US Residents to begin paying Sales Tax

[Dragon Mommy]

What tax landowners will pay will be determined by their state specific laws. It's important to remember the Wayfair supreme Court decision gave states the ability to choose to apply tax to purchases made online by their residents, not made it mandatory. IIRC, most states have already drafted and put into effect their own laws on this, but you'd need to look into your specific state to know what taxes do and do not apply. 

Unfortunately they can't make it easy or clear, because... Well. US taxes. 

[LittleMe Jewell]

12 minutes ago, Drake1 Nightfire said:

I am a bit confused.. Will this apply to MP purchases made with L$? I cant see how as it states in the ToS

"Except as set forth above or in any Additional Terms, purchases of Linden Content (including but not limited to Usage Subscriptions, Virtual Tender, and/or other Virtual Goods and Services) are final, non-refundable, have no monetary value (i.e. are not a cash account or equivalent) "

How do you charge sales tax on something with no monetary value? Buying L$ as well should not incur a sales tax as L$ have no monetary value as well. 

It does not and will not apply to anything bought with L$ - because they are considered game tokens.

Currently it only applies to the reoccurring charges paid with RL money.  They indicate that down the road it may also apply to other things that we pay RL money for, like buying L$.

[Drake1 Nightfire]

27 minutes ago, Mollymews said:

at this time there is no tax payable on L$ transactions. The US Treasury (IRS) has not made any determination about in-game transactions. If Linden ever do start charging tax on in-game (L$) transactions it will be because of a change to US Treasury regulations

your estate owner tho will be liable for any tax payable by them, when Linden charge the estate owner the monthly tier

 

Which probably means an increase in land costs to renters... joy.

[Alwin Alcott]

6 hours ago, Mollymews said:

for zero sales taxes then looks like only: Delaware, New Hampshire and Oregon

hmm.. my household is in boxes to move already, i might change the location to one of those  

[Paul Hexem]

1 hour ago, Drake1 Nightfire said:

I am a bit confused.. Will this apply to MP purchases made with L$? I cant see how as it states in the ToS

"Except as set forth above or in any Additional Terms, purchases of Linden Content (including but not limited to Usage Subscriptions, Virtual Tender, and/or other Virtual Goods and Services) are final, non-refundable, have no monetary value (i.e. are not a cash account or equivalent) "

How do you charge sales tax on something with no monetary value? Buying L$ as well should not incur a sales tax as L$ have no monetary value as well. 

 

1 hour ago, LittleMe Jewell said:

It does not and will not apply to anything bought with L$ - because they are considered game tokens.

Currently it only applies to the reoccurring charges paid with RL money.  They indicate that down the road it may also apply to other things that we pay RL money for, like buying L$.

Charging tax for L$ purchases would make the "L$ are worth no money" argument much more interesting, at least.

[Sid Nagy]

12 hours ago, Coffee Pancake said:

I presume we have always being paying the sales tax and it's just been included.

Which really just makes this a price hike with fingering pointing.

Of course we payed those taxes already.
It was not so that they charged them on their own salaries and profits.
They use this excuse to raise prices. Not so strange with the roaring inflation.
But I guess they will use the inflation excuse for another raise later in the year.
The boss men are investors, not a charity fund for virtual worlds.
 

Edited March 1, 2022 by Sid Nagy

[Finite]

6 hours ago, Bitterthorn said:

What tax landowners will pay will be determined by their state specific laws. It's important to remember the Wayfair supreme Court decision gave states the ability to choose to apply tax to purchases made online by their residents, not made it mandatory. IIRC, most states have already drafted and put into effect their own laws on this, but you'd need to look into your specific state to know what taxes do and do not apply. 

Unfortunately they can't make it easy or clear, because... Well. US taxes. 

I would guess only  a state tax would apply considering the US doesn't have a flat, across the board sales tax. I live in Taxachusetts but some how my state isn't in the top 10 for sales tax. Looks like I'll be paying an additional 6.25%. Most states will pay anywhere from 4-10% with 4 states having zero local or state sales tax.

