No sales tax for shopping online

by Rocket Finance

Sometimes I am a little slow.

Mrs. Rocket agrees with that statement – as long as I remove the word sometimes. I recently made a purchase through my Ebates account and I just realized that online shopping is tax-free!

Yesterday, Ebates sent out a survey of their membership to find out about their online shopping habits. I always fill out surveys like that and always try to give honest feedback. I think it is a good way to communicate ways for companies to improve service. One of the questions on this particular survey was “Why do you shop online?” I was then asked to rank several motivations like convenience, saving gas, cash back, selection, 24/7 access, etc. Then they asked if the avoidance of sales tax was a motivating factor. Avoidance of sales tax is a great reason to shop online, but it did not motivate me – simply because I had not thought of it before. From now on, I will add sales tax to my list of savings from shopping through Ebates.

Since I will be riding my bike to work and doing a lot of hiking in the mountains with my daughter this summer I needed a small backpack and a couple of leg band reflectors. I always look at Ebates first when making such purchases. After reading reviews and looking at pictures, I settled on a couple of items from REI Outfitters. Here is what I saved on a $55 purchase by shopping through Ebates:

  • 4% cash back from Ebates = $2.20
  • 1% cash back by using my Chase Freedom Visa = $.55
  • No 6% sales tax = $3.30
  • No shipping. REI offers free in-store pick-up = approximately $6.00
  • I also was able to “shop-around” while eating breakfast and without burning gasoline

Furthermore, since Ebates is offering a $10 bonus to everyone who signs up as well as awarding a $10 bonus to the referrer, I had just enough money in my account to cover the entire cost of the backpack and reflectors. A pretty good deal all around.

And for those of you who feel sorry for the government coffers that missed out on collecting sales tax on my transaction? The IRS will simply have to content itself with the tax revenue collected from my wireless internet bill, from the energy company that provides my electricity, from my income taxes, from the income taxes for the workers who made the items, and from the Ebates, REI, Visa and Chase corporate taxes. I think the state of Colorado and the US government will have plenty to work with.

If they did more shopping through Ebates, they might not need so much.

Note: As was pointed out by Mom from Wide Open Wallet in the comments below, if a store has a physical presence in your state, then sales tax is collected. Read more here. I will need to re-check my sales receipt on my purchase to see if I was charged for tax.

  1. 2 Responses to “No sales tax for shopping online”

  2. By Mom @ Wide Open Wallet on May 28, 2008 | Reply

    I believe you only avoid the sales tax if the company doesn’t have a brick and mortar in your state. So Wal-mart, Target ect will still charge tax. I think that’s the rules.

  3. By rocketc on May 28, 2008 | Reply

    I will have to check on that. Thanks for pointing that out.

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