Tax rates and LEGO collecting

Farmer_JohnFarmer_John USA - 4,035 Miles from 62 West Wallaby St., Wigan, Lancashire, UKMember Posts: 2,404
edited February 2012 in Buying & Selling Topics
Each state enforces different tax rates for the same Lego set.

In Tennessee, a $100 lego set from a B&M store will cost roughly $110. As of the beginning of this year, a 10% tax rate is also levied on purchases from Lego [email protected] purchases. Furthermore, our wonderfully deceitful governor who ran for election on no tax increases has just negotiated a deal with Amazon to begin levying a 10% tax on Amazon purchases. Long story short, as of 2012 Tennessee will probably have the highest tax rate in the USA for Lego purchases at 10% through all primary channels.

What are the tax rates for Lego purchases in your state?

Moved to Buying/Selling by YC 2/1/12
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Comments

  • jocappyjocappy Member Posts: 207
    8.7 in my county in Wa state.
  • prof1515prof1515 EarthMember Posts: 1,561
    The tax rate for Lego purchases is the same as tax rates for any general purchase in my state: 6.25%. Of course, depending upon where you live in the state there are also local taxes that are added on.
  • dougtsdougts Oregon, USAMember Posts: 4,128
    0.0% - no sales tax Oregon
  • HuwHuw Brickset Towers, Hampshire, UKAdministrator Posts: 6,440
    20% here in the UK, and no way to avoid it from buying from other countries :-(
  • YellowcastleYellowcastle Member Posts: 4,401
    ^ 20?!?!
  • JenniJenni JapanMember Posts: 1,382
    1. Much as I dislike Haslam it's not a new tax, you've just not been paying the sales tax you owe on internet purchases. The Hall Tax Return has been around for a long time, I first found out about it in 2001.

    2. It's 9.25% in TN, Alabama is at 10% and is therefore even more regressive than Tennessee.

    3. You're not paying a state income tax, do you really think that people in the states with low sales tax rates are paying less taxes?
  • richoricho Member Posts: 3,821
    edited January 2012
    that's right, 20% in the UK.
  • Farmer_JohnFarmer_John USA - 4,035 Miles from 62 West Wallaby St., Wigan, Lancashire, UKMember Posts: 2,404
    20% here in the UK, and no way to avoid it from buying from other countries :-(
    Cough, cough!!!!!
  • Farmer_JohnFarmer_John USA - 4,035 Miles from 62 West Wallaby St., Wigan, Lancashire, UKMember Posts: 2,404
    1. Much as I dislike Haslam it's not a new tax, you've just not been paying the sales tax you owe on internet purchases. The Hall Tax Return has been around for a long time, I first found out about it in 2001.
    The State of TN does not make it easy to pay internet taxes. Haslam worked a deal with Amazon to collect taxes directly from internet sales to bolster state revenue from citizens already suffering in a downtrodden economy. I predict Amazon sales will plummet in TN, which really doesn't require a crystal ball.
    2. It's 9.25% in TN, Alabama is at 10% and is therefore even more regressive than Tennessee.
    Actually, it's 9.75% in TN where I live. I thought Alabama's sales tax was lower. I had even heard about people crossing the TN/AL border to purchase goods in AL to get a better rate. When did AL go to 10%? I must have misunderstood.
    3. You're not paying a state income tax, do you really think that people in the states with low sales tax rates are paying less taxes?
    In TN, you do pay state income tax IF your interest and dividends are more than a certain amount (The Hall Tax). Technically, TN is not considered an income tax-free state because of Hall. I have personally paid income taxes in TN along with their ridiculously high sales tax. Furthermore, I would guess that TN has some of the highest gas taxes in country, which account for the very nice highways (and perpetual road construction) we get to enjoy.

