Cellular Abroad Charges Tax On Security Deposit, Calls It A "Sale"

Joanna writes, “Here’s my tip for using Cellular Abroad: don’t.  They totally charged me tax on a ‘security deposit’ and then refused to refund my tax on the returned portion of the deposit.” When she wrote to Cellular Abroad to dispute the tax, she was told that technically it wasn’t a security deposit but a purchase, and that when they refunded her the difference after she returned the phone, that wasn’t a refund—they were buying it back from her, and because they have a reseller’s license they don’t have to pay taxes on their “re-purchase.” Whaaa?

We thought maybe it was a non-taxable, refundable security deposit, mainly because on their website, when you first select the phone to rent, it says DEPOSIT, and then when you agree to the transaction later on, they call it a SECURITY DEPOSIT and use the word “refund”:


So now you know: if you do business with Cellular Abroad, be prepared to pay unnecessary taxes on your refundable security deposit we mean purchase price.

(thanks to Joanna!)