Heads up, Illinois Customers: Valve might someday stop distributing Steam cards there.

[magelord01]

Here's why: a recently passed Illinois law forces pretty much all online vendors, including Valve, to collect sales tax from Illinois customers. If Illinois' average combined sales tax rate gets too high (it's already 10.25 percent in Chicago -- the very HIGHEST in the whole nation!), then Valve may figure out that they can make more money from Illinois customers if they stop distributing Steam cards to that state and instead have Illinois customers be able to fill their Steam wallets via PayPal or credit card only! I figure that if Valve stops distributing Steam cards to Illinois, then Valve will no longer be obliged to collect sales tax from Illinois customers. You see, I believe that the fact that Steam cards are available in Illinois is the reason why Valve must collect sales tax from Illinois customers.

[Spawn of Totoro]

Even if they use a Steam Card, they still have to pay taxes on the purchase. There will be no diffrence.

Valve already collects taxes from Illinois on checkout, same as they do for Washington State.

Valve is required to collect sales tax, reguardless of the payment method, as per a states laws.

[eram]

Sales tax around the world is already much higher and we can still purchase steam wallet cards.
UK vat on steam wallet cards is 20% The rest of Europe is 15 to 30% depending on the country.

at 10% sales tax i wouldnt worry at all. Consider all the other non US countries that you can buy cards from and the tax is already much higher.

[Chompman]

I don't think you know how sales tax works and who pays it.

It's not steam that pays it.

[magelord01]

All I know is that Illinois has managed to figure out a way to make Valve collect sales taxes from Illinois customers. So I figure that perhaps the availability of Steam cards in Illinois counts as "a sufficient physical presence in the state" according to the new law. If this is the case, then Valve would need to STOP distributing Steam cards to Illinois in order to be allowed to stop collecting sales tax there.

Yes, I DO understand that in Illinois, Steam wallet funds from ANY source (Steam cards, credit card, and PayPal) do get taxed in that state whenever a person who lives there buys a game; BUT I have a feeling that if Valve makes Steam cards unavailable in Illinois, then Valve might be allowed to stop collecting Illinois state tax from Steam wallet funds that come from credit cards and PayPal (this is because, without Steam cards, Valve would no longer have a "sufficient physical presence" in Illinois to be required to collect sales tax).

If Valve does stop distributing Steam cards to Illinois, then please don't blame Valve! Blame the Illinois state legislature instead; and VOTE OUT all of the incumbents in that state during the next state election!

[Chompman]

Originally posted by magelord01:

All I know is that Illinois has managed to figure out a way to make Valve collect sales taxes from Illinois customers. So I figure that perhaps the availability of Steam cards in Illinois counts as "a sufficient physical presence in the state" according to the new law. If this is the case, then Valve would need to STOP distributing Steam cards to Illinois in order to be allowed to stop collecting sales tax there.

The problem is these are gift cards and you cannot charge tax twice, once when you purchase the card and when you use it, as the person that purchases the card pays the tax when they use it and that covers the area of sales tax as far as I know.

Illinois will still collect this tax when it is used if use of the card is used in their state as that is where they can collect the money from.

[Satoru]

The only think IL "figured out" was that Valve opened a factory in IL to make the controllers. As such with a physical presence in the state they are required to collect taxes from IL residents just like in WA state

As others have noted this has been going on for a year now and is not anything new

IL does not collect taxes on gift cards anyway. Taxes are only collected when something is actually purchased. Thus your own thesis is basically moot since you don't get double taxes on gift cards

The cards aren't even distributed nor sold by Steam. They're distributed by FastCard. As such your entire concept of magically moving all purchases online is pointless. Because again the FACTORY is why they're paying IL taxes, not because of gift cards

[Chompman]

Originally posted by Satoru:

The only think IL "figured out" was that Valve opened a factory in IL to make the controllers. As such with a physical presence in the state they are required to collect taxes from IL residents just like in WA state

This makes sense now as this has happened when online stores like amazon has a physical location in that state and are forced to charge tax from buyers of that state.

But in either cases if you are never charged sales tax from a purchase because of this it's legally up to you as a buying to report these purchases and pay for the taxes when tax time comes around but most ignore this issue.

[magelord01]

If you want to absolutely keep from paying sales tax on Steam purchases, then you'll want to move to any of the following four states: Delaware, New Hampshire, Oregon, or Montana. In these states, there are NO sales taxes on the state level or even the LOCAL level! This means that, in those states, the price you see on the price tag is literally the price you pay! For instance, if you purchase a game at Best Buy in one of those four states with a $19.99 price tag, then guess what: you pay EXACTLY $19.99 for that game! NOT, for instance, $23.65!

