May 24 2010

Do you pay sales tax for online purchases?

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Yesterday when sharing my camping gear deals, I mentioned that I wasn’t charged sales tax, since I bought from an online place that doesn’t have a Pennsylvania location.

Reader AnnMarie commented:

“You didn’t have to pay sales tax up front, but that’s because the company isn’t collecting it on behalf of your state. But almost every state requires that YOU pay the sales tax, reporting all online purchases for which you did not pay sales tax when you file your tax return, and paying it at that time.”

Hmm. At first, I thought…well who actually does that? And is it even true?

Turns out, oh yes it’s true.

It’s called “use tax.” The Commonwealth of Pennsylvania describes its importance here, basically stating that when we don’t pay sales tax on an out-of-state item, we’re hurting businesses that are in our state since they can’t be as competitive. Because yeah — it’s essentially a 7% discount to shop out-of-state if you don’t pay the sales tax.

Pennsylvania residents — here is the form you need to use. The tax is due by the 20th of the month following the purchase.

Interesting stuff.

First of all, states (at least, PA) are not doing a good job of publicizing this. I didn’t even know it existed until AnnMarie called my attention to it.

Some Googling showed that there had been attempts at legislation to require online vendors to collect sales tax on behalf of the consumer, but it doesn’t look like that has made progress.

Honestly, if states want their tax money from online purchases, they are going to need it automated. Because if people can fairly easily avoid paying taxes, they’re going to. How can the government monitor your online purchases? You’d like to think they can’t just be all Big Brother about it and know…but ya never know.

Do you send use tax payments to your state every month that you’ve made a qualifying purchase? What do you think about the issue?


May 23 2010

I saved on camping gear by splitting a purchase into 3 transactions

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UPDATE: I am now aware of use tax that is required when you make online purchases out-of-state. Read more about it here.

After reading about how much fun Ashley and Jes have while camping, and hearing my husband talk about how he wanted to go…I thought, “Well why not?”

Sure, I’m inexperienced and I’m not exactly an outdoorsy person. And I’m a wimp when it comes to mosquitoes and critters and sleeping on the ground. But I can give it a shot and be a good sport about it. My son is sure to love it, and I’m pretty sure my husband will, too. I’ll probably like some aspects (S’mores!). And let’s face it — camping is a really cheap way to get out.

I’m accumulating camping gear (while you can borrow or rent stuff, I am buying most of our gear. It seems that everything except the tent will serve dual purposes, so I’m fine with the start-up costs).

Ashley suggested I check out Target and Walmart for good prices on gear. They do have good prices — but so does Meijer! Oh man. Meijer.

There isn’t a Meijer near me so I almost forgot about the store entirely. Since there isn’t a physical store in Pennsylvania, I didn’t have to pay sales tax on my purchases. That adds up!

From Meijer.com, I made three separate purchases. I first started out through Ebates*, where clicking through that site first earns me 1.5% cash back.

I ended up splitting my purchases into three transactions because I could only use one coupon code per order, and it was the best way I could save some money.

Transaction #1:

Two sleeping bags. I chose these because we’re tall and would prefer long-length bags. I wanted cotton inners and outers because I don’t like slipping around in a polyester bag, plus they are noisy. The weight doesn’t really matter since we won’t be carrying it far. $37.45 each on sale. A similar bag was $57 each (plus tax) at Target — it would have been $122 just for the bags!

The total for those two bags was $74.90. There was a code that I found on RetailMeNot for free shipping on orders over $75. Ten cents shy. Drat.

The shipping would have been $13.95. That’s just too much!

So I hunted around for some other equipment we would need so that I could save money on shipping.

I chose these camp chairs with a little table for $23.99.

My total for the two bags and camp chairs set was $102.84. I did have to pay about $4 in shipping, because the code I had was good for up to $15 worth of free shipping. $4 is better than $14!

Transaction #2:

I did a bit of research and asking around and chose this tent. I hope it serves us well. I wanted one that I could stand upright in and that would have some extra room for our stuff and for Johnny to move around. I wanted a three-season tent because it just isn’t hot in Pennsylvania. We have like two days above 90 degrees a year, it seems — and it’s not really that bad. Nights are cool, even in summers. And I just get cold easily and I would imagine my baby would, too. He’s not as chubby as he once was.

This tent was listed at $179.99 with free shipping already. The same one is listed at $220 on Target with free shipping and a 15% off ($33) discount, so $187 plus tax — $200 total, roughly.

At Meijer, I had a coupon code good for $25 off a $175 purchase, so it brought it down to $154.99 and again, no tax.

Transaction #3:

Because I am a wimp (and for pete’s sake, I’m also pregnant) I insisted on an air mattress. I chose this queen-sized double-high air mattress for $45.38. I bought a separate, battery-operated pump for $12.13. (I bought three foam pads to put underneath the airbed, but from Walmart locally).

My total was $57.51. Shipping would have been $13.95. No thanks — so I kept on searching for something else to add to the order.

I went with this LED lantern for $21.71.

Since it was more than $75 at that point, I went ahead and used the free shipping code that I used in my first transaction.

Total for this one was $79.22.

All told, I spent $337.05 on these purchases from Meijer. I will get 1.5% cash back from Ebates so that’s an extra $5.05 or so back.

Splitting the transaction into 3 allowed me to save $29 on shipping costs. And since I got it from Meijer and didn’t have to pay sales tax, that’s another $23.59 I didn’t have to spend.

Any tips you wanna share with me? What types of items aren’t so obvious to bring, but extremely helpful? Once I get it all, I’ll write another post detailing all that we’ve purchased and the costs.

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Hey! I'm Kacie, wife and mother of 3. I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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