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Horizon Hobby charges sales tax for online orders???

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Old 02-01-2004, 11:56 PM
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SkyDude
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Default Horizon Hobby charges sales tax for online orders???

Can anyone tell me why Horizon Hobby charges 7% sales tax on online orders? Is that an Illinois law? I live in CA and this is the first time I remember being charged sales tax by an out-of-state company like Tower or Chief Aircraft.

Just curious... thanks!
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Old 02-02-2004, 12:02 AM
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bentgear
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Default RE: Horizon Hobby charges sales tax for online orders???

Dont' they have a warehouse in CA that they ship some stuff from? Bet some of it came from there.

Ed M.
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Old 02-02-2004, 08:56 AM
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Matt Kirsch
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Default RE: Horizon Hobby charges sales tax for online orders???

If the company has an established presence in your state, they have to charge your state's sales tax.

HOWEVER, there has been a lot of work going on behind the scenes in the various levels of government, because they're losing a lot of money on sales tax due to online shopping. Illinois could be very well be one of the first states to adopt a law that you have to collect sales tax no matter where the buyer is from.

Frankly, it's only fair that we should have to pay the sales tax of the state we buy something from... If you drove to Illinois and bought that stuff from a hobby shop, you'd pay Illinois sales tax.

It's a good thing for local hobby shops. Most hobby shops match Horizon's prices, but local sales tax versus shipping, shipping usually is cheaper. If you had to pay the seller's state sales tax on top of shipping, you'd be more apt to buy locally.
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Old 02-02-2004, 09:30 AM
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Default RE: Horizon Hobby charges sales tax for online orders???

I think Horizon has had a California facility since the mid 80s. As Matt said when a company has a physical location in a state they are required to collect that states sales tax. The tax you paid will go to California, not Illinois.

In my home state, Alabama, there is a line on the state income tax for reporting any purchases from out of state merchants where sales tax was not collected. State law requires those purchases to be reported and sales tax paid.

So don't be mad at Horizon, they are only doing what the law requires.

Eric
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Old 02-02-2004, 09:33 AM
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Default RE: Horizon Hobby charges sales tax for online orders???

Matt's right about the presence in CA.

State's can not pass laws to charge tax from out of state. It is against the Constitutional ban on restraint of interstate commerce. The Feds have been considering passing a law to collect the tax, then send it back to the states.
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Old 02-02-2004, 01:39 PM
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Default RE: Horizon Hobby charges sales tax for online orders???

Thanks for the info. I wasn't aware that they had a CA facility, plus, the CA tax rate is 8.25%, not the 7% I was charged. I had to pay for shipping too, so I just was curious. When I get some time, I'll probably call them and get their take.

The reason I'm asking is that I probably won't buy from them again since I can just go to my LHS, get the same or better out-of-pocket price, and not have to pay or wait for shipping. The tax savings is one of the main reasons I buy online besides product availability. Luckily, there are still plenty of online RC places where I don't get taxed.

Thanks again for the comments.
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Old 02-02-2004, 02:14 PM
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Default RE: Horizon Hobby charges sales tax for online orders???

Some years ago there was a 'lake states tax consortium' or some such, where all the states bordering the great lakes agreed to collect sales tax on purchases from one of the other stages. One thing it did was drive a lot of small suppliers out of business, because they did not feel they could afford to do the paperwork involved. For a small business collecting and paying sales tax can be a real pain. The consortium didn't last too long. I understand some of the bigger retailers are collecting sales tax on internet retail sales in other states.

Jim
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Old 02-02-2004, 02:34 PM
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Default RE: Horizon Hobby charges sales tax for online orders???

(Here I go again.)

MNRC dosen't charge out of state tax and their stuff is always cheeper. Give them a go and see what you think.
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Old 02-02-2004, 02:43 PM
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Default RE: Horizon Hobby charges sales tax for online orders???

The tax % is based on the local city/county tax of the area the sale originates from... The Horizons warehouse was in Paso Robles until this last year, they then moved it to Southern Cal.
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Old 02-02-2004, 03:10 PM
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Default RE: Horizon Hobby charges sales tax for online orders???

ORIGINAL: SkyDude

Thanks for the info. I wasn't aware that they had a CA facility, plus, the CA tax rate is 8.25%, not the 7% I was charged. I had to pay for shipping too, so I just was curious. When I get some time, I'll probably call them and get their take.
CA state sales tax is 7%. Santa Clara county sales tax is 1.25%
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Old 02-02-2004, 03:13 PM
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Default RE: Horizon Hobby charges sales tax for online orders???

I have asked Horizon about this and they say it is because they maintain a warehouse in Ontario, CA.
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Old 02-02-2004, 03:50 PM
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Default RE: Horizon Hobby charges sales tax for online orders???

Ahh, and there it is. Thanks for all the info. This is one awesome group of knowledgeable folks.
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Old 02-02-2004, 05:29 PM
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Default RE: Horizon Hobby charges sales tax for online orders???

You bet it is.
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Old 02-05-2004, 02:45 PM
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Default RE: Horizon Hobby charges sales tax for online orders???

ORIGINAL: SkyDude

The tax savings is one of the main reasons I buy online besides product availability. Luckily, there are still plenty of online RC places where I don't get taxed.
This is an oft-misunderstood topic. People think that because an online retailer doesn't charge them sales tax, then they are not obligated to ever pay any tax on those items.

ORIGINAL: depfife

In my home state, Alabama, there is a line on the state income tax for reporting any purchases from out of state merchants where sales tax was not collected. State law requires those purchases to be reported and sales tax paid.

Nearly every state (there may be some exceptions) requires that residents pay what is often referred to as a "use" tax on goods that are purchased out of state and brought into the state for use. Like it or not, every one of your online purchases (if you are the end consumer purchasing from a merchant and the purchase is one for goods) is subject to either sales tax or use tax.

If the merchant has a sufficient presence in your state then the merchant can/should collect sales tax at the time of purchase. If, however, the merchant does not have a sufficient presence in your home state, they are prohibited from charging sales tax to you and you are personally responsible for reporting and paying the applicable use tax for your state when tax time rolls around.

Many people are unknowingly in violation of the law in this area. Check your state law to see how and whether it applies in your state. A simple search for "use tax" and your state will tell you all about it. Then ask yourself, now that you know about it, are you going to comply? That was the question that my tax professor put to us after we covered that particular bit of tax law.
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Old 02-01-2019, 01:21 PM
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Originally Posted by BaronSchwab View Post
You bet it is.
I believe this just started in 2019. I live in Maryland and I've been mail ordering from them for years and they didn't charge out of state tax before then. Welcome to the new year!
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Old 02-02-2019, 02:29 PM
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Nebraska is working on legislation to permit collection of sales tax on online purchases.
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Old 02-02-2019, 03:40 PM
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Last year the Supreme Court overturned Quill Corp vs North Dakota which exempted online retailers from collecting tax on out of state sales, unless a company had a presence in the state. States are now passing legislation so sales tax is collected for online sales. I guess in time we will all pay sales tax for online purchases.
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