I was wondering if someone can explain if it is appropriate for a vendor to charge buyers the sales tax rate where the vendor is located instead of the sales tax rate where the purchaser is located, for an online purchase? MusicDirect is located in Chicago where the sales tax rate is 10.25%. I live in Illinois but not in Chicago where the sales tax rate is 6.25%. MusicDirect persists on charging me 10.25% when Amazon, eBay and other vendors charge me 6.25%. They have told me that they charge me 10.25% because the have “a physical nexus to Chicago”. Well I do not. Using MusicDirect’s logic Upscale Audio should be charging me California sales tax, which they do not. Anyone care to explain to me if MusicDirect is correct in their practice and why? Thanks.
I buy only select open box or other special items with a coupon code from them. But believe me, I do buy the majority of my gear elsewhere. It’s like they are charging me an extra 4% over the posted price. And as we have seen above, if you live outside of IL they charge you your local sales tax, which is where the point of sale is.
@lowrider57 please define “your area”. However, MD does not have any such facility in my town. I have been to MD and have seen their warehouse. Everything from them appears to come from their Bryn Mawr Ave offices and warehouse.
Ok. Thanks everyone. Interesting input from everyone. I learned that some state’s sales tax is “origin based”. I think that is important to know and it is never discussed (until now, to my knowledge). Well that is “the terrain upon which I am deployed”. So I know what I need to do (which is what I have been doing). I was just hoping this was a mistake. Oh well. Onward...
Bought many a thing from them without issue and was charged my state tax of 6.25 percent. However I do agree that not everything they sell is at the best price available. It does pay to shop around, in fact other places such as audio advisor do not charge me any sales tax! So that right there is a decent savings on a big buck item.
I work for the Illinois Department of Revenue. While sales tax sourcing is complicated, if the sale by an Illinois seller is to an Illinois buyer, the tax rate of the inventory location in Illinois is applied. Illinois has ORIGIN sourcing, not DESTINATION sourcing.
I make several purchase each month from Music Direct and only get charged my local tax rate. I live in Minnesota, BTW. If you do not live in the state of Illinois and are being charged their tax rate something's not right. I have no idea how to fix it, but I do know that everything I buy from them has only been charged MN tax rates.
Thanks everyone. I think we covered this. As per @funthings IL has sourced based sales tax. Since MusicDirect is based in Chicago they will charge ALL IL buyers the Chicago sales tax rate of 10.25%. Out of state buyers are charged their local sales tax rate. As for me, I have and only will buy open box items with a discount code that nearly covers the tax. If I want something other than open box, I go elsewhere. Thanks everyone for clarifying this. Regards, K
I’ve limited my purchases from MD for that very reason. The kicker was when I bought a used cable from Agon and ended up paying 10% sales tax. Now I purchase albums through Acoustic Sounds or Elusive Disc and check other sites before buying from MD. I know it’s the law, but paying sales tax on a used item seems like a potential class action lawsuit - I wish I had the time to pursue.
riley804 is correct. I like Music Direct. Nobody Packages LPs as good as them and they sell the best LP pressings. If you don't want to pay sales tax, there are other vendors that won't charge you the tax.
I live in Oregon ( duh!). I bought a pair of speakers through Audiogon from a dealer in California. In order to avoid shipping costs and damage, I proposed that I drive down and pick them up. The dealer warned me: if I picked them up he’d charge me a hefty CA tax. Freight shipping saved me hundreds of dollars compared to CA tax.
Although I enjoy paying no sales tax, there is nothing wrong with paying sales tax. The essential services and worker in your town are not free. But I have a problem with the origin based sales tax. I don’t live in Chicago and don’t feel I should pay Chicago’s sales tax. I will pay my town’s sales tax, thank you very much! So I only buy open box items for prices I can’t get elsewhere AND if at the time MD is offering a coupon to offset their Chicago sales tax. Otherwise, I shop elsewhere. If they want to put themselves at a 4% price disadvantage that is there problem and not mine. Other competitors to MusicDirect for many of their brands include DedicatedAudio.com in Scottsdale, AZ who are a pleasure to work with. Also Soundapproach.com, and moon-audio.com. There are others.