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neps · Oct 17, 2003, 08:52 PM

I'm just watching the quicktime stream of the demo, and watched Steve spend his $20 gift certificate on a CD, bringing his total to $10.01 remaining. I know personally when I purchase a $.99 song, I get charged Tax later on, bringing my total to over a dollar. Is this going to happen to the person I sent my Gift Certificate to? It kind of sucks if they are, one because they don't know about it up front as according to the in iTunes update, and two they'll be charged for a gift on tax for something that should have been free.

Anyone test this out and know?

iDriveX · Oct 17, 2003, 09:58 PM

Tax? When I buy a $9.99 album, I get a charge to my debit card for $9.99. Where do you live that you are getting taxed? I am in CA.

CheesePuff · Oct 17, 2003, 10:11 PM

I live in NY and I get charged for $0.99 singles and $9.99 albums.

Art Vandelay · Oct 17, 2003, 11:21 PM

Originally posted by neps:
I'm just watching the quicktime stream of the demo, and watched Steve spend his $20 gift certificate on a CD, bringing his total to $10.01 remaining. I know personally when I purchase a $.99 song, I get charged Tax later on, bringing my total to over a dollar. Is this going to happen to the person I sent my Gift Certificate to? It kind of sucks if they are, one because they don't know about it up front as according to the in iTunes update, and two they'll be charged for a gift on tax for something that should have been free.

Anyone test this out and know?

$20 - $9.99 = $10.01

There's no tax in that transaction. However, it is perfectly normal for there to be tax for a transaction regardless of method of payment including gift certificates. It's no different than giving a $20 bill to a friend to use at a store. Would you expect there to be no tax in that situation too?

Art Vandelay · Oct 17, 2003, 11:23 PM

Originally posted by iDriveX:
Tax? When I buy a $9.99 album, I get a charge to my debit card for $9.99. Where do you live that you are getting taxed? I am in CA.

I live in NY and I get charged for $0.99 singles and $9.99 albums.

Both of you should be getting charged tax. If a company has physical operations in the state that you live in, you must pay tax on online transactions with that company. Apple has physical operations in both of your states.

iDriveX · Oct 18, 2003, 01:00 AM

Originally posted by Art Vandelay:
Both of you should be getting charged tax. If a company has physical operations in the state that you live in, you must pay tax on online transactions with that company. Apple has physical operations in both of your states.

But maybe since the songs were never physical, and there's no physical item being exchanged, it's exempt from tax laws? I mean think about it. Apple has one copy of this song, they are copying a copy, there's no physical anything being transferred to you. You can burn it onto a CD and make it physical but you already paid sales tax on that CD. It's transferred completely over the internet and may even be considered interstate commerce depending on where Apple's file servers actually are (for all I know they are in Tahiti or something). Don't you have some Architecture to do or something?

parkds · Oct 18, 2003, 01:28 AM

Usually the person who purchases the gift certificate is charged tax. Then when the receiver goes to spend the certificate he/she does not have to pay tax since it has already been paid on the transaction. They only have the marked price subtracted from the certificate (unless they spend more than the certificate covers).
The easiest way to think about it is that the gift certificate is the same as someone going into a store and saying I want to pay for $50 worth of merchandise now, but I want to pick it out later.

higuy83 · Oct 18, 2003, 02:06 PM

I live in LA and am ALWAYS charged tax on my single and album downloads... If someone else lives in California and dosen't pay tax, what is going on here?!

-Brian

Art Vandelay · Oct 18, 2003, 03:28 PM

Originally posted by parkds:
Usually the person who purchases the gift certificate is charged tax. Then when the receiver goes to spend the certificate he/she does not have to pay tax since it has already been paid on the transaction. They only have the marked price subtracted from the certificate (unless they spend more than the certificate covers).
The easiest way to think about it is that the gift certificate is the same as someone going into a store and saying I want to pay for $50 worth of merchandise now, but I want to pick it out later.

The person buying the certificate does not pay tax, the person buying the goods with the certificate does. I've never paid tax when I've bought a gift certificate. A gift certificate is just a convenient method of transferring money from one person to another. That is not a taxable transaction. Also, I've always had to pay tax when I've used a certificate unless it is an online transaction and the company does not have a physical presence in my state.

Art Vandelay · Oct 18, 2003, 03:32 PM

Originally posted by iDriveX:
But maybe since the songs were never physical, and there's no physical item being exchanged, it's exempt from tax laws? I mean think about it. Apple has one copy of this song, they are copying a copy, there's no physical anything being transferred to you. You can burn it onto a CD and make it physical but you already paid sales tax on that CD. It's transferred completely over the internet and may even be considered interstate commerce depending on where Apple's file servers actually are (for all I know they are in Tahiti or something). Don't you have some Architecture to do or something?

That is not how it works. When I said physical operations, I did not mean the actual transaction. It refers to whether the company has a physical location in the state, such as a retail store or offices. Apple has either retail stores or offices in most states. Since Apple has stores and is based in California, you should be getting taxed. You won't see the tax when you shop on the iTMS but you will see it on your invoice and credit card statements.

iDriveX · Oct 18, 2003, 05:07 PM

Art- I pay with a debit card with a Visa logo so after about 3 days the funds are transferred out of my account. I have Online Banking and everytime I go to check I am charged $9.99. I have bought 5 albums from the store and everytime $9.99. I promise. And my Quicken still balances, so they haven't charged me the tax later or anything! I just bought an album when the new iTMS opened the other day, It should be billed to my account by Monday, I can take a screenie of my Online Banking if you'd like!

sandsl · Oct 18, 2003, 05:13 PM

The US tax system is so much more complicated than the UK system.

iDriveX · Oct 18, 2003, 09:49 PM

Looks like you can actually go to Apple.com, click on the store, and go to Order Status to see your invoice for iTMS purchases. Here's a pic of my invoice saying no tax (I know it says estimated tax, but regardless, I've never been charged tax):

Picture