Edited March 1, 2022 by Finite

[Asadora Summers]

14 hours ago, LittleMe Jewell said:

It will be based on where you live.  You can google for your local city & state (and sometimes county) tax rates.

 

This might be helpful https://www.calculator.net/sales-tax-calculator.html

I used it for my state which is 9.75% sales tax

[Asadora Summers]

11 hours ago, Mollymews said:

i looked it up for the USA

only 5 states with zero sales tax: Alaska, Delaware, Montana, New Hampshire, Oregon

lowest non-zero at 4% is Alabama

highest at 7.5% is California

edit source: https://www.tax-rates.org/taxtables/sales-tax-by-state

 

Wrong. I live in TN and the tax for my state is 9.75%

https://www.calculator.net/sales-tax-calculator.html

But only 5.5% for food... so that's something... lol

[Drake1 Nightfire]

26 minutes ago, Finite said:

I would guess only  a state tax would apply considering the US doesn't have a flat, across the board sales tax. I live in Taxachusetts but some how my state isn't in the top 10 for sales tax. Looks like I'll be paying an additional 6.25%. Most states will pay anywhere from 4-10% with 4 states having zero local or state sales tax.

We do not pay sales tax on digital goods in good ol Taxachusetts.. So.. I would like to see how LL handles this. 

[Drake1 Nightfire]

30 minutes ago, Asadora Summers said:

 

This might be helpful https://www.calculator.net/sales-tax-calculator.html

I used it for my state which is 9.75% sales tax

https://www.salestaxhandbook.com/massachusetts/sales-tax-taxability

This one actually tells you the taxability of all items by state.. Just click your state and scroll down to the list of taxable items and find Software and Digital Products. 

[Finite]

2 minutes ago, Drake1 Nightfire said:

https://www.salestaxhandbook.com/massachusetts/sales-tax-taxability

This one actually tells you the taxability of all items by state.. Just click your state and scroll down to the list of taxable items and find Software and Digital Products. 

I think digital currency is taxed though. The products we purchase inside the game wouldnt be taxed but the linden itself I believe is taxed. Im pretty sure I've been taxed before for buying wow tokens. I cant confirm though since I havent played for a long time.

[Drake1 Nightfire]

51 minutes ago, Finite said:

I think digital currency is taxed though. The products we purchase inside the game wouldnt be taxed but the linden itself I believe is taxed. Im pretty sure I've been taxed before for buying wow tokens. I cant confirm though since I havent played for a long time.

Taxes on the sale of digital products are exempt in Mass. If you were taxed by WoW, they broke the law. 

[Silent Mistwalker]

3 hours ago, Asadora Summers said:

Wrong. I live in TN and the tax for my state is 9.75%

https://www.calculator.net/sales-tax-calculator.html

But only 5.5% for food... so that's something... lol

TN STATE tax is 7%. When you add county and city sales taxes to that is when you get the 9.75%

Don't try to argue with an accountant. 🤭

[SarahKB7 Koskinen]

After a bit of reading up on it, what a ridiculously inconvenient and overcomplicated tax system the US has!  I thought you were supposed to be the United States? You're more like a Loosely Aligned Federation of States... (LAFS!)

Why can't you just have one single all encompassing nationwide Federal VAT sales tax level that ALL US citizens have to pay, without all the individual states, counties and cities being allowed to set their own local taxation levels?

From all this hypothetical nationwide Federal VAT sales tax, your government could then allocate the necessary funding to all the individual states, counties or cities that actually need it?

I was also surprised to learn that the US doesn't even have PAYE (Pay As You Earn) income tax for employees! PAYE is a system where all companies and employers automatically deduct all necessary national taxations and deductions from an employees monthly salary - without the employee ever needing to fill in or complete a tax return document.

 

Edited March 1, 2022 by SarahKB7 Koskinen

[Bree Giffen]

The US does have pay-as-you-earn income tax. Both federal and state tax is withheld from every paycheck. We file our taxes every year by calculating how much tax we need to pay and checking against how much tax was paid over the year. If there's a difference then we either pay tax or get a refund.

