Subject: "A Riddle at the Register"

From: [email-masked]
Date: Tue, 6 Apr 1999 06:12:34 -0400

The subject line of this email is the title of a recent article in the NY
Times about the difficulties local food merchants have with the NY state
sales tax rules.  The underlying rule is that most products have sales tax
applied at the point of purchase, but most food (and medicine) are
excepted.  However, there are many special rules:

* Frozen food is not taxed, but the same food is taxed if heated and served
on a plate, ready-to-eat.

* For many years, regular size marshmellows were taxed as candy, but
miniature marshmellows were not taxed because they were considered recipe
ingredients.  (This one was finally changed after many years of
complaints.)

* Cold cuts (i.e. sliced ham & other preserved meats) are tax-free when
sold in bulk, but are taxed when served on a plate, or in a sandwich.

* Ice cream sold in bulk is not taxed, but the same ice cream is taxed when
served as an individual portion in an ice cream cone.

The point of the article is that merchants have real difficulty applying
these tax rules properly - particularly the smaller merchants.  Smart cash
registers help a lot by applying the right regulations to items that are
identified by reading bar codes, but the rules change from time-to-time.

My own point is that it seems clear that an Internet tax regime that
expects non-NY merchants to apply NY's sales tax rules is doomed to
failure.

--------------------------------
Mark H. Linehan
IBM, Mgr. of Internet Emerging Payment Technology

phone: (914) 784-7860 or IBM tieline 863-7860
fax: (914) 784-3833 or IBM tieline 863-3833
internet: [email-masked] or [email-masked]
Notes: Mark H Linehan/Hawthorne/IBM @ IBMUS

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From: Aram Perez <[email-masked]>
Date: Tue, 06 Apr 1999 09:40:34 -0700

Along the same line, several times at certain ice cream parlor(s) here in 
California I've been asked if I was buying ice cream "for here or to go".
After the second time of being asked, I asked why it mattered. It turns out
that if you buy ice cream "for here", i.e. you want to eat it inside the
store, you get taxed. However, if you buy the ice cream "to go", you will
not get taxed.

Go figure,
Aram Perez

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From: David Burdett <[email-masked]>
Date: Tue, 6 Apr 1999 18:57:17 +0100

Mark provides some interesting examples of bizarre tax rules that currently
exist. But if you look at them closely, I can't honestly seem many of the
products Mark suggests being sold over the Internet to out of state
customers, for example:
*	heated frozen food would be inedible and unsafe to eat
*	a cold meat sandwich would be stale
*	the ice cream cone would have melted

To do physical delivery takes time which will help remove from the equation
a whole variety of food related products from Internet commerce.

However I agree with Mark that collecing "out of state" (or even "out of
country" !! ) tax is not a simple thing to do and will require effective
ways of communicating the necessary "tax rules" from those that set them to
those that need to apply them - perhaps the Internet could be used for this.
I also think that a simplification of the rules themselves will probably be
required ... and that will take a lot of talking ...

David

> ----------
> From: 	[email-masked][SMTP:[email-masked]]
> Sent: 	06 April 1999 03:12
> To: 	[email-masked]
> Subject: 	"A Riddle at the Register"
> 

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From: "Milton M. Anderson" <[email-masked]>
Date: Tue, 6 Apr 1999 17:01:02 -0400

Just out of curiosity, does anyone know whether the
purchase of a DIVX movie at the store followed by the
purchase of several subsequent performances is taxed
differently than the purchase of a DVD?

I can see some enterprising lawmakers writing tax laws that
say downloading and playing an MP3 in real time is a 
performance which is taxed differently than downloading 
and storing the MP3 on your hard drive as a purchase
of music.  Sort of like "are you eating it here or taking
it out".   And what happens if you don't download it to 
your own location, but to a server in another state?

Milt