[dragonwriter]

> I am sorry I'm just going of the linked article and I am sure I am missing some nuances here however it doesn't seem like what they've done is exactly illegal.

When the linked article says they “The corporation can designate where a given transaction has taken place, separate and apart from the underlying origin and destination realities" it is correct only in the extent that, say, you can report money you spent on narcotics and escort services as “charitable donations” on your federal tax returns, in that it is physically possible, but definitely not legal, to do it.

The entire reason this is in the news is that state sales tax authorities audited Apple’s sales tax reporting and found it out of line with the law.

[iamerroragent]

I am still not seeing anything here explaining the actual illegality here. As far as I can tell, and it appears still to to be determined, Apple and the city in question are both operating within the law.

https://www.eastbaytimes.com/2023/04/13/apples-local-tax-arr...

If anything it looks like the State is just now getting around to realizing that they foolishly left money on the table and now they want it.

As it is we have Thursday it looks like to find out the results of the audit.

Plus, bigger picture, what the city is being accused of doing to other cities, the the State's themselves already do to each other. Ask yourself why so many corporations are home in Delaware?

[dragonwriter]

> I am still not seeing anything here explaining the actual illegality here.

The illegality is Apple assigning sales where the goods were not in Cupertino at the time of the transaction to Cupertino for sales tax purposes, to take maximize advantage of sales tax kickbacks offered by Cupertino, despite state law which says the location for sales tax is the location where the goods physically were at the time of the transaction.

> If anything it looks like the State is just now getting around to realizing that they foolishly left money on the table and now they want it.

The state gets the same share no matter where in the state the transaction is assigned for sales tax purposes. The entities losing out are other localities, not the State.

[iamerroragent]

> The illegality is Apple assigning sales where the goods were not in Cupertino at the time of the transaction to Cupertino for sales tax purposes, to take maximize advantage of sales tax kickbacks offered by Cupertino, despite state law which says the location for sales tax is the location where the goods physically were at the time of the transaction.

This directly contradicts what the article states.

[dragonwriter]

> This directly contradicts what the article states.

No, it doesn’t.

It contradicts what you appear to have falsely inferred from the very vague writing in the article, and that false inference may be the intent of the vague writing, but it doesn’t contradict what the article actually says.

I have gone beyond the article to understand the actual facts here. For instance, here’s the official city page on the issue: https://www.cupertino.org/our-city/departments/finance/cdtfa...

“In December 2021, the CDTFA notified the City that they were reviewing one of the taxpayers in the City. In May 2022, the CDTFA updated the City, saying they had asked the taxpayer for more tax returns. […] In March, the CDTFA verbally informed the City of their preliminary determination that tax dollars had been misallocated to the City, and they gave rough estimates of how much money the City might lose. The CDTFA said the City would get a letter with the final results of the review, including the actual amount of money that would be lost, in the next four to six months.”

So that tells us the issue is about “misallocation”. So, how are sales taxes supposed to be allocated? Here’s official information from the CDTFA, the agency responsible for sales and use taxes in California: https://www.cdtfa.ca.gov/industry/localanddistricttaxes.htm#...

“Regulation 1620, subdivision (a)(2)(A), states that participation in the transaction in any way by the in-state place of business is sufficient for the transaction to be subject to sales tax. However, to constitute participation, an activity must serve some real purpose and have some meaningful effect in the actual sales process and involve some genuine physical human interaction with the sale from that location.

“Generally, activities taking place after the sale has occurred are not participation in the sale. There are also activities that a retailer might conduct from a California location to support its operations that do not constitute participation in the sale for purposes of Regulation 1620, subdivision (a)(2)(A), including price setting, purchase of resale inventory, web design, and general marketing.

“Internet transactions are generally designed and intended to be processed online, without direct human intervention until the property is picked, packed, and shipped at the storage location. As such, a storage location is often the only place of business that participates in an Internet transaction. Activities related to creating and maintaining the automated online processes would generally be considered the type of support operations that do not constitute participation in any particular transaction. The location of the server where the website is hosted or maintained is also immaterial”

[iamerroragent]

A. What you are describing here isn't illegal activity. You're describing the State determining that Apple incorrectly reported where the sales tax should go (no one is saying deliberately). Now the state is trying to remedy this.

B. From what I was gathering there's been a change in law regarding online sale tax in 2019 or so. Fair enough for the State to take a couple of years to audit and find compliance.

Doesn't really seem to be malicious actions between Apple and the city.

Additionally Apple is free to apeal here and say they did report their sales tax correctly.

[dragonwriter]

> What you are describing here isn’t illegal activity.

Yes it is.

> You’re describing the State determining that Apple incorrectly reported where the sales tax should go

Failing to report as legally required is illegal.

> (no one is saying deliberately).

Sure, but that’s not germane.

> From what I was gathering there’s been a change in law regarding online sale tax in 2019 or so.

There was; mainly, from looking at the CDTFA information on sales tax (which calls out the 2019 changes) affecting sales through internet marketplaces and in some circumstances making the marketplace, rather than the seller-through-the-marketplace, the retailer for sales tax purposes, and requiring registration and use-tax collection by retailers in certain cases. The change doesn’t seem related to the Apple/Cupertino sales tax issue.