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Why is there sales tax on the upgrade fee?
gordonmx
Member

I'm sorry for the posting, but no one at customer service has an answer

On 10/20/2013, I purchased upgrade phones for my daughters in Idaho and Virginia.  Since we were upgrading our basis phones with 2 year contract extensions, one phone was free while the other was 99 cent.  I understand there is an “upgrade fee” of $30 on each phone, but why was I charged sales tax on the fee, 6% and 5.3%, respectively? The information from the website states this fee is intended to provide the customer with a high level of support.  Since the same fee applies to all phones regardless of value, the $30 is a service fee.  Idaho specifically prohibits sales tax on a service.

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Re: Why is there sales tax on the upgrade fee?
Not applicable

However if you are a resident of another state no matter where your children live, most states charge tax on "Goods and Services" for where the account holder resides. That is an issue for you to take up with the tax department. Verizon is just obeying the tax laws.

Good Luck

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Re: Why is there sales tax on the upgrade fee?
gordonmx
Member

Actually, Idaho has a "use" tax, which means no matter where you buy the product, if you use it in Idaho you must pay at least 6% (but not on services)

"That is an issue for you to take up with the tax department. Verizon is just obeying the tax laws."  I would love to, but Verizon hasn't responded.  Verizon is just obeying the tax laws, as they understand them, but could they be wrong?

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Re: Why is there sales tax on the upgrade fee?
Not applicable

They could be wrong. But on taxes I would not be so sure.

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