davidw

randominternetperson said:

MplsP said:

rob53 said:

What’s statute of limitations on sales tax payments. This ended almost 8 years ago. 

When did lawsuit start, though? They've probably been bickering over this for 3-4 years.

Seems a bit backwards - If I go to Best Buy and Buy a $500 TV on sale or $400, I only pay sales tax on $400, right?

Right, but it sounds like the carriers were paying Apple the extra $100 (in your example) so Apple is on the hook for remitting the tax on that as well.  

It's not so much that Apple got the $100 (in this example), but that the consumer that bought the iPhone using the carrier discount, got the $100. Businesses do not pay the sales tax, the consumers pays the sales tax. The businesses only collects the sales tax for the government. 

Here, Maine said that Apple was should have collected the sales tax from the consumers, for the retail value of the iPhone because the buyers ended up with an iPhone of that value. Even though they paid less for it because they got the carrier discount. And it appears that Maine changed their mind about having Apple collect the sales tax on the retail value of the iPhone, instead of just what the iPhone sold for with the discount, after they found out Apple agreement with the carrier included having the carrier pay any sales tax on the value of the discount. 

So Apple is now on the hook for the sales tax on the discounted amount of the iPhone sold using the carrier discount. But maybe Apple can recoup that from the carrier, if they are still in business. 

Here's how screwy things can get.

In CA, we have a liquor warehouse kind of store (Liquid Barn or BevMo?) that often have "buy one, get one free" sales. with this kind of sale, the consumers still have to pay the sales and alcohol tax on the free one. So for example, if a consumer buys a bottle of wine for $20 plus $3 in taxes, They still have to pay the $3 in taxes on the free bottle because the government are saying that the consumer still ended up with a bottle of wine valued at $20. So it comes to $26 for the two bottles of wine. This adds up when one buys a case of the wine. 

But if the liquor store has a 50% off sale on that same bottle of wine. The consumer would pay $20 ($10 each) for the 2 bottles of wine but only get taxed on $20. They do not have to pay the tax on the discount they got. So they end up paying $23 for exactly the same two bottles of wine. And the business makes exactly the same profit on the sale. But the government loses out. If the bottle of wine goes on sale for $10, then that is the value of that bottle of wine, at time of purchase.  

I think I figured out what happened here. With what little pieces of info given.

In CA and I assume also in other States, businesses are suppose to collect sales tax on the full value of an item, if the buyer uses a discount coupon or got a rebate on that item. 

Here, Apple and certain carriers made a deal where the carrier would offer a discount coupon, for an iPhone, if they sign a contract with the carrier. And the carrier would later pay Apple back for the discount. So when these people went to an Apple Store or bought online, Apple would honor the coupon or rebate.

Now in Maine, the tax people informed Apple that they only need to charge tax on the price of the iPhone, after honoring the discount coupon. (No way this would be the case in CA.) That would be like if Apple were to have a sale on iPhones, they only had to collect sales tax on the sale price of the iPhone, not the retail price. (This is true, even in CA.)

Later, the Maine tax people found out that the agreement Apple had with the carrier, included the carrier paying any sales tax on the value of the discount coupon, if Apple had to collect sales tax on the discounted portion of the iPhone purchase. (Like in CA.) But since the tax people in Maine told Apple that they only had to collect sales tax on the discounted price, Apple did not charge the carrier any sales tax for the iPhones sold in Maine, when the carrier paid Apple back for honoring the discount coupon.

So the tax people in Maine are basically saying to Apple ...... we made a mistake by telling you that you didn't have to collect sales tax on the discounted portion of the iPhones sold to consumers using the carrier's coupon. If we had known that the carrier would had paid the sales tax on the discounted portion under your agreement with them, we would have told you to collect the sales tax on the retail price of the iPhone. But pay up anyway and BTW- were going to fine you $100K for not collecting sales tax on the retail price of the iPhones that were sold at a discount with a carrier coupon, even though we told you you didn't have to. 

danvm said:

MplsP said:

JWSC said:

Putting aside the merits of this legislation, questionable though they may be, I’m not sure this can be done at the state level.  Interstate commerce remains the realm of the federal Government.

It would be enlightening to know who is behind this legislative push.  As Deepthroat would have said, “Follow the money.”

My thoughts exactly. The other question is why an xbox console is any different from a phone, other than some legislator got a campaign donation from Microsoft.

There are a few differences.  For example, a console is not a general purpose device, as an iPhone / iPad.  Second, as today, console users are not forced to use the app store, neither the app store payment system.  They can purchase a physical or digital game from a retailer, like Amazon or Walmart.

