It was explained once on some earlier thread but the discount is actually considered an "Instant rebate". Meaning that immediately after you purchase the phone, they give you $XX back, this is all done at the cash register to make things faster and make it appear to be a discount rather than a rebate, but by the letter of the law its technically supposed to happen after the purchase. In this case the state doesnt care if the person you bought something from decides to give you some of your money back after the fact, all they care about was what the phone sells for, thats what the want tax on.

The reason for this is because Verizon, AT&T, etc are actually selling you phones for LESS than what they pay for them from Apple, motorola, Nokia, etc, sometimes even free! This is technically a big no-no, so the loophole is they sell them at MSRP and do the rebate so everything is legit and they make their money on your contract, the only downside is you still pay the extra tax, still better than having to pay full price AND tax though, sorry thats just the name of the game

 

Don't cry man, you know all that **** on "Price is Right" is supposed to be free but they have to also pay the sales tax on every prize, so nothing ain't totally free in this life. Taxes are forever so pay up!

 

 

i talked to my brother in law, who is a tax attorney in LA.

he says that there is a KALIF law saying (phone) companies can charge the FULL PRICE tax of the phone even though its free...

weirdest of the weird.

 

How about his. You give me the phone and I get give you $64 back. Everything is evened out.

 

No problem, but you'll have to pay taxes on the full price

Not only is this to get around the tax issue with the state, it is also because they know they make more money off your continued service than they do off the one time sale of the phone. The cost of the phone is factored into everyone's bill, so in the end, you still end up paying for it.

 

The California State Board of Equalization — the state tax folk — distinguishes between "bundled" and "unbundled" sales prices. Bundled means a phone comes with a service plan, usually lasting a year or two. Unbundled means the phone has been sold au naturel, without an accompanying plan.

According to the tax board's Regulation 1585, "Tax applies to the gross receipts from the retail sale of a wireless telecommunication device sold in a bundled transaction, measured by the unbundled sales price of that device."

In other words, even if you buy a discounted cellphone as part of a bundled package, you still have to pay the unbundled tax rate.

"The retailer of the wireless telecommunication device is required to report and pay tax measured by the unbundled sale price of the device and may collect tax or tax reimbursement from its customer measured by the unbundled sales price," the regulation says.

And now you ask: How is that fair?

The retailer likely has obtained the cellphone at a wholesale price and is making it available to customers at a discount, but it's required to ensure that the state is cut in for sales tax based on the full retail price — an amount that no one in the sales equation has had to pay.

"With cellphones, you get a discounted phone only because you're buying a service with the phone," said Anita Gore, a spokeswoman for the Board of Equalization.

"A phone has a value," she said. "Even if you purchase a plan, the phone still has a value."

 

Not to be knocking on anybody, but the sales tax on the full retail price on cell phones have been around for a long time. I rememeber even when I bought my first cell phone it was implied then many years ago. I just dont understand on how saturated the market is with mobile devices that people are just starting to realizing that the tax is on the full retail value.

 

Back when full price on the phone was $100 or $200- even if you got it for free, sales taxes of 10-20 didn't raise much attention, but now that retail prices are again upwards of $5-600 (like they were when you needed a suitcase for the battery on your cell phone) the taxes are a little bit harder to ignore.

 

this is not just on cell phones its on anything u buy that on sale, mfir,or irc the state charges u tax on the og value of item not sale price because the value of the item has not changed in there mind the store or company is just trying to move the item. I know it sucks but thats taxes for u

 

True but even when I got a black berry or various other phones I remember the taxes would at least be $45. but then again smart phones wasnt as big in the mobile market as they are now thus resulting in people not experiencing the high tax rate before.

 

WERD!!!!! oh i might drop by to the buffalo meet.