I purchased a new laptop computer from Dell in December 2008 with the three year extended warranty and 24/7 onsite technical support. Yesterday my computer broke and I had to call Dell for assistance and they charged me an extra $239 to get technical support over the phone. The interesting point of the phone call was when the sales representative who controls access to the technicians told me she was adding $19.84 in sales tax to the $239 bill. I informed her that Arizona did not have a sales tax, but rather has a transaction privilege tax and consulting services are not subject to the tax. I also told her I had a copy of Arizona’s transaction privilege tax rules that I recently obtained from the Arizona Department of Revenue on a shelf by my desk and gave her the appropriate sections to review. She put me on hold for about 20 minutes and came back and agreed I was correct and that she would not charge the nonexistent sales tax.
Dell is charging nonexistent sales tax on services
My question to readers is: have any of you paid Dell for technical support services and been charged a nonexistent sales tax in addition to Dell’s technical support service fee. If you have paid this nonexistent sales tax to Dell, please comment to this article with your story. If enough people have been affected I will turn the information over to the Arizona Attorney General’s Office to see if they can convince Dell to refund the money to Arizona consumers. Please forward a copy of this article to anyone you know who owns a Dell computer.
Also, since the State of Arizona does not charge transaction privilege taxes on services, does anyone know what Dell is doing with the extra 8.3% it is charging for the nonexistent sales tax on its technical services?
For additional Information please contact:
Robert K. Minniti, CPA, CFE, Cr,FA, CFF, MBA
Website: http://www.minnitiaccounting.com
LinkedIn: http://www.linkedin.com/in/robertminniti
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Comments
Great Article! This a really interesting read especially considering that this has probably happened before to many people.
I live in Mississippi, which has a state sales tax and this tax applies to service provided to computers, etc., as these are considered tangible assets or something like that. I have an LLC providing computer services, and I always add sales tax to my invoices (except for exempt entities). Sometimes I contract my services to dispatch companies, and here is my question.
If a company like HP (not in MS) contracts with another company (not in MS) (say, a warranty dispatch service company) to support computers under warranty, and that dispatch service contracts me as a technician to service the customer's computer (in MS), who is responsible for paying the sales tax?
I called the tax commission, and they said that the dispatch company (or HP) would have to pay the sales tax and that I should get from them their state issued ID number for auditing purposes. They said that if they didn't pay the sales tax that I would have to pay it. The dispatch company's agent became angry when I tried to discuss this with them, and I terminated our relationship (she wouldn't let me place a conference call to the tax commission to sort this out). So, did I do the right thing? I didn't want to have to pay the sales tax out of the flat fee that the dispatch company would have paid me for the service, but they told me that I would have to pay it.
I have a DELL XPS, I like the quality of this laptop and it runs very fast. About a month back, I called dell tech support since I had couple of minor issues with my laptop. Call went to their call center in Texas but I felt like that guy was new in DELL. For every problem he asked me to contact the other company or take a software support of dell.
- He suggests me to contact Microsoft for the problem with MS Excel even though I bought MS Office with my DELL computer.
- I was not able to transfer the pictures from my canon to my laptop, and he asked me to contact canon support or pay for their software support even though I have their onsite warranty.
He explained that my warranty only covers hardware replacements. I tried couple of things on my own but couldn't solve the problem. Same day, I saw an online ad of IT24BY7 (www.IT24BY7.com). I visited their website and I found that they support everything whether it’s iPod, Digicam, Ms Office etc….I contacted IT24BY7 and they solved all the issues within minutes without saying we don’t cover this problem. Amazing customer service. I will give them 10 out of 10!!!!!
Dell routinely overcharges sales tax. They will refund it easily enough, in time. However the sales tax for Texas residents is 6.25%. Cities and other municipalities have the option of tacking on was much as 2%, and most do. I live in a rural unincorporated area in Texas. However I have a mailing address with the city of Waller in it. That doesn't mean that I live in the city of Waller, nor am I subject to their higher sales tax rate. The sales tax by law is the rate in effect for the address to which goods are delivered to. Dell is too ignorant, stupid and lazy to not only charge the correct amount, they also know about the problem and have known for quite sometime but yet they don't do anything to correct it.! Most people I suspect either don't know that they are systematically being overcharged by Dell, or bother to demand a refund. This is call 'stealing' by any other name. And who gets to keep the overcharges? I am willing to be that any overages do not get sent to the State of Texas.
To be fair many other companies do this too. Including HP and Sam's Club online. Sam's is even easier to get your money refunded and HP is like pulling teeth. You are lucky to ever talk to an American citizen. They just repeat canned answers like trained parrots.
And many other companies such as Kohl's get it right. It isn't hard to do. One can easily use the zip+4 numbers to differentiate different tax rates in different areas. How can a company like Kohl's do as compared to Dell??
I ordered something from Microsoft today - A Windows 7 three-pack. The online cart showed the same old improper 8.25% and I got angry and phone their sales number. The sales rep took my order and the correct 6.25% sales tax came up on his end. Go figure? So I placed the order.
I am sick and tired of Dell and all of these other sales-tax pirates and all of their ignorance. And I try to avoid doing business with them now as much as I can.
I got the Texas Comptroller's Office to issue me a signed document declaring that the official sales tax for my home address is 6.25%. That took some doing too. I even bumped heads with one employee there that claimed that I should be paying the sales tax where the item is shipped from! No sir! That is not how it works! I doggedly persisted and finally received the letter on their official letterhead.
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