As of today, with a Live account, an X-Box One game console has a browser and can surf the internet. A X-Box One can send and receive eMail. An X-box One can control Smart home devices like a thermostat and cameras. An X-Box One can listen to PodCast. And X-Box One can  access and search You Tube. One can use Skype and video chat, for free. Add a keyboard and mouse to an X-Box One and it will support Office 365 and Zoom. Since the X-Box 360, with a Live account, one can buy and rent movies and stream it to a TV.  One can stream Spotify or Pandora with an X-Box. Even while playing a game. 

You must be thinking of the game consoles that only plays games on a cartridge or disc. That must have been over 10 years ago.  With an online account, a game console is much, much more than for only playing games. They are as "general purpose" as an iiPad.  And all the apps that allows an X-Box to be more of a general purpose device can only be downloaded through Microsoft.

Don't fall for Epic B.S. that game consoles are vastly different than mobile devices because they are only for playing games and therefore it's okay for Epic to pay them the 30% "tax", for access to game consoles customers and not Apple for access to their iDevice customers. Sweeney is clueless. Don't be like Sweeney.  He thinks it only cost Apple 2-3% to process CC payments through iTunes and it's the only thing the 30% "tax" pays for. 

https://www.thenorthernecho.co.uk/news/18991370.get-zoom-office-xbox-one-ps4/

https://www.windowscentral.com/home-remote-xbox-one

It doesn't matter if X-Box users are not forced to use the Microsoft Store in their X-Box to get contents into it, all contents for an X-Box must go through Microsoft and Microsoft will get paid for it. What? You think a developer can go to Walmart or Amazon and ask them to sell and distribute their X-Box software that is on a physical disc and they are able to bypass paying Microsoft and without a developer license from Microsoft? Get Real. 

roundaboutnow said:

davidw said:

ITGUYINSD said:

genovelle said:

So, if Samsung distributes it and Samsung sell more phones than Apple, how can Apple have a monopoly?  Having the more profitable products does not equal a monopoly. The question then are we redefining what a monopoly is because one company goes against the grain in almost everything they do and makes more money because of it. 

It's not a monopoly in that there is only one source for the product.  Read the case.  It's about the fact that Apple only allows one method of payment for in-app purchases, and that is through Apple's own systems and at Apple's own rate (30%).  CC transactions typically cost businesses 2-3%.

That is wrong. It cost businesses much more than the 2-3 % of the CC transaction. 2-3% is just what the CC and issuing bank charges the business. There are many players involve and they all charge a fee and more often than not, a set fee per transaction.  Businesses that does a lot of CC must also pay to have that transaction insured. Otherwise, they are the ones on the hook for fraud CC purchases. They must also pay a monthly of annual fee to set up an account with each of the credit cards that they will honor. The more CC transactions in a year, the less the monthly or annual fee.There's also the cost of maintaining or renting the equipment to process CC payments. 

Plus there's a set transaction fee of usually $.05 or $.10 PER transaction and can be as high as $.20, depending on the type of account they have set up. Use your what math skills you have and calculate what the CC transaction percentage cost would be for a $.99 transaction, if it cost the business $.10 plus the 3%. It would only cost businesses close to 2-3% per transaction, if the transaction was over $15.   

Here's a run down of what it cost a business to accept CC. For sure Apple will be on the low end in term of overall cost but will be on the high end for the App Store as most of the transaction there are probably less than $5 with $.99 being most of that. The set fee PER transaction they have to pay, along with the percentage of the transaction will put their cost way above the 2-3%.

It a long read but maybe you'll stop passing on the lie that it only cost a business 2-3% of the CC transaction, to accept CC payments. 

https://www.merchantmaverick.com/the-complete-guide-to-credit-card-processing-rates-and-fees/

The set fee per transaction was the reason why Steve Jobs stated that Apple about breaks even or takes a slight loss per $.99 iTunes purchase, even though Apple gets 30% of the $.99 transaction. But when one buys more than 1 song or a $9.99 album, per transaction, Apple begins to make money. The set transaction fee is the same whether it's a $.99 purchase or a $9.99 purchase or a $99.99 purchase. But a $.10 set transaction fee is 10% of a $.99 transaction, 1% of a $9.99 one and .1% of a $99.99 one. But Apple did not penalize the buyers that only purchase one song at a time. 

One of the cheapest way for a business to accept CC is to use Square. They can charge as low as 2.6% of the transaction plus a $.10 per transaction fee or as high as 2.9% plus a $.30 per transaction fee. Either way, it's not going to cost a business just 2-3% of the CC transaction, if most of the transactions are below $5. 

https://squareup.com/us/en/townsquare/credit-card-processing-fees-and-rates

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This is all very interesting. When you say that "Apple about breaks even or takes a slight loss per $.99 iTunes purchase," does that also (or actually) mean for App Store purchases?