    TN is finally joining AL and many other states in getting a Lego Store, which is good and bad. Heretofore, I was able to purchase lego sets from [email protected] without getting nailed for sales tax. Now that we are getting a Lego store in Nashville, the sales taxes are being assessed and the total cost just increased by 10%. It was a good ride while it lasted. On the positive side, I do plan to frequent the new Lego B&M as much as I can to eliminate shipping costs and receive a better selection.
  • DuchessaDuchessa Member Posts: 287
    I win. The sales tax on toys (including Lego) here in Sweden is 25%.
  • Farmer_JohnFarmer_John USA - 4,035 Miles from 62 West Wallaby St., Wigan, Lancashire, UKMember Posts: 2,404
    I just went to Lego [email protected] and noticed that they also tax the shipping costs at 10% as well. I guess it is a "service," but it kind of adds insult to injury.

    Hopefully another site can be found (outside of Lego and Amazon) that offers reasonable prices on Legos. Legos are already expensive, but participating in this hobby is getting unsustainable from a personal revenue standpoint. I may have to revert to my original plan and purchase additional sets and resell once they're EOL'd to help sustain this hobby. Honestly not whining here....just trying to figure out how to keep "lego-ing."
  • JenniJenni JapanMember Posts: 1,382
    ^ I apologize for my reaction. You definitely came across as whining, and that pushes my buttons when we're talking about toys and people pay 7.75% (in my county at least) on food.

    It's a sales tax not a services tax, so maybe you should complain about that to LEGO.

    It may not be all AL, but at the Birmingham B&M it was 10%, if I can find my receipt from stopping at Target in another county on the way back I'll check it. Georgia is around 6%, maybe you're thinking of that. Our B&M will be 9.25%.

    I don't know that Amazon sales will plummet. Instead of driving somewhere to pay RRP and tax you still get to sit at home and get lower prices plus tax. People may be unhappy but, as you say, what other options are there? It will be like Netflix where everyone gets mad and leaves and then realizes there isn't anywhere else to go.
  • LegoFanTexasLegoFanTexas TexasMember Posts: 8,409
    @Jenni - you pay sales tax on food? At the grocery store? As in a loaf of bread? That is wrong, in my humble opinion, if that is the case...

    In Texas, items like that are exempt from sales tax to keep it from being completely regressive, and I can agree with it, people living on the edge don't need to have 8% of their food money taken away.

    As for sales tax being on shipping, some states do apply it to shipping, others don't, but companies do it anyway because it is easier and less risk of an audit for them.
  • suntken34suntken34 Member Posts: 6
    0% in Iowa on [email protected], 7% at the brick & mortars. Oh, and 0% on "most" food items.
  • legoDadlegoDad Member Posts: 529
    Sweden...yikes! 25% sales tax....but you have ABBA.

    In NYC it's 8.875% and if you buy clothing and footwear under $55.00, no tax.
  • OdinduskOdindusk Member Posts: 763
    Sweden...yikes! 25% sales tax....but you have ABBA.
    Which obviously makes up for the tax and then some.
  • YellowcastleYellowcastle Member Posts: 4,401
    Sweden...yikes! 25% sales tax....but you have ABBA.
    ....and tattooed girls! ;o)

  • LegoFanTexasLegoFanTexas TexasMember Posts: 8,409
    And the Swedish Bikini Team... ;)
  • YellowcastleYellowcastle Member Posts: 4,401
    ^ Well, now you've gone too far. ;o)
  • LegoFanTexasLegoFanTexas TexasMember Posts: 8,409
    edited January 2012
    http://www.swedishbikiniteam.com/

    Too far? Is there such a thing? ;)

    Actually, that link goes to something unrelated to the original SBT...

    http://en.wikipedia.org/wiki/Swedish_Bikini_Team

    That tells the real story...
  • Farmer_JohnFarmer_John USA - 4,035 Miles from 62 West Wallaby St., Wigan, Lancashire, UKMember Posts: 2,404
    ^ I apologize for my reaction. You definitely came across as whining, and that pushes my buttons when we're talking about toys and people pay 7.75% (in my county at least) on food.

