So I know almost every state has different VATs and sometimes even counties. So which VAT is used when you order something online? The one where the selling company is at? Or the one you’re in? And if it’s the one you’re in, couldn’t you just use a VPN to bypass this?

12 comments

  3. We don’t have VAT* we have different sales tax in each state.

    Sales tax is applied to where you have a product shipped. Where you buy it from is irrelevant.

    *There are odd outlying events which result in a VAT, but they’re super rare.

  4. A sales tax is a tax on the financial transaction, not the physical item. Firewood and an intricately carved wooden statue have the same sales tax rate.

    It depends on the taxing state’s legislation. In the past Washington state required the selling company have some sort of physical presence in the state to levy sales taxes.

    But with the advent of e-commerce they changed the law so that anything being sold to Washington state consumers would require the sales taxes.

  5. No state has a VAT. Instead they have sales taxes. VAT is charged at every stage of production and distribution. Sales tax is just charged at the final point of sale.

    The answer to your question is, it depends on the state. In the past, it was only charged if the buyer *and* seller were located in the same state. But as you can imagine, that made it really easy to evade sales tax by buying online from a retailer without a physical presence in your state. States were missing out on revenue, and brick-and-mortar retailers were at an even bigger competitive disadvantage with online shopping.

    Now, many states have since cracked down and are now requiring online sellers to charge sales tax to any buyer within their state, whether they have a presence in that state or not. It’s based on your shipping address, or, if it isn’t a physical good, your credit card billing address. So VPN won’t evade it.

  7. The US doesn’t use VAT. We just have sales tax at state and local level. I’m fairly certain sales tax is based on destination. I only ever pay PA sales tax when I buy something online.

  8. The US does NOT HAVE VAT. There are no *Federal level* ***sales tax*** aka VAT, outside of a few areas like gasoline, and alcohol, *which have these taxes in the price*.

    ***Each state*** *has a SALES TAX,* which in the US is added AT THE POINT OF SALE. The price does not reflect taxes.

    Some states have exemptions for things from this sales tax, like food, clothes. Some have special “tax holidays” for things like back to school supplies, storm prep supplies, .

    Some areas in a state may have passed a special 0.1-1% additional sales tax. My area has this extra 1% which is supposed to be used for various things from various capital improvements ie: fire stations, engines, LEO’s, etc.. So in my area the state is 6% and the county collects 1% for this.

    The sales is collected for WHERE YOU ARE SHIPPING THE ITEM.

    The wink wink wink “loophole” that was used in the past was that if I have my store/business in Idaho, and I sell to you in Ohio, since I don’t have a business presence in OH, I don’t charge the OH Tax. BUT BUT! The law has always been SELF REMITTANCE on this tax when you do this. It was routinely ignored, and nobody really went after it. States needed more tax money for various reasons to meet demand for service or loss of residents fleeing high tax areas.

    Many states have now passed laws to close this wink wink loophole. It reqires all sales sent to the state to be charged sales tax.

  9. It used to be many e commerce sites didn’t charge sales tax unless they had a physical presence in the state. Most if not all states have changed those laws, and places like Amazon have warehouses pretty much every where nowadays .

    Sales tax is charged bases on your location

  10. We don’t have VAT. Sales tax is actually different.

    Used to be that you only paid if the company you were buying from had a presence in your state, but now you pay based on destination.

  11. Sales tax is added to where the item is being delivered vs who is buying it. If my MIL buys my kids something at an in person store or online and brings it with when she flys to see us she pays her sales tax but if she she ships it to us she pays my sales tax. Her sales tax is 6.63% mine is 10.25%.

    VAT isn’t an American thing.

  12. So selling companies have to keep vast tables of tax rates. I’m sure there’s a business to business service that provides that.

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