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December 14, 2003
Quixtar and sales tax
By QBlog in
This morning I purchased an expensive Christmas present from Amazon.com. I live in a state that has a sales tax yet I was not required to pay a sales tax on my purchase. Why? Well, since Amazon.com is not in my state, they are not required to charge a sales tax. This means that I (with free shipping) can spend several hundred bucks at Amazon.com and spend less than I would going to a local retailer to make that same purchase.
What does all this have to do with Quixtar? Well, I'm not exactly sure. I honestly can't remember if we paid sales tax on Quixtar purchases. I found one report that indicates MLM businesses like Quixtar do collect sales tax on purchases but I can't seem to find anything at Quixtar.com to verify this information. The point is that I saved roughly $30 by shopping at Amazon.com vs. a local retailer. And I'm not comparing Amazon.com to Quixtar because I realize that PV/BV introduce a unique dynamic into the equation but what I am doing is bringing up the sales tax issue as it relates to Quixtar purchases.
UPDATED: With information provided by David Robinson.
Does Quixtar charge sales tax? Quixtar, like other MLMs, collects sales tax, for purchases for the Independent contractor status of each rep.
If so, why? A rep can choose to file in their area and pay sales tax directly to their state, but most find it more convienent to let Quixtar collect and pay to the respective states. As Quixtar's status is one of a supplier for the reps, they do not constitute an online retailer as Amazon does.
Does charging sales tax put Quixtar at a competitive disadvantage with other online retailers?
Comments
Qblog-interesting that you would bring this topic up. I believe this is one area where you will find Quixtar to be squeaky clean in their approach. It is somewhat of a gray area according to retailers but is somewhat of a fraud according to the multitude of states which are losing out on potentail retail tax revenue. I am very in favor of a national sales tax which is distributed to the states based on residence because of this very reason.
I was not meaning to suggest that Quixtar was bending the rules or breaking the law. I agree, they are 100% following the law with this, especially after hearing additional info from David Robinson. All I'm wondering is if Sales Tax matters as an element of competion? Maybe it doesn't since the PV/BV component is involved? Maybe it does. I don't really know but it doesn't hurt to ask.
Inheriter,
Do you have any idea what kind of nightmare a tax like you propose would be for small online business?
Think about it...1,000's of different tax rates for cities and counties within each state.
That's the ticket. We need more taxes. We only pay roughly 50% of our income to some form of tax today...might as well make it 60%. PUKE!
Regarding a national sales tax--you would only have to pay one rate nationwide. That's not so hard now is it?
Qblog-I wasn't assuming that you thought Q/A was doing anything wrong. I understand you were pointing out a difference. As for competition, overall price is certainly looked at when comparing to of the same item from different vendors. price+shipping+tax
mlmblog mentions in his comments:
"Think about it...1,000's of different tax rates for cities and counties within each state."
This is another area that Quixtar handles nicely. They also collect the municipal taxes as well, so that each IBO stays in compliance with the law.
Bulletins are published frequently to IBOs listing all applicable taxes for each state and individual municipalities within that state.
Let me also comment, as to your question of sales tax on Quixtar products being an advantage or disadvantage compared to other online retailers.
Mail order companies have for years collected the sales tax on sales they make to residents in the state in which the are based. You might remember seeing something like "CA residents please add 6% for sales tax"
So, the sales tax issue has been tackled in various forms for companies that operate across state lines over the years.
Most customers are used to paying a tax on purchases, so I don't see a big issue among Q clients paying sales tax.
But as you point out; for IBOs who pay tax and/or shipping, we often factor in our PV/BV as an offset to these expenses.
This mainly holds for shipping costs and our individual sales tax we pay on personal purchases. Client tax is a "wash".
A smart IBO will weigh the costs versus bonus awards to arrive at a decision to try a product. Most are like any other consumer, if it costs too much, we don't purchase it.
And if we don't purchase it, we don't sell it, and Q gets the message and adjusts price or discontinues the product.
I hope that helps. BTW, thanks for the mention of my name in the recent journal entry. I love seeing my name in print.
Yes I have paid sales tax on all Quixtar purchases. I am not sure why, but they charge sales tax on the retail price even when an IBO pays the wholesale price on the product. I went back though last year's purchases to check this for myself. I had read on another website that they assume an IBO retails the product themselves and that is why they charge the tax that way unless you telephone your order in and tell them you are purchasing the products for personal use.
Lisa,
You can file for a refund with Q on purchases you made for yourself at wholesale and paid retail tax. You can also set your orders up to pay the tax on the wholesale price.
There's no reason why you should not being paying the proper tax on your purchases for yourself.
Contact Q to fix this and get instructions.
Quixtar, like other MLMs, collects sales tax, for purchases for the Independent contractor status of each rep.
A rep can choose to file in their area and pay sales tax directly to their state, but most find it more convienent to let Q collect and pay to the respective states.
As Quixtar's status is one of a supplier for the reps, they do not constitute an online retailer as Amazon does.
Its the rep, that is the retailer, not Q.
Posted by: David Robison | December 14, 2003 4:10 PM