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can you really truely save on sales tax?

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gmoney29

Rough_Rock
Joined
Jul 7, 2004
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I have been visiting a lot of websites talking about "no sales" tax on diamond purchases. Based on articles I have read and some threads on this post, it appears that you may not get hit with it up front but that it might be something you have to report on your tax return depending on what state your in. My situation is that I like a diamond from a local dealer in my state. When price shopping I mentioned that I can buy over the internet with no sales tax, to which they replied that they can just ship it out-of-state to another address if I desire. Sounds good as my true home is out-of-state, but is this something that could catch up to me?
 
I am doing the same thing. I don't know why you would have to report it on your taxes?! I am buying the diamond and having it shipped out of state to avoid paying the tax on it. Saves me over $400
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Legally, you are supposed to report it. There is a spot.

The vendor does not collect it. You pay the tax in YOUR state.
 
So say you buy in NY, but ask them to ship it to PA, you have to pay PA sales tax (when reporting on your NY tax return)? Is the vendor taking more of a risk or the buyer of not collecting/paying the sales tax?
 
my understanding is this:
it is your responsibility to report it. it theory, it could catch up with you & i even read on "another" diamond site that some states give jewelers cash rewards for reporting sales.
that makes me a bit nervous, but i guess the worst case scenario is that you end up paying tax on something you should have in the first place.
still sucks though.
 
Don't give it another thought...the chances of this ever being a problem is so slight!!! This is the LEAST of my tax problems!
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On 7/9/2004 8:13:04 PM moremoremore wrote:

Don't give it another thought...the chances of this ever being a problem is so slight!!! This is the LEAST of my tax problems!
naughty.gif
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Not necessarily. I bought an expensive watch for my husband in Europe years ago. I declared it, and paid the customs, like you are supposed to. Somewhere in the 6 - 12 months timeframe later, I got a bill from the state of CA for sales tax -- go figure. Turns out, much to my surprise and dismay, I had to pay it. This is no different than buying from out of state (although specific state laws may vary.) I think in general you are legally liable for it -- it's just a matter of whether they know about it.
 
I think the problem is that you declared it!
 
let me rephrase...the reason that happened was that you had declared it....
 
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On 7/9/2004 4:27:50 PM gmoney29 wrote:

My situation is that I like a diamond from a local dealer in my state. When price shopping I mentioned that I can buy over the internet with no sales tax, to which they replied that they can just ship it out-of-state to another address if I desire. Sounds good as my true home is out-of-state, but is this something that could catch up to me? ----------------
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Yes, it is. Your jeweler is commiting a felony and when he gets caught he will face serious charges as well as huge fines for back taxes, penalties and interest.

Tiffany's got caught shipping empty boxes out of state and letting the tourists wear their jewelry out of the store many years ago. The new York taxing authority caught them and I believe the fine was something like 75 million dollars since the taaxing authority decided that nothing that had been purchased was actually shipped so Tiffany's owed the taxes, penalties and intereest on every thing they had ever sold as tax free.

Your jeweler will not have the assetts that Tiffany's does to pay the fine so he will be singing like a little bird to get all those who cheated with him to help pay the fine. Not a big chance of getting caught as has been mentioned, and your jeweler is already a crook so you will not have tempting him on your conscience, but do you want to do business with a crook? Someone who will cheat the government with all of their powers to catch him will surely cheat those who have no ability to catch him.

Sorry to sound harsh, but in this business we are trusted and expected to have high moral standards because we deal in tiny things with high values. I think that this jeweler has defamed not only himself but his profession and I am sad for him. I wish he was alone, but there are many just like him, and that makes me sad for my profession.

Wink
 
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On 7/9/2004 8:37:33 PM moremoremore wrote:

let me rephrase...the reason that happened was that you had declared it....----------------
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True. But there are two issues here. The first is what is legal, and the second is what you can get away with. 2 different things for everyone to make their own decision about once they understand the difference.
 
An easy solution is to buy your diamond from a dealer in Oregon where there is NO state sales tax on anything (includes cars, boats everything!!). NiceIce.com is located in Oregon for just that reason.
 
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On 7/10/2004 8:43:38 AM Wink wrote:

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On 7/9/2004 4:27:50 PM gmoney29 wrote:

My situation is that I like a diamond from a local dealer in my state. When price shopping I mentioned that I can buy over the internet with no sales tax, to which they replied that they can just ship it out-of-state to another address if I desire. Sounds good as my true home is out-of-state, but is this something that could catch up to me? ----------------
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Yes, it is. Your jeweler is commiting a felony and when he gets caught he will face serious charges as well as huge fines for back taxes, penalties and interest.

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Wink, I'm confused. If the poster has a legitimate mailing address that he reside at in another state, why would the jeweler be commiting any fraud?

BTW, regarding reporting the tax in your state, each State is different & the levels at which they pursue. And, some may target certain businesses. A few years back, VA audited shipping records of a NC furn. distributor. People were shopping for furniture in the High Point, NC Outlets & having the furniture shipped to their homes. VA didn't like the business going South & they didn't like the fact they weren't getting the tax. I'm sure the furn lobby in VA lobbied to have this looked into. Much to the surprise of many, they received a tax bill from the state of VA. & interest owed.


But, I would have to think the chances of getting caught are minimal. And, usually the States have bigger fish to fry.
 
The shipping address better be the same as the buyers address and this is very simple for the IRS to audit. And the jeweler is required to keep the shipping information and the sales slip to document what he/she (they) did.