If so, what about all those free apps? Does this mean that Apple takes a loss on all the free apps (I mean really free, no in-app purchase)? I suppose having a bunch of free apps help makes the ecosystem look better, so I guess it could be considered a "marketing cost," but still...People often forget to mention the huge number of free apps when bringing up the 30% (or less) that Apple charges.

One has to remember at the time Steve Jobs stated that, the iTune Store was a relatively new operation for Apple. Therefore, the cost of RD, expansion, maintenance and learning curve of operating the iTunes Store, would be a higher back then, than it would be now for the Apple App Store. But in terms of how much Apple makes per $.99 purchase, it's the same $.30 now as it was back then and I imagine Apple cost per $.99 CC transaction hasn't changed that much. 

Free apps are not free for Apple. They cost Apple something to host them in the App Store. They are subsidize by Apple making money with the apps they do get a commission from and somewhat from the sales of hardware whose features are enhanced, with the availability of free apps on iDevices.  But remember, the free apps in the App Store are also free on Android. So it's not as much of a selling point for iDevices, as some make it out to be. So if you factor in how much it cost to subsidize free apps, I wouldn't think the sale of a $.99 app would be very profitable, if at all. I remember reading somewhere that the top 1% of developers account for over 90% of Apple gross revenue in the App Store. And I can't imagine that the top 1% are there from selling a Hell of a lot of $.99 apps. The biggest revenue generator are in-game purchases (like with Fortnight) and then with on-going subscription payments (like with Netflix). Over 75% of the apps in the App Store, are free. The same as in the Google Play Store.

ITGUYINSD said:

genovelle said:

So, if Samsung distributes it and Samsung sell more phones than Apple, how can Apple have a monopoly?  Having the more profitable products does not equal a monopoly. The question then are we redefining what a monopoly is because one company goes against the grain in almost everything they do and makes more money because of it. 

It's not a monopoly in that there is only one source for the product.  Read the case.  It's about the fact that Apple only allows one method of payment for in-app purchases, and that is through Apple's own systems and at Apple's own rate (30%).  CC transactions typically cost businesses 2-3%.

That is wrong. It cost businesses much more than the 2-3 % of the CC transaction. 2-3% is just what the CC and issuing bank charges the business. There are many players involve and they all charge a fee and more often than not, a set fee per transaction.  Businesses that does a lot of CC must also pay to have that transaction insured. Otherwise, they are the ones on the hook for fraud CC purchases. They must also pay a monthly or annual fee to set up an account with each of the credit cards that they will honor. The more CC transactions in a year, the less the monthly or annual fee.There's also the cost of maintaining or renting the equipment to process CC payments. 

Plus there's a set transaction fee of usually $.05 or $.10 PER transaction and can be as high as $.20, depending on the type of account they have set up. Use your what math skills you have and calculate what the CC transaction percentage cost would be for a $.99 transaction, if it cost the business $.10 plus the 3%. It would only cost businesses close to 2-3% per transaction, if the transaction was over $15.   

Here's a run down of what it cost a business to accept CC. For sure Apple will be on the low end in term of overall cost but will be on the high end for the App Store as most of the transaction there are probably less than $5 with $.99 being most of that. The set fee PER transaction they have to pay, along with the percentage of the transaction will put their cost way above the 2-3%.

It a long read but maybe you'll stop passing on the lie that it only cost a business 2-3% of the CC transaction, to accept CC payments. 

https://www.merchantmaverick.com/the-complete-guide-to-credit-card-processing-rates-and-fees/

The set fee per transaction was the reason why Steve Jobs stated that Apple about breaks even or takes a slight loss per $.99 iTunes purchase, even though Apple gets 30% of the $.99 transaction. But when one buys more than 1 song or a $9.99 album, per transaction, Apple begins to make money. The set transaction fee is the same whether it's a $.99 purchase or a $9.99 purchase or a $99.99 purchase. But a $.10 set transaction fee is 10% of a $.99 transaction, 1% of a $9.99 one and .1% of a $99.99 one. But Apple did not penalize the buyers that only purchase one song at a time. 

One of the cheapest way for a business to accept CC is to use Square. They can charge as low as 2.6% of the transaction plus a $.10 per transaction fee or as high as 2.9% plus a $.30 per transaction fee. Either way, it's not going to cost a business just 2-3% of the CC transaction, if most of the transactions are below $5. 

https://squareup.com/us/en/townsquare/credit-card-processing-fees-and-rates

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