    It will be like Netflix where everyone gets mad and leaves and then realizes there isn't anywhere else to go.
    Food in our county is taxed at 9.75%, so we feel your pain. In fact, I don't know anything that isn't. Taxes on gasoline are even higher. State (and federal) spending are out of completely control.

    I do agree with your second statement, but the beauty of the internet is that there are more sites than Amazon and Lego [email protected] to purchase sets from. ;-)
  • OldfanOldfan Chicagoland, IL, USAMember Posts: 621
    edited January 2012
    Illinois charges about 6.75% sales tax (varies by county ±1%) for goods, and about 1% for food. Illinois also has a Use Tax law, which requires you to pay the difference in sales tax if you bought goods out of state for "use" in IL. This prevents us from buying cars in Wisconsin or Indiana with their lower sales tax and enjoying the savings. It also means that everything I buy via the internet, I must pay full IL sales tax unless the taxes were already levied by the seller. I believe that LEGO includes the sales tax on my purchases currently.

    And just to keep us honest, there is a line on the IL income tax form to declare your Use Tax, and you are not allowed to enter -0-...

    And yes, I know all the Europeans are playing the world's smallest violin in sympathy!
  • JenniJenni JapanMember Posts: 1,382
    @Legodad we have a limited sales tax holiday twice a year, right before school starts and sometime in the spring. The idea being that parents can get school stuff so it includes clothes, school supplies, computers under $1,500. I'm sure people on very limited incomes are taking advantage of it but you should see the Apple stores, I know the independent one doubles staff and then they don't sleep for the entire weekend.

    TN considered an income tax a few years ago, a whole group of people spent days driving their SUVs around and around the Capitol continually blaring their horns in protest, while lower and middle income people went to work, so the legislature raised the sales tax instead.

    @Farmer_John I do know there are other sites that sell LEGO, but if there's one with the same range and prices as Amazon I've yet to hear of it. Unless, is @LegoFanTexas about to take his obsession one step further? :)
  • DaddyWhaleDaddyWhale Member Posts: 130
    Like legoDad mentioned, the sales tax in New York is 8.875%. But there's a LEGO tax as well here in Manhattan. The LEGO store in Rockefeller Center adds a 10% premium over the regular retail price because of the location. I don't know if they do this as well for their store in Queens.
  • legoDadlegoDad Member Posts: 529
    edited January 2012
    ^That must be new. I haven't shopped at Rockefeller since early last year and I didn't see the 10%. Must be new. It's a huge tourist area so I'm not surprised they add on. The rent must be crazy there.
    In the Queens shop is just the normal 8.875% tax.
    EDIT...ohhhhh...you mean they have higher prices. I though you meant an added tax. Yes...the prices at the Rockefeller shop is higher than regular Lego retail. Right...roughly 10% higher or more. Queens shop is regular retail.
  • bahnstormerbahnstormer Member Posts: 180
    germany has 19% on goods, services and 7% on food. at least the UK doesnt tax food or things for kids.

