If you’re of a certain age, you’ll remember when buying things online was cheaper than shopping in a store because if you bought from a seller outside your state, you didn’t have to pay sales tax. To be honest, you were supposed to report those purchases to your state and pay the sales tax with your taxes but it was well known that no one bothered to do that.
Since then, online merchants have opened delivery locations around the country and once you have a physical location in a state, you’re on the hook to pay sales tax. That’s why you used to get away with not paying taxes on your Amazon.com purchases, but nowaways you’ll pay your state for everything you buy online. This is the penalty for getting same-day delivery.
Online merchants who operated from a single state took advantage of this loophole and kept selling online to buyers from out of state without collecting or paying sales taxes. That’s no longer the case.
I’ve previously purchased items from B&H Photo in New York. The photo, electronics and computer shop is well known for its large selection and low prices. While you’re not likely to see them on a shopping portal, the prices, free shipping and the fact that you didn’t have to pay sales tax(unless you lived in New York), meant their final prices were often lower than other online merchants.
Florida is now forcing online merchants to pay sales tax when shipping products to the state even if they’re not located in Florida. This might be a liability to most companies, but B&H Photo is rearranging the letters of liability and making it spell opportunity (Bonus points to anyone who gets that very meta-reference to a Broadway show.).
B&H Photo is offering a new credit card from Comenity Bank called Payboo.
The main advantage of the B&H Payboo credit card is that it provides a statement credit equal to the state sales tax you pay for purchases from B&H Photo.
For instance, the local sales tax in Orange County, FL is 6.5%.
When you use the Payboo Card to pay for qualifying purchases, B&H will collect the total of the merchandise plus applicable fees and taxes, and will instantly issue and apply the Instant Savings as “Payboo Card Savings” as a form of payment on your order total in checkout. Thus, you will see two payment lines on your order confirmation or receipt – one is the Payboo Card Savings and the other is your Payboo Card charge.
Is this the most brilliant credit card offer ever? Since it’s illegal to not charge sales tax, we’re going to offer a co-brand card that allows you to make a purchase and get an instant statement credit for the taxes made on a purchase.
I know that many people in this game can make more than 6% back on purchases but if I was buying a large purchase like a camera or TV, I might consider saving 6-8% on that purchase instead of earning 1-3% back on a credit card.
Not all of the moves in this game involve earning the most points. Sometimes it can pay to save money on a purchase instead of maximizing the miles earned on a purchase.
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2 comments
This is an interesting play. While not on points and miles portal B&H is on a several cash back portals for 1 to 2% back. https://www.cashbackmonitor.com/cashback-store/b-h-photo-video/ Goedekers may have changed since the last time I checked but they also don’t charge tax on out of state orders but then again they don’t have a tax back credit card in play. Good post on this btw.
An update to the second paragraph: The US Supreme Court in the Wayfair case eliminated the physical nexus requirement for an economic nexus. Businesses can now be required to collect sales taxes on online purchases regardless of a physical location in a state.