We have a sales tax and home tax which are used locally by the cities and state. There are also special proposition taxes (called fees) which we have to vote for. In California, every voting period usually includes some kind of proposition to raise sales or home taxes. People actually vote to increase their taxes. For example, California voted for a high-speed rail tax and a homeless housing tax. Both are failing abysmally.

[Rolig Loon]

19 minutes ago, SarahKB7 Koskinen said:

Why can't you just have one single all encompassing nationwide Federal VAT sales tax level that ALL US citizens have to pay, without all the individual states, counties and cities setting their own local taxation levels?

The grand theory has two parts: 

(1) The country is too large and has too many different local priorities for a nationwide sales tax system to be practical. Instead of charging one federal sales tax and then squabbling over how to divide it equitably, it's easier to let the states and communities levy taxes to meet their own needs.  On a larger scale ...

(2) The United States are just that -- a federation of states.  From its founding days, the idea has been to let the states act as incubators, small experimental plots where citizens can develop laws that made sense to them locally (as long as they don't contradict federal law or create destructive competition with each other). The idea is that these local experiments can lead to more informed creation of federal policies and laws down the road.

In practice, the system gets bogged down and bumps into itself a lot more than it ought to. We've also been entangled for 250 years in an existential debate about whether the individual states or the federal government should be guiding our sense of direction.  It's not often clear which side of the argument is the right one. Be that as it may, it's our system.  We keep tinkering with it, and it gives us plenty to talk about.

[SarahKB7 Koskinen]

No company employee in England files their own taxes, its the duty of the company or employer to do so on behalf of the employee and pays that tax directly to our national tax collector (HMRC). Its a system we started in 1944.

All the tax deductions are listed in the employees monthly pay cheque. It is possible here for an employee to work their entire lives and never need to fill in a single tax form or document.

For self-employed people, they must calculate and complete their own taxes.

Edited March 1, 2022 by SarahKB7 Koskinen

[erikspartan]

27 minutes ago, SarahKB7 Koskinen said:

Why can't you just have one single all encompassing nationwide Federal VAT sales tax level that ALL US citizens have to pay, without all the individual states, counties and cities setting their own local taxation levels?  ...your government could then allocate neccesary funding to the individual states, counties or cities that actually need it...

I was surprised to learn that the US doesn't even have PAYE (Pay As You Earn) income tax for employees!

 

You might be forgetting U.S. federal income tax which all U.S. taxpayers pay. I lose 30% of my paycheck to the feds. As for "necessary funding to the individual [jurisdictions] that need it" -- as a resident of California, I am financing the poorer states such as Mississippi.  California taxpayers send about $2.50 to Washington for every $1 we get back in the form of federal spending. So 60% of my federal taxes are not being spent on California bridges and highways, but elsewhere. In turn, poorer states are basically receiving "foreign aid" from the richer states. And by "richer" I mean the taxpayers themselves, not the state's coffers.

The U.S. does indeed have "pay as you go" income tax. My taxes are deducted from every paycheck (7 different taxes total) by my employer and paid immediately to the government. Every year there's a reconciliation where I pay or receive the difference between what was withheld from my paychecks and what I actually owed. For a salaried employee, that amount is usually negligible.

[Rolig Loon]

10 minutes ago, SarahKB7 Koskinen said:

No company employee in England files their own taxes, its the duty of the company or employer to do so on behalf of the employee and pays that tax directly to our national tax collector (HMRC). All the tax deductions are listed in the employees monthly pay cheque.

Same here.  When we file our tax returns at the end of the year, we are doing it to justify claiming some of that money back because we have extenuating circumstances (more dependents than average, high medical costs, contributions to charity ..) and to declare income on investments that our employers know nothing about (but we should still be paying taxes on).

That's all about income tax, though.  This thread is about taxes on consumption ... sales tax.

Edited March 1, 2022 by Rolig Loon
typos. as always.

[Anna Salyx]

17 hours ago, Chic Aeon said:

Now would be a LOVELY time to let citizens pay for Premium (or Premium Plus) with linden dollars.   Just saying.