    real irony is the tax in someway is used to pay for people on welfare who also have to pay the tax
  • choob99choob99 Member Posts: 147
    The rate here in PA is 6% but I pay an additional 1% in the county i'm in making it 7% for me
  • Farmer_JohnFarmer_John USA - 4,035 Miles from 62 West Wallaby St., Wigan, Lancashire, UKMember Posts: 2,404
    edited January 2012
    real irony is the tax in someway is used to pay for people on welfare who also have to pay the tax
    In the states, the federal government takes money out of our paychecks for social security and medicare. Unfortunately, these taxes go into the general fund and are spent on political boondoggles. The irony here is that when I (and those of my age) reach retirement, the money paid in will not be available to provide us with our retirement. I have personally paid in about $150,000 in these funds over my lifetime of working, and will likely not get one cent back when it is my turn. Imagine if I could have used those funds to purchase legos instead. I could have almost purchased a lego franchise... :-)
  • legoDadlegoDad Member Posts: 529
    ^It's called a 'legal'l Ponzi scheme. I believe when FDR did the social security there were like 20+ workers providing benefits to one retiree ratio...now it's like 4 workers to one. When you or I retire Farmer John, we won't see a dime. We just 'gave' it away (at figuritive gun point).
    To me taxes equal theft. It's all for the greater good so pay your tax or we'll fine you and/or put you in jail...all for the greater good.
    At least we have Lego to help us sleep at night.
  • Farmer_JohnFarmer_John USA - 4,035 Miles from 62 West Wallaby St., Wigan, Lancashire, UKMember Posts: 2,404
    @Farmer_John I do know there are other sites that sell LEGO, but if there's one with the same range and prices as Amazon I've yet to hear of it. Unless, is @LegoFanTexas about to take his obsession one step further? :)
    I would love to see a picture of @LFT's stash. Better yet, I would love to show my wife a picture of @LFT's stash. It might buy me some empathy where my lego hobby is concerned (at least temporarily)... ;-)
  • Farmer_JohnFarmer_John USA - 4,035 Miles from 62 West Wallaby St., Wigan, Lancashire, UKMember Posts: 2,404
    edited January 2012
    ^It's called a 'legal'l Ponzi scheme. I believe when FDR did the social security there were like 20+ workers providing benefits to one retiree ratio...now it's like 4 workers to one. When you or I retire Farmer John, we won't see a dime. We just 'gave' it away (at figuritive gun point).
    To me taxes equal theft. It's all for the greater good so pay your tax or we'll fine you and/or put you in jail...all for the greater good.
    At least we have Lego to help us sleep at night.
    Amen, my Lego Brother....

    If I get enough sets, I figure I can build a temporary lego home to live in. And when I get accosted for setting up camp somewhere, I can just break down the house and relocate. The nice thing is that I can add and redesign rooms without paying a contractor. Indoor plumbing might be an issue though...
  • ButchaButcha New ZealandMember Posts: 45
    Here in New Zealand there is the universal GST (Just a different name for VAT) of 15%. But you don't get charged it when bringing Lego in from overseas - unless it's worth over $400 :)
  • brickmaticbrickmatic Member Posts: 1,071
    NJ tax rate is 7.5%. However, there are places defines as Urban Enterprise Zones where it is half the regular rate. So sometimes it is only 3.5%.

    No tax on unprepared food, household paper products, medicine, and clothing. Also not tax on goods purchased for resale. So I guess you can deduct all those investment sets.

    @legoDad and @Farmer_John Social Security is not a Ponzi scheme because Social Security is not an investment plan. Furthermore, the US government has no contractual obligation to pay you anything. Additionally, if the Social Security fund runs out, then you still have a legal entitlement to money per Social Security legislation, however, it will be paid as money becomes available. So when the Social Security fund runs out of money, people will still be paid, just less than what might be expected. Unless of course an alternative source of funds for the program are legislated. So really, the problem isn't Social Security but rather the fiscal health of the United States. To that end, I'd be much more worried about the huge amount of spending on ineffective wars rather than a program that supports retired, widowed, and orphaned citizens. Also, the United States is a wonderful country in that you don't get sent to jail for debt. You get sent to jail when you try to be sneaky and weasel out of taxes by doing shady things (for example refusing to file tax paperwork, lying on your return, moving money between accounts to try and evade taxes, any kind of fraud, etc.) Garnishing wages is much easier than sending you to jail.
  • legoDadlegoDad Member Posts: 529
    ^Thanks. I feel so much better about paying my taxes now. Whew...load off my mind.
  • bmwlegobmwlego Long Island, New YorkMember Posts: 766
    @DaddyWhale
    Glad to see another NY LEGO Store shopper here. The Queens LEGO Store is awesome and they don't charge any type of premium like the Rock Center Store but they have an awesome PaB wall and great employees as well.
    Contact me through Brickset if you would like to learn more about I LUG NY, the LEGO Users Group of NY.
  • Silber334Silber334 Member Posts: 147
    Hi. I'm not here to brag. But we have a 5% consumption tax imposed on all goods and services, even necessary items. Either way, a lot of things cost a lot of money here, even without the tax. So 5% should be enough.
    But wait! We're getting a tax hike next year at 8%! And that's to be hike to a further 10% to match Western standards.
  • bahnstormerbahnstormer Member Posts: 180
    @ legodad / farmer john

    a ponzi scheme is a ponzi scheme, regardless of who the perpetrator is. I am exempt from contributing to germany's one, should that change i have adequate legal insurance to challenge it.

