An interesting offer from B&H to cancel out sales tax

[mi-fu]

I have no affiliation with B&H, but just find this interesting from dpreview. And this certainly affects ways to do business on the internet.

https://www.dpreview.com/news/88281...net-sales-tax-with-its-new-payboo-credit-card

https://www.bhphotovideo.com/credit-cards

So basically, by rolling out its own credit card (the "credit card" can only be used with B&H and it is NOT a Visa / master, etc) , B&H and the card issuer absorb the tax. It is an unexpected way to deal with the new internet sales tax. And surprisingly, this new scheme is even applicable to NY state - people who have always needed to pay tax if shopping at B&H.

Say, for NY, the tax is 8.875%. I am quite surprised that B&H (and the bank) are willing to take up that amount. But thinking that they can avoid the user from using credit cards / paypal (a few %), and potential financial fees from people using the credit line of the new card. They can compensate a bit on the extra expense.

But still, I think they need to lose some profit on that.

I guess the new inter-state tax ruling just affects their business a lot.

Imagine, what if Amazon is taking a similar approach? It will instantly create a strong credit card business (quicker than Apple credit card).

 

[maxxevv]

Amazon's card will supercede Paypal in transaction value in a few short months if they do something like that .....

 

[invaderzim]

...But still, I think they need to lose some profit on that.
....

Or they will make a killing on interest: ** For new accounts: Purchase APR is 29.99%

 

[invaderzim]

On a side note, these new sales tax rules are a nightmare for mid-sized online businesses.

 

[mi-fu]

A bit earlier, I also received an email from eBay that they are obliged to collect tax for out-of-state purchase. It will be a nightmare for many eBay sellers too.

To be fair, though, online businesses have been taking advantage of this for years to overpower brick-and-mortar (I would admit they are dying anyway). The original tax regulations clearly not keep up with today's e-commerce environment.

But as a consumer, I still hope I can avoid all sale tax!

 

[invaderzim]

A bit earlier, I also received an email from eBay that they are obliged to collect tax for out-of-state purchase. It will be a nightmare for many eBay sellers too.

At least ebay will (should) handle all of the collecting an distributing of the tax .

To be fair, though, online businesses have been taking advantage of this for years to overpower brick-and-mortar (I would admit they are dying anyway). The original tax regulations clearly not keep up with today's e-commerce environment.

I agree, but it would be nice if they could find a way to simplify it.

Right now 28 states have a requirement that sales taxes be collected for out of state orders that are shipped there. The states all have their own criteria for what makes a business required to collect taxes there. Some are based on dollar sales or total number of sales others are based on just dollar sales and others are based on dollar sales and number of sales.

Most of those states require that the vendor collect the tax that matches the exact delivery address.
This means that the vendor has to have your address classified as to where exactly it is located and what taxes are collected for that location. So that they can collect the exact tax rate for the delivery address.

A house across the street might actually have a different tax rate depending on the exact city and county lines. Since cities and counties can implement their own taxes on top of the base state tax. Sales tax in California varies from 7.25% to about 10%.

Then the vendor has to keep a record of the taxes collected and the amounts from it that go to that state, city and county to pay each of them.

And this doesn't even take into account that the states have different rules on what is and isn't taxed. In some states clothes aren't taxed unless they are considered recreational. So winter gloves for work aren't taxed but winter gloves for skiing are taxed.

 

[Ron Texas]

What is likely to happen is that platforms other than the actual sellers will collect the tax. In other words, eBay or the credit card issuers will do it for their merchants. I doubt Amazon will match B&H because Amazon offers 1 day delivery in most transactions. That's a different business model from B&H whose advantage on many items was no sales tax. I expect every single state with a sales tax to be enforcing collections within a year. They either need new regulations or legislation from a legislature which meets every other year. The party is over, but I suppose we can order stuff from overseas.

 

[invaderzim]

There are more and more 3rd party solutions available but they can be costly to implement for some vendors. The really big players like ebay won't have issues with it because they do enough volume they can handle spending a huge chunk to add things like this.
We will likely see more large companies handling the payment for online orders because they will already have things in place to handle it. But that will squeeze the low margin vendors out because they don't have enough markup to give a percentage to someone else.

..., but I suppose we can order stuff from overseas.

And don't even get me started on how much we are paying in our postage rates to offset delivering those package for free.
For a long time I couldn't figure out how I could order something from China for $2 and they could offer 'free' shipping. Then I found out they just pay the Chinese postage on it, once the US gets a hold of it we subsidize the rest of the trip by paying more to ship our packages

 

[Ron Texas]

@invaderzim sorry about the USPS, but it's broken in many ways. BTW, I just got home from the Bay Area last night. I was freezing cold the whole time.

 

[Tks]

A bit earlier, I also received an email from eBay that they are obliged to collect tax for out-of-state purchase. It will be a nightmare for many eBay sellers too.

To be fair, though, online businesses have been taking advantage of this for years to overpower brick-and-mortar (I would admit they are dying anyway). The original tax regulations clearly not keep up with today's e-commerce environment.

But as a consumer, I still hope I can avoid all sale tax!

New York is truly starting to get on my nerves more than ever..