 

I would happily pay with some of my linden dollar collection.  Not paying with US :D.  I can't be alone in this as I know a bunch of folks who quit when the linden to USD changes happened. 

 

You kinda can I think.  I mean you do have to convert to Tilia and factor in those fees, but.... for my monthly land tier, I convert some linden dollars into a Tilia cash balance and let that be used for tier. This month, after tier was payed, my Tila balance had about 14 cents left over. And since my Premium payment was also due, my Tilia balance of 14 cents came off the top of that. So, if you convert some lindens you might have to a Tilia cash balance and just let them sit, that would help pay (or fully pay depending on your Tilia balance at the time) for premium. I would think so anyway.  Personally, I'll have to wait a year to find out.

[Coffee Pancake]

5 hours ago, Sid Nagy said:

They use this excuse to raise prices. Not so strange with the roaring inflation.
But I guess they will use the inflation excuse for another raise later in the year.
The boss men are investors, not a charity fund for virtual worlds.
 

I'd honestly be less of a cynic if the boss men used the product.

 

[Drake1 Nightfire]

46 minutes ago, SarahKB7 Koskinen said:

After a bit of reading up on it, what a ridiculously inconvenient and overcomplicated tax system the US has!  I thought you were supposed to be the United States? You're more like a Loosely Aligned Federation of States... (LAFS!)

Why can't you just have one single all encompassing nationwide Federal VAT sales tax level that ALL US citizens have to pay, without all the individual states, counties and cities being allowed to set their own local taxation levels?

From all this hypothetical nationwide Federal VAT sales tax, your government could then allocate the necessary funding to all the individual states, counties or cities that actually need it?

 

Just to point out, we have two states that are bigger than any single European country. California is bigger than all but Spain, France and Ukraine. 

Seeing as our whole country has double Russia's population and is over twice the size of the entire EU, I would say having different sales tax per state makes sense. Does the EU have the same taxes across each country? 

[SarahKB7 Koskinen]

@Rolig LoonRussia, Canada and China are all larger (in area size) than the United States and all have national sales taxes. Using country size as an excuse to not have a national sales tax is just a poor excuse.

@Drake1 Nightfire Please do not confuse Europe the continent with the European Union (EU), they are very different things. Despite having a flag and an anthem, the EU isn't a country, its only a political and economic organisation with 27 member countries within it.

There are a total of 44 countries in the continent of Europe, with 27 of those in the EU and 17 not in the EU.

As for population, there are a total of 750 million people in the continent of Europe, with 447 million of those living in EU countries and 303 million not. The US has a total population of 332 million.

The area size of the total European continent is 3.931 million mi², with the EU taking 1.634 million  mi² of that.   The US area size s 3.79 million mi².

Edited March 1, 2022 by SarahKB7 Koskinen

[Chic Aeon]

6 minutes ago, Anna Salyx said:

You kinda can I think.  I mean you do have to convert to Tilia and factor in those fees, but.... for my monthly land tier, I convert some linden dollars into a Tilia cash balance and let that be used for tier. This month, after tier was payed, my Tila balance had about 14 cents left over. And since my Premium payment was also due, my Tilia balance of 14 cents came off the top of that. So, if you convert some lindens you might have to a Tilia cash balance and just let them sit, that would help pay (or fully pay depending on your Tilia balance at the time) for premium. I would think so anyway.  Personally, I'll have to wait a year to find out.

Yes, understand that and did it for many years.  But not everyone wants to work with the Tilia TOS (or for some the Tilia charges are a problem -- some likely both).  At one time Patch said The Lab was thinking about direct payment, but this was years ago and that apparently isn't going to happen.   There are direct payments with Linden Dollars for classified ads and I think the Marketplace ads are just paid with Linden Dollars --- hence no exchanging for USDs and no taxes on that. 

 

And in the case of this thread the point was about the TAXES which if paid with lindens (at least at this point) would be an "in game" charge perhaps so no taxes would need to be paid. Not sure of the legalities on that but if all game costs become taxable in the future, that could really kill things.  

 

Hope that makes sense. Just waking up.