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3 On Your Side: Sales Tax Confusion

jim-donovan-web Jim Donovan
Jim Donovan is a 13-time Emmy Award-winning consumer reporter w...
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By Jim Donovan

PHILADELPHIA (CBS) — You might be paying more than you should when shopping online, and it’s all because of a change in tax policy. Consumer reporter Jim Donovan explains the problem and has information on how to protect yourself.

Until recently, if you lived in Pennsylvania and shopped online, you escaped paying state and county sales tax on internet purchases. But that changed on September 1st, when the Pennsylvania State Revenue Department began to enforce a law.

“Anything that’s taxed in Pennsylvania will have to be taxed now via the internet,” said consumer advocate Mary Bach.

And some consumer advocates are concerned shoppers will be hurt, because the state sales tax can be confusing.

“I think there is a one-hundred-percent chance that retailers in other locations outside of Pennsylvania who are doing business over the internet won’t have a clue,” said Bach.

So we did some online shopping and found there does seem to be confusion.

For example, in Pennsylvania heating pads shouldn’t be taxed. But on Target’s website, we were charged a tax of $2.39. The same thing happened at Amazon.com, where $1.92 in taxes were added to the price of a heating pad.

Flea powder isn’t taxable in Pennsylvania either, but Amazon added in sales tax at checkout.

The tax law varies even on similar products.

“If you buy toilet tissue, you do not pay sales tax. But if you buy any kind of facial tissue, those items are taxable,” explained Bach.

Sometimes, it works to the consumers benefit. For example, umbrellas are taxed in the state, but at Amazon, a large umbrella wasn’t taxed at checkout.

Still, advocates worry any confusion could mean consumers are likely to lose out.

We reached out to Target and Amazon about the online tax errors but have not heard back yet.

For a list of taxable and non-taxable retail items in Pennsylvania, visit: http://cbsphilly.files.wordpress.com/2012/10/pa-taxable_non-taxable-items.pdf

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