Curious About “Unfair” Sales Tax On Cell Phones

By Ken Tucci, WBZ-TV

I recently bought a new Verizon Smartphone and when I looked at the receipt it showed tax for $43.69. The phone with my 2 year plan was only $199 also I received a discount for $30, so the actual cost is $169.99  The state is trying to charge me for what the actual cost of the supposed for is $649. Does the state have the right to charge me for something I did not pay for?  You are being taxed at a rate of 6.25% for something you did not actually pay.  Please can you find out if this is legal  from Verizon or any other carrier.  This is just another way that the state is trying to take more money to pay for their mistakes.  Absolutely unbelieveable. – Julie, Waltham

It’s legal alright, but a lot of people say it’s not fair.  Since Julie paid only $169.99 she assumes she should be charged sales tax on just that amount which would be $10.62.  But she was hit for a lot more.  Here’s why.  This summer the state Dept. of Revenue put out a directive telling retailers they have to charge sales tax on cell phone purchases on the wholesale price of the phone, if it is “bundled” with a service contract….not on the price you actually pay.  You can read the directive here.

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I can’t think of any other product where this happens.  As Julie pointed out when she and I talked….it certainly doesn’t happen when you buy a car.  You negotiate your deal and you pay sales tax on that…not on the sticker price.

But the state has decided that cell phones are different.  Joe Shortsleeve did a story about this change a few months ago.  You can see that here.

But there’s a problem.  It’s next to impossible to find out what the wholesale price is ahead of time, and you have to trust that the retailer or the phone company are applying the sales tax on the right amount.

But the bigger issue that Julie brings up is one of fairness.

What do you think? 

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  • Marty

    Not fair at all, however, they do the same thing when you go to register a used car that you bought in a private party deal. They charge you tax on the NADA “trade-in value” and not the actual price that you paid, even though you have a signed bill of sale right there. Not fair at all.

  • ann

    I dont think this is Far my hubson and i use our cell phones for work only.
    and i dont think when you get a new cell phone they do pay the Tax but not this hight i think this is fair

  • Wilson

    Ask Warren Buffet to pay it for you. He’s been complaining for months that he’s not paying enough in taxes. There are dozens of examples of more unfair tax policies on the books than this. Know this, vote for a Democratic candidate and you have no grounds for complaint.

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