Song prices at iTunes (reality vs news page)

[Latexxx]

From news page:
though with a smaller selection and considerably higher prices than in the US

From http://www.apple.com/itunes/store/ :
the music you want for just 99¢ per song

From http://www.apple.com/de/itunes/ :
Einzelne Songs kosten nur 0,99€

Lets sum up.
1. In Europe the songs cost 0,99€ each (including VAT).
2. In the USA price of one song is $0.99 + VAT (about 20%) = $1.20 = 0.99€ (xe.com's live mid-market rates as of 2004.06.17 14:50:32 GMT)
=> The songs cost just as much in Europe as in the states.
==> The news page has got it (and many other things) wrong.

[Doom9]

2. In the USA price of one song is $0.99 + VAT (about 20%) = $1.20 = 0.99€ (xe.com's live mid-market rates as of 2004.06.17 14:50:32 GMTI thought sales tax was lower (around 15% but I can't cite any sources.. where did you get the 20% from?), and I'm pretty sure sales tax only applies if you buy in-state.. so since Apple is located in California, all US citizens not living in California are not subject to the same tax, are they?

(and many other things) wrong.Now that's not very nice, is it? I dare you to back it up or shut up.

[Latexxx]

Originally posted by Doom9
Now that's not very nice, is it? I dare you to back it up or shut up.
The things I mean are mostly personal opinions and I don't want to start making enemies by arguing about some things which don't have a right answer, but here is a little list.

1. Empty media levies. (Used in Finland, everybody order their discs currently for Germany instead of buing from local dealers.)
2. I believe that DRM is good as long as it allows me to do what I want, like copying music to HD for home listening and to empty CDs to be used in the cars, alas, the current webshops allow that. (Come on! Flame me because I have nothing against working drm.)
3. I have decided not to write anything about copyright laws/software patents. Everything isn't evil by nature.

I'm out of this thread.

[echooff]

Sales tax where I am (Florida) is 6% for state and 1% county for a grand total of 7%. There is no federal sales tax and no VAT. I only pay sales tax for items purchased from companies that have a physical presence in the state (store, offices). Which means for i-Tunes only .99 a song. Still way over priced if you ask me.

[Doom9]

Empty media levies. (Used in Finland, everybody order their discs currently for Germany instead of buing from local dealers.)Our levies are higher than yours.. yet I'm the only one I know of ordering his discs abroad..

I believe that DRM is good as long as it allows me to do what I want, like copying music to HD for home listening and to empty CDs to be used in the cars, alas, the current webshops allow that.How many PCs do you have? I believe iTunes is limited to 5.. I could easily fill that out.. my workspace is litered with phones and PCs. And my portable music player can't handle AAC, with or without DRM. Sure I can go via CD burning -> MP3 but that's another compression and thus another quality loss. And I do believe burning music to CD is outdated.

@echooff: thank you for those numbers. I have to admit, I did not consider the fact that in the US prices are without sales tax and I'm glad to hear I wasn't as wrong as I could've been by making that omission.

[wmansir]

The issue of US state sales taxes for internet purchases is a very complicated one. The federal government has imposed and extended a restriction on states from forcing internet companies to charge state sales tax for residents of other states. However, States (like most forms government) are greedy for what they see as 'their money', so of course they will try and get as much as they can.

Some have a very broad interpretation of "physical presence". Take for example Netflix. I have to pay sales tax on my use of the service, even though they have no distribution center or corporate/IT office in my state. The only physical presence they have is the DVDs themselves, which are transported by the US federal postal service. But the lawyers say this constitutes a physical presence. It's a pretty flimsy argument, but enough for the state's attorneys to scare Netflix into collecting state taxes.

Also, many states have tried to skirt the anti-internet sales tax regulation by enforcing a "Use tax". What is the difference? Almost nothing, they cover the same products and are the same rate as the state sales tax. The one difference is they cannot force an out of state vendor to collect the tax and instead force the buyer to track all out of state purchases and add the tax to their income tax bill.