    big difference here over US is that german govt pretty much admitted that the population is in decline and need immigrants to come in and work to cover future obligations - oops....
  • Farmer_JohnFarmer_John USA - 4,035 Miles from 62 West Wallaby St., Wigan, Lancashire, UKMember Posts: 2,404
    big difference here over US is that german govt pretty much admitted that the population is in decline and need immigrants to come in and work to cover future obligations - oops....
    Deja vu - We must live in a parallel universe with Germany. Over here some politicians have recognized that their voting base is shrinking and are in need of immigrants (from across certain borders to the south) to come in a vote for them to ensure they do not lose their power - oops...

    But that is another story for another blog... :-)
  • Farmer_JohnFarmer_John USA - 4,035 Miles from 62 West Wallaby St., Wigan, Lancashire, UKMember Posts: 2,404
    I sent an email to TLG to ask about why they are charging sales taxes already when we don't have an open store in the entire state. I received an email stating something along the lines of "we'll get back to you." I have never understood why companies do that.
  • OldfanOldfan Chicagoland, IL, USAMember Posts: 621
    I sent an email to TLG to ask about why they are charging sales taxes already when we don't have an open store in the entire state. I received an email stating something along the lines of "we'll get back to you." I have never understood why companies do that.
    I know that my state (Illinois) is actively working with big internet sales companies to make arrangements to collect state sales tax on internet sales to IL residents. Apparently, TLG is willing to enter such agreements, since they seem to charge state sales tax on most US orders. Amazon, on the other hand, has in the recent past pulled its operations out of some states that get too agressive with their sales tax "sales pitch"...
  • Farmer_JohnFarmer_John USA - 4,035 Miles from 62 West Wallaby St., Wigan, Lancashire, UKMember Posts: 2,404
    edited February 2012
    I have always understood that a company charges sales tax when they have an actual store located in the state (e.g., Walmart, TRU, Target, etc.).

    A few years ago, Lego was charging sales tax in TN even though they didn't have a store in the state. I found out the reason was that they were distributing their products around the USA from the Memphis, TN area (due to Fedex being located there). They didn't actually have a store, yet were still charging nearly 10% sales tax in TN. A couple years ago, their USA operations moved just a few miles south into Southaven, MS, no doubt for beneficial tax treatment from MS (some irony here). By the way, take a look at the map and see where Southaven, MS is compared to Memphis, TN. It was great news for TN customers as sales taxes on [email protected] sales were rescinded. With the reopening of the Opry Mills Mall (due to flooding a couple years ago), a Lego store is coming to town in early April 2012. But for some reason, Lego has already started charging sales tax in the state. While I certainly agree that Lego is within their rights to do so, I can also tell you that their prices seem to have skyrocketed compared to the after-Christmas sales with free shipping and no applied taxes.

    So yes...Lego can charge sales taxes even when no store is present in the state. Some of us just can't afford to purchase the sets we would have otherwise purchased due to the significant increase above the RRP (roughly 20% with taxes and shipping).
  • sidersddsidersdd USAMember Posts: 2,432
    ^ I dunno anything about tax laws or retail selling, but perhaps once LBR "registered" a "license" to sell product within the state they were required to start collecting taxes on sales in that state - regardless of where the physical product was sourced from.
  • LegoFanTexasLegoFanTexas TexasMember Posts: 8,409
    @sidersdd - you have it right, they probably have already signed a lease and applied for an occupancy permit. Those would trigger a "nexus" in the state.

