10%

Is 10% the normal Tn. sales tax rate?
dangerous beans
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9.75%

RD

pennzy
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I know that my last ebay purchase from a Chinese company was taxed. 2 separate charges on PP. One for the product and one for the tax. I assume the tax goes to my home state.

dangerous beans
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Let’s hope!

RD

pennzy
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My last Amazon purchase was divided into 2 separate charges also.

atobe
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Same here, two charges on CC. Now I just look for a local or same state seller if I can on eBay, at least I’ll get it sooner.

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Vegas LED Fan
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eBay warned buyers about two months ago that if they had a state sales tax exemption they needed to register it with eBay or they would be charged sales tax. For me without an exemption, they started charging the 8% Nevada sales tax on 11/1/19. I guess now there is no way to avoid paying it. RATS!

MtnDon
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Taxes do bring us things, services we benefit from. I don’t like paying taxes all that much, but I do appreciate the services my local government supplies. Online sales that did not collect and forward taxes cut deeply into the revenue of my small county for many years. We now get some taxes on sales by Amazon and some other online sellers. I do feel that is equitable. I never did buy online tjust to save on taxes, but rather because I could not find the item locally or for the convenience. I do wonder how in the world an online seller like Aliexpress can be trusted to forward any taxes they collect.

I did find an online article that did state that taxes are collected by Aliexpress, for sales that are shipped to Connecticut. District of Columbia, Idaho, Iowa, Nebraska, New Jersey, New York, South Carolina Washington. There was no explanation as to the reason those states are taxed but others are not.

EDIT: I originally left out that the collected taxes in places in the last paragraph were for Aliexpress.

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dangerous beans
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I did see that same list of states, but I am in Tennessee, and I am being charged tax.

RD

pennzy
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Every state makes there own rules. In time they all will be collecting the tax.

pennzy
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dangerous beans wrote:
9.75%

Wow, that’s high. I guess you have lower income or property taxes in TN.
RobertB
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pennzy wrote:
dangerous beans wrote:
9.75%
Wow, that’s high. I guess you have lower income or property taxes in TN.

TN has no income tax, and some of the lowest property taxes in the nation. They do have a “Hall” tax, which is an income tax on interest and dividends. But I think that is low too.

kat
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Maybe it’s charged by the bank/cc company, and not Ali/ebay/store ?

TheIntruder
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The bottom line is that these taxes are going to your state governments, so if you have an issue with them, take it up with your state lawmakers.

For years, the standard for online taxes was defined by the physical nexus. SD vs Wayfair relaxed that, and enabled states to enact laws to for force retailers to be responsible for tax collection, in effect, shifting the burden for enforcement to the retailers.

Prior to the court ruling, many states already had use taxes in the books, which were the surrogate. That relied on residents to self-report, and pay, which few did. Those laws were next to impossible to enforce, at least for personal transactions. Businesses could be audited, but nobody had the capacity to track every individual purchase.

Congress could have stepped in and provided a Federal framework, long before the ruling, but neglected to, for a myriad of reasons. So the Supreme Court in effect, broke the dam, and enabled each state to act independently in how it wished to tax online sales.

That has resulted in confusion, as there are at least fifty separate jurisdictions, each responsible for setting their own thresholds and time lines for retailers to adhere to.

It’s not something retailers relish either, as it adds additional work for them to interpret and follow the laws for each state, and was long one of the arguments for something to be done at the Federal level.

But since that wasn’t forthcoming, this is the result. The states want their taxes, and the B&M retail lobby wanted to “level the playing field” one way or another.

pennzy
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That about covers it. It all gets back to death and taxes.

ka7mef
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I noticed the sales tax addition now as well, Ok Supreme court says states can..
But here in WA, to legally collect sales tax, the company must be registered, the company doesn’t have to have a physical presence, just be registered.
AliExpress is not registered in WA.
So when they collect sales tax, it is a SCAM!

Takeeasy
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You are wrong, I will blame this to the state, I living in Ny, Amazon AliExpress eBay wish all charge me the tax now. and the funny thing is if I pay stuff in “Taobao” which is same aliexpree company but just in China, and I use my US credit card to pay for it, they will charge my tax depending on which state on my billing address, and no tax if I use my chinese account to pay, and I can see there is 2 charge, one is going to taobao another one is going to NY state, so I know not only the company who shipping to US will be charge tax, even you buying stuff in other country and shipping to the local you will have to pay the tax too, the new law is bad for our customers! I guess I am paying tax no matter in which country if I am using my credit card or PayPal,

Takeeasy
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ka7mef wrote:
I noticed the sales tax addition now as well, Ok Supreme court says states can..
But here in WA, to legally collect sales tax, the company must be registered, the company doesn’t have to have a physical presence, just be registered.
AliExpress is not registered in WA.
So when they collect sales tax, it is a SCAM!

You are wrong, I will blame this to the state, I living in Ny, Amazon AliExpress eBay wish all charge me the tax now. and the funny thing is if I pay stuff in “Taobao” which is same aliexpree company but just in China, and I use my US credit card to pay for it, they will charge my tax depending on which state on my billing address, and no tax if I use my chinese account to pay, and I can see there is 2 charge, one is going to taobao another one is going to NY state, so I know not only the company who shipping to US will be charge tax, even you buying stuff in other country and shipping to the local you will have to pay the tax too, the new law is bad for our customers! I guess I am paying tax no matter in which country if I am using my credit card or PayPal,
Barry0892
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From what I know, ebay and amazon charges taxes, and the taxes will not go to sellers account. Sellers can not take it.

And eBay sellers have to pay for the paypal fee of “price + tax”. For example, if no tax, the income is the price, let’s say US$10, paypal fee will be 3.9%*10+0.3=$0.69. But if there is tax, let’s say $1,they paypal fee will be 3.9%*(10+1)+0.3=$0.73. The tax is not seller’s income, but paypal charges more fee if there is tax.

I don’t know about aliexpress. But from what I know, sellers can not control that but platform “eBay” “amazon” do.

Oh, people who were charged tax fee on aliexpress, do you use paypal to pay? If so, I guess it was PayPal who charged the tax.

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