Most Use tax laws have been on the books for years, but were largely ignored until the boom of internet sales.

PS. Florida has a Use Tax.

[thekid]

on an interesting note i just checked one of my itunes receipts to see if they charged sales tax...

and to my surprise i was not charged

and yes i'm a resident of California

that said... the law as i understand it now is that if the company has an office in the state from which you are buying something from over the internet you have to pay tax on that item.

So Amazon is in Washington and i pay no tax, but Dell is in California and i do pay tax on those purchase...

so why Itunes is not charging me tax is unclear to me but they are not...

thekid...

on a related note, California tax forms now have an area where you are to "declare" any purchases made on the internet where you did not pay sales tax so you can pay the correct tax at that time....

that one made me really mad.. as if filling out taxes aren't enough frustration

[FredThompson]

A few years ago I was one of a 2-person company that sold software via mail order. Things may have changed a little but, most likely, not much. Sales tax is a real bugbear. Tax can be applied at the federal, state, country and township level. Each district has its own laws. In theory, sales tax is only applicable when the purchaser's address is in a district where the merchant has a "presence." Some companies charge the state sales tax because it's easier than tracking changes in every one of thousands of districts. Some single shops don't charge at all except for their own state's taxes. It's a royal mess.

[daveidmx]

@wmansir
"The only physical presence they have is the DVDs themselves, which are transported by the US federal postal service."
Interestingly enough, in Minnesota the case of delivery by another party is excluded and not considered a presence. I think California is the same.

@doom9
i just sent you an email with some info before i realized this thread was here. Sorry!

@all
This is based on info from Minneosta and California, and seems to generally represent what goes on in most other states.

In MN online retailers are only required to collect sales tax in states where they have a physical presence. In CA its phrased as "engaged in business" instead of "physical presence". Includes:
A permanent or temporary office, distribution center, sales or sample room, warehouse, or other place of business in California.
Having a representative in California who makes sales, takes orders, installs merchandise, trains customers, or makes deliveries.
Receiving rental payments from the lease of tangible personal property that is located in California. There are many out-of-state companies not physically "engaged in business" in the State of California that make retail sales to California consumers. These companies usually solicit orders via the Internet or through mail order. Their only connection to California is shipping merchandise by U.S. mail or other common carrier to California customers.
(CA BOE Sales and Use Tax FAQ #6)

“Minnesota sales tax does not apply to items the seller delivers to customers outside Minnesota…” (MN DOR Sales Tax Fact Sheet "STFS" 110, p1)

Use Tax:
But if you purchase something from another state for use in your own state, you most likely owe "Use Tax" to your state. Use Tax is generally the exact same as Sales Tax except you pay it yourself instead of having the retailer pay it for you.

Tangible Personal Property
"Sales and use tax applies to the sale or use of tangible personal property in California." (CA DOE S&UT FAQ #1)
"When the final [product] is transferred electronically to the client, with no physical transfer of...tangible items, the entire charge for the [goods and services] is exempt." (Emphasis original, MN DOR STFS 169, p2)

Hence when no tangible goods are exchanged, no sales tax is due. Hence iTunes should not charge sales tax. I think. Because I'm totally a lawyer certified to talk about this stuff. Yeah, or totally not.

:rolleyes:


cite:
CA DOE Sales and Use Tax FAQ (http://www.boe.ca.gov/sutax/faqusetax.htm)
MN DOR "Use Tax for Individuals" STFS156 (http://www.taxes.state.mn.us/taxes/sales/publications/fact_sheets_by_name/content/156%2012-02.pdf)
MN DOR "Photography and..." STFS169 (http://www.taxes.state.mn.us/taxes/sales/publications/fact_sheets_by_name/content/169%205-02.pdf)
MN DOR "Items for Use Outside Minnesota" STFS110 (http://http://www.taxes.state.mn.us/taxes/sales/publications/fact_sheets_by_name/content/110%201-03.pdf)