How is this legal?

[Smoked_tails]

From my other thread, heres a pic 26.34% Tax?? How the hell can they legally do this??
My receipt from today..apparently they can charge tax on the full 399, just doesnt seem right to me.. they are as hell are not paying tax on the 399 so why should I

[Imahottguy]

That's absurd. You need to contact the stores manager, or someone at like Better Business Bureau perhaps (I don't know for sure). In no way should you pay 26% tax. Why did you go through with the transaction?

[ElGriton]

At least you got something for your $52.41

[Smoked_tails]

did some research apparently in a few states including california they charge you tax on the retail price of the phone, which is still a huge amount of ********. When you buy a car you dont get them lower and then pay tax on the msrp that is just stupid and should be illegal. Thanx obama

[reddevilseye]

they cant charge 26%
im in chicago and we r the highest taxes and its 10.25% on retail and 13.25% on soda so lets say its a soda phone, its expensive go and return it or call 311 for city department of revenue and send them an inspector

[zwaldowski]

Thanx obama

That is inappropriate for this thread, and, more importantly, what has he done to raise retail taxes? At all? That's a state/local thing, take a frigging Civics class.

I would go straight back to the store to speak with the manager, and then to the BBB if you're sure this is erroneous.

[Imahottguy]

^^ Thanx lol. I was thinking to myself "Because Obama was directly involved with that decision" lol

This is a serious issue that needs attention. So that means when there is a fire-sale (in certain states) on phone XX at carrier XX, which normally retails for $400 and is now at $50, the tax could cost as much as the device? That is insane, and any business that taxes that way should be ashamed of themselves. How else can you betray the consumer?

[StealthBravo]

^ lol

[GenesisDH]

This is a serious issue that needs attention. So that means when there is a fire-sale (in certain states) on phone XX at carrier XX, which normally retails for $400 and is now at $50, the tax could cost as much as the device? That is insane, and any business that taxes that way should be ashamed of themselves. How else can you betray the consumer?

IIRC, it's only true if a subsidy [from signing a service contract] covers part of the end cost, as if the subsidy is treated as a sort of 'store credit.'

The store/carrier still pays full price of the phone to the manufacturer for each unit, and that full cost is usually taxed by the state and local government (B2B and wholesale purchases tend to incur sales taxes). So, why should they lose revenue to part of the taxes paid on a phone that is sold to you with a subsidy? That's not usually in their best interests (unless doing so helps them sell more, as what happens with 'tax-free' or 'tax-inclusive' sales).

Some coupons, instant rebates and in-store discounts for higher-priced items like electronics tend to have wording similar to 'taxes are calculated before discounts.' This really is no different.

If a fire sale, some other sale, or OEM/manufacturer-mandated discount occurs before the subsidy kicked in, then the discounted pre-subsidy price tends to be the taxable price.

[Smoked_tails]

IIRC, it's only true if a subsidy [from signing a service contract] covers part of the end cost, as if the subsidy is treated as a sort of 'store credit.'

The store/carrier still pays full price of the phone to the manufacturer for each unit, and that full cost is usually taxed by the state and local government (B2B and wholesale purchases tend to incur sales taxes). So, why should they lose revenue to part of the taxes paid on a phone that is sold to you with a subsidy? That's not usually in their best interests (unless doing so helps them sell more, as what happens with 'tax-free' or 'tax-inclusive' sales).

Some coupons, instant rebates and in-store discounts for higher-priced items like electronics tend to have wording similar to 'taxes are calculated before discounts.' This really is no different.

If a fire sale, some other sale, or OEM/manufacturer-mandated discount occurs before the subsidy kicked in, then the discounted pre-subsidy price tends to be the taxable price.

i can GUARANTEE YOU ATT is not paying 599 for 16GB and 699 for 32GB iphones

That is inappropriate for this thread, and, more importantly, what has he done to raise retail taxes? At all? That's a state/local thing, take a frigging Civics class.

I would go straight back to the store to speak with the manager, and then to the BBB if you're sure this is erroneous.

I have taken a civics class, however I found my answer to this post (which by the way was already answered) on google rather then in a classroom. I still know ATT is not paying full price for each unit

[gary002]

I was also charged $57.67 in tax for the 32GB 3G S!!

@GenesisDH: It is fair for them to charge tax on the amount of the subsidized phone and unfair to charge on the unsubsidized price!! THEY are the ones who chose the price, so THEY should be the ones who live with the lower taxes. That's the whole point of a subsidy. They take a hit in income on the phone itself but make up for it during the 2 YEARS that we're legally obligated to pay monthly fees, and even more if we're forced to pay for extra add ons like the unlimited data plan for iPhone!!! Un-fricken-fair!!!!!

Wow! I got mildly upset just then. haha. I apologize for all the bold text and exclamation marks but it really is unfair. I'm gonna call up Apple (or go into their store) and b!tch about this and see what's up. Maybe if enough of us do it, they'll change it. Kinda like how they gave early iPhone 3G adopters, who were a few months shy of the full subsidy, the lowest price on the 3G S.

[istorm]

I was charged $61.16 for 32GB 3GS. Can we start a class action suit? hehe This tax is ridiculous!!!

[tyfly867]

yeah that $52.41 is the 26% of the $199 subsidized price. Watch out AT&T is a greedy corporation that will do anything to squeeze the extra few cents from your pockets. zwaldowski was right, you should see the manager. If he sticks his nose at you, there are consumer protection groups (BBB for example) you can talk to.

[GenesisDH]

@Smoked_tails,
True, that unsubsidized price isn't the invoice price, but that unsubsidized price is very likely the MSRP. In California, the MSRP is almost always the price the state requires taxes to be calculated with.
I bet most other applicable states have similar language in their tax law.

Even though at&t/Apple sells you the phone for $99/199/299 or $299/399/499, you're essentially recieving store credit/voucher by signing a service agreement. The price of at&t's service doesn't change if you're in a contract or not (w.r.t. using the service with applicable plans at activation), so the credit MUST BE due to the contract signing.
It's not much different than how store credit and vouchers are treated in 99.999999999% of retailers, where taxes are taken on the pre-discount price of an item.

You should visit a Best Buy Mobile, Radio Shack, or similar phone retailer to see how the subsidy is actually treated. These retailers tend to ring a phone up at full price, then apply the subsidy after calculating taxes and before cash/credit payment...

@gary002,
Look at it this way:
Say I'm a retail store owner/operator and I gave you a voucher or store credit for some dollar amount because of some agreement between you and I. You decided to buy something at my store and use that voucher/store credit as a part of your payment.
Shouldn't I be able to charge you for the sales tax (I am required to charge you according to state/local law) for the entire amount of the sale? I think so, because otherwise I'd lose revenue and/or my ability/license to be a retailer in said state or locality.

Plus, complaining to Apple/at&t won't change this because it's the applicable state & local governments that allow/require retailers to charge taxes on the full retail price of an item.
You'd need a lot of people to complain about this to the applicable gov't, and even then it's not likely they (especially with some having funding/insolvency issues because of the economy, such as California) will change this tax policy for your benefit...


This is very old news; there's been similar complaints with nearly every carrier for years now (I can google records of complaints online at least as far back as 2003). It won't change anytime soon.

It's plain and simple: you may not think it's fair or legal to charge taxes on full price of the phone, but in many cases it's very much legal and may even be REQUIRED BY LAW.
If you don't like it, move to an area that either doesn't charge taxes on full retail prices OR has no sales taxes at all (such as a few towns in Alaska, Delaware [use taxes apply], Hawaii [excise taxes apply], most of Montana, New Hampshire and parts of Oregon).