Most Commonly Asked Shopping Related Tax QuestionsThursday, March 20, 2014 Mary Anne Velasco
Taxes are a regular part of shopping. Most people learn from an early age that when they check out a register, the price they pay will be more on the price tag. While there is some exclusion to this rule, this is generally the way that shopping and taxes works. Here are some frequent tax questions relating to shopping and taxes.
How are taxes during shopping decided?
The taxes that you pay on the goods that you purchase in store are called sales taxes. Sales taxes are typically set by the local and state government. The state government will set a state wide sales tax rate. The local government can also decide on a local rate, which will be added into the state sales tax rate.
Can the same state have different sales taxes?
Yes, due to local tax rate options, a person purchasing the same item for the same price in one state can pay higher sales taxes in one county versus another. For instance, Los Angeles County California has a local tax rate that equals 9%. Orange County tax rates are equal to 8%. So in Anaheim, a city in Orange County, you will pay 8% in sales taxes, in Malibu, a city in Los Angeles County California, you will pay 9% in sales tax. While places may not be far away from one another, they may have different tax rates due to their county.
Some places can also have three set tax rates. One by the local government, one by the state government, and one set by local special interest groups. In Tuba City, Arizona, there are three taxes which are added on to the sales of goods and services. One is the state tax, another is the county tax, and the third is set by the tribal government which runs the reservation on Tuba City land. This tax is equal to 12.25% all together, and is the highest in the nation.
Are there places in no sales tax rates?
Yes, there are several states in the Union that do not charge sales taxes. These states are Delaware, Montana, New Hampshire, Oregon, and Alaska. While there are no sales taxes in Alaska and Montana, both of these states allow local governments to set tax rates.
For instance, in Homer, Alaska, the sales tax rate set by the local government is 7.5%. For those who live in the city of Anchorage, there is no local tax, so residents there enjoy a 0% tax rate.
Do you have to pay taxes on internet purchases?
There have been a lot of fights and legislation produced about internet sales. Previously, it was not customary to pay taxes on the sale of goods and services ordered online. Now, many states are setting in place taxes on internet goods and services. The general rule that some states are setting is if there is a physical presence by the seller in the state, then sales tax must be charged. If there is no physical presence in the state, tax is void.