    TLG has no desire to "cut corners" by trying to shave a month or two of sales tax, only to be called on it later, so they play it safe and start charging now.
  • Farmer_JohnFarmer_John USA - 4,035 Miles from 62 West Wallaby St., Wigan, Lancashire, UKMember Posts: 2,404
    edited February 2012
    TLG has no desire to "cut corners" by trying to shave a month or two of sales tax, only to be called on it later, so they play it safe and start charging now.
    I agree...

    Lego's decision to move a few miles further south into another state (MS) from their previous location near Fedex's primary distribution facility in Memphis, TN speaks volumes on their justifiable desire to avoid taxes as a business entity. In short, nobody wants to pay taxes (high or otherwise)...even Lego.
  • DaddyWhaleDaddyWhale Member Posts: 130
    Just to make sure we're comparing apples to apples: in the US prices are quoted before the sales tax is added; in Europe prices are generally quoted with the VAT applied. Is that true? Explains some of the difference in prices across countries
    @DaddyWhale
    Glad to see another NY LEGO Store shopper here. The Queens LEGO Store is awesome and they don't charge any type of premium like the Rock Center Store but they have an awesome PaB wall and great employees as well.
    Contact me through Brickset if you would like to learn more about I LUG NY, the LEGO Users Group of NY.
    Thanks! I'll definitely pm you to find out more. It looks like a trip to Queens is well worth it!
  • Farmer_JohnFarmer_John USA - 4,035 Miles from 62 West Wallaby St., Wigan, Lancashire, UKMember Posts: 2,404
    I mentioned above that Lego started charging taxes for [email protected] purchases, even though there is not currently a Lego store in the state of TN. I sent them an email asking about it, but never heard back.

    Last night I saw a good price on a set that I wanted to purchase from [email protected] and put it in my basket to purchase. Low and behold, the Lego checkout system did not apply taxes to my purchase. It saved $5 on a $50 purchase.

    I wonder if others from TN have experienced the same thing? Very interesting...
  • gmpirategmpirate Member Posts: 1,654
    Like Siderssd & LegofanTexas said. Once you start any of the paperwork the state will be after fees, permits, etc. -- even if you don't conduct any business. File the paperwork and they want their money. After you get your resellers permit you have to start reporting regardless of whether your business exists or not.
  • Farmer_JohnFarmer_John USA - 4,035 Miles from 62 West Wallaby St., Wigan, Lancashire, UKMember Posts: 2,404
    Like Siderssd & LegofanTexas said. Once you start any of the paperwork the state will be after fees, permits, etc. -- even if you don't conduct any business.
    Makes sense...however, TLG [email protected] charged me taxes on a couple orders, but didn't on my last order. In fact, I just went out to [email protected], put an item in my cart, and went through the process of checking out. Again, no taxes were applied, and I find it odd for the very reason you mention.
  • gmpirategmpirate Member Posts: 1,654
    ^^ Sounds to me like the got enough feedback from customers and cancelled the sellers permit. Or who knows, maybe your state a allowed a temporary injunction unil they actually open.
  • brocksbricksbrocksbricks Member Posts: 3
    I mentioned above that Lego started charging taxes for [email protected] purchases, even though there is not currently a Lego store in the state of TN. I sent them an email asking about it, but never heard back.

    Last night I saw a good price on a set that I wanted to purchase from [email protected] and put it in my basket to purchase. Low and behold, the Lego checkout system did not apply taxes to my purchase. It saved $5 on a $50 purchase.

    I wonder if others from TN have experienced the same thing? Very interesting...
    The order I placed did not show taxes all the way through checkout; not on the final summary and not when I hit submit. I was excited by this as it was my first purchase since moving to TN. Then I saw my credit card statement later: One charge for the exact amount at checkout another for exactly 9.25% more. Oh well, won't make a habit of buying from [email protected] any more.
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