[Chompman]

Originally posted by magelord01:

If you want to absolutely keep from paying sales tax on Steam purchases, then you'll want to move to any of the following four states: Delaware, New Hampshire, Oregon, or Montana. In these states, there are NO sales taxes on the state level or even the LOCAL level! This means that, in those states, the price you see on the price tag is literally the price you pay! For instance, if you purchase a game at Best Buy in one of those four states with a $19.99 price tag, then guess what: you pay EXACTLY $19.99 for that game! NOT, for instance, $23.65!

It's all fun and games doing this for a ton of purchases other then just steam until you get audited.

[Dimebag]

Originally posted by magelord01:

Here's why: a recently passed Illinois law forces pretty much all online vendors, including Valve, to collect sales tax from Illinois customers. If Illinois' average combined sales tax rate gets too high (it's already 10.25 percent in Chicago -- the very HIGHEST in the whole nation!), then Valve may figure out that they can make more money from Illinois customers if they stop distributing Steam cards to that state and instead have Illinois customers be able to fill their Steam wallets via PayPal or credit card only! I figure that if Valve stops distributing Steam cards to Illinois, then Valve will no longer be obliged to collect sales tax from Illinois customers. You see, I believe that the fact that Steam cards are available in Illinois is the reason why Valve must collect sales tax from Illinois customers.

Nope . More doomsayers who assume taxation is a new thing . The same type keep repeating about how Australia , the UK etc will loose service due to local laws . If Valve is making money they will sell in the region . Simple .

[Spawn of Totoro]

Originally posted by Satoru:

The only think IL "figured out" was that Valve opened a factory in IL to make the controllers. As such with a physical presence in the state they are required to collect taxes from IL residents just like in WA state

That doesn't matter. IL has passed a law that all online purchases are taxed, reguardless of where the company is located...at least in the US.

[FaeStar]

Originally posted by Chompman:

Originally posted by magelord01:

If you want to absolutely keep from paying sales tax on Steam purchases, then you'll want to move to any of the following four states: Delaware, New Hampshire, Oregon, or Montana. In these states, there are NO sales taxes on the state level or even the LOCAL level! This means that, in those states, the price you see on the price tag is literally the price you pay! For instance, if you purchase a game at Best Buy in one of those four states with a $19.99 price tag, then guess what: you pay EXACTLY $19.99 for that game! NOT, for instance, $23.65!

It's all fun and games doing this for a ton of purchases other then just steam until you get audited.

That makes no sense. Nobody gets audited for buying stuff in a state with no sales tax. It's perfectly legal.

[Chompman]

Originally posted by Vid:

Originally posted by Chompman:

It's all fun and games doing this for a ton of purchases other then just steam until you get audited.

That makes no sense. Nobody gets audited for buying stuff in a state with no sales tax. It's perfectly legal.

Misread that as no sale tax for online purchases in the state only for some reason so ignore that.

[Satoru]

Originally posted by Spawn of Totoro:

Originally posted by Satoru:

The only think IL "figured out" was that Valve opened a factory in IL to make the controllers. As such with a physical presence in the state they are required to collect taxes from IL residents just like in WA state

That doesn't matter. IL has passed a law that all online purchases are taxed, reguardless of where the company is located...at least in the US.

Every state has a requirement that 'all out of state purchaes be taxed'. That hasnt changed. Such payment is required by the purchaser to report on their tax forms not hte seller.

Also note that IL law only required 2 important factors to be met in order for an online retailer to be required to collect sales tax.
1) more than 10k in sales
AND
2) have online affiliate program with users in IL

The affiliate program is in essence how states are enforcing the 'local' requirement. By designating affiliates as 'local businesses' they then trigger the normal clause that local businesses have ot collect and remit state sales tax

Since Steam has no actual Affiliate program thus it would not fit within the IL law anyway. Amazon has killed their affiliate program in many states when such laws are enacted. Amazon is opening a datacetner in IL anyway so they would have eventually had to collect sales tax no matter what.

For Steam the physical requirement was met when they started building out the STeam controller/link factory in IL.

Without any affiliate program, or the factory, IL has no legal right to demand out of state businesses collect and remit sales tax since they cannot prove they have no physical presence in the state. There is no over arching federal law either which is why individual states need ot pass their own laws