If you do not claim it and you do get audited about it, you may be in for more of a problem than simply paying the sales tax. It can lead to a compliance audit which the IRS will then go over each line of your tax return and demand you to document each and every line. This can take months or even years to complete along with very probable other expenses such as attorneys and CPAs. The expense and certainly the aggravation can be way more than paying the tax and being honest to begin with.

The jeweler is not required to collect the tax, they are only held responsible to document what you paid for it, and where it was shipped.

I know someone who was in a lot bigger mess than you can imagine over the shipping of some furniture out of state and not reporting the tax. It can happen, and we know that this war has to be paid for. Our tax codes will become better enforced in the near future. If you can buy the item you can pay your fair share too.

I do not like taxes either, but I consider honesty one of the most important human traits.
 
RE: Wink, I'm confused. If the poster has a legitimate mailing address that he reside at in another state, why would the jeweler be commiting any fraud?
---------------
If as I understand it, the original question was about having it shipped to another state to avoid taxes, then there is fraud. If the original poster lives in both states and buys it in the one he/she is currently living in, even though he/she resides in the other state part of the time and has it shipped to the other state just to avoid taxes and does not report it in the other state as is probably required if that state has a SALES AND USE TAX, then the jeweler is guilty of collusion to avoid taxes. From the opening question I believe that is the current case.

Both are BAD! If the person was visiting a state and had it shipped to their home state, that is perfectly legal, and if the person wishes to be perfectly legal in most states, they will have to fill in the line on their income tax form that asks about purchases made in other states and shipped without payment of taxes.

Yes, on an individual basis there is little chance of getting caught. Yes, the states are loosing BILLIONS of dollars in taxes and they are going to be coming after them because they can and because they think they need the money. I forsee, and do not look forward to, the day when any state can request that my state sales and use tax commission forward to them the list of non taxable sales that were made from my state. When that day comes I will be required to turn over the name, address and amount of any sale that I mailed out of state without collecting the tax. I will comply or go to jail, guess which I will choose? It is not yet the law, but it will be someday, probably not too long from now.

Don't get me wrong, I HATE sales and use taxes with a passion, but not as strong a passion as I would hate being locked up, there is no kayaking in jail!

I would guess that most people at this time are not reporting themselves when they buy something from out of state. I do because as a small business owner I am an audit target and never so far have I been required to pay so much as a dime at any of my audits.



Pause there, I had to go knock on wood...

The laws vary from state to state, and I do not know your state's laws, only my own. I do NOT like them, but I follow them.

Wink
 
Sure Steve, sneak in there while I am typing and say it better!
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Wink
 
Hey Wink
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And I only stop in every week or so, you must type really slow
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I'm glad that my post has generated such an intense discussion. The situation I am describing is that I live, and have lived in state A for 6 years. I list this address for everything. My parents home is in state B. So basically the jeweler would be shipping to state B. The sales tax I would end up paying is close to $800 bucks....having to pay it coould very well knock me out of the diamond I want. On the other hand, I can go online and get it without sales tax but I really don't want to have to pick a diamond out online, return if I dont like it, etc. I have seen some S1 that are not "eye clean", and I'm probably looking to buy in this range. I guess at the end of the day I'm wondering how much of this really goes on and how many normal buyers do it? (ie. avoiding sales tax)
 
What about the issue that someone mentioned of buying in Oregon, where there is no sales tax? Would you still legally owe use tax in your home state? What about buying in a state with a lower sales tax rate than your own? Would you owe the difference in that case? Or would you be covered because you did pay some sales tax?
 
So this is the main reason I use NiceIce especially for big purchases - NO TAX. I have pasted a section from their web-site which is written in their usually humor.

NiceIce.com web-site:
0% sales tax on everything you buy from us...
No sales tax... No tricks... It's Oregon law...

We are located in Roseburg, Oregon. And the gorgeous state of Oregon doesn't charge sales tax anywhere! God Bless the tree loving hippies and moonshine makers for keeping the tax collectors out of this state! We couldn't collect sales tax from you if we wanted to because there simply isn't a system for doing so... Now, we've heard rumor that some states require their residents to declare any out of state purchases on their state income tax forms, but we're not accountants, nor are we tax advisors, we're just simple Oregon Folk now... We escaped from California, but don't tell anybody... They've been known to lynch people around here for less... So if you have the need to give your local government more than they deserve, you go right ahead... But if we were you, we'd buy from us and flip the tax collector the Howdy-do bird...
 
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On 7/10/2004 4:12:58 PM Wink wrote:

RE: Wink, I'm confused. If the poster has a legitimate mailing address that he reside at in another state, why would the jeweler be commiting any fraud?
---------------
If as I understand it, the original question was about having it shipped to another state to avoid taxes, then there is fraud. If the original poster lives in both states and buys it in the one he/she is currently living in, even though he/she resides in the other state part of the time and has it shipped to the other state just to avoid taxes and does not report it in the other state as is probably required if that state has a SALES AND USE TAX, then the jeweler is guilty of collusion to avoid taxes. From the opening question I believe that is the current case.

Wink----------------
Click to expand...


It's a loophole & it's legitimate in my state. I have asked. All the vendor has to do is keep the mailing receipt record. And, with all the interstate commerece going on, I doubt it will exist for much longer.

The problem lies in the fact that the item really has to be delivered to that Out of State address. The name escapes me, but, my trade journals were full of stories about a fortune 500 CEO who resided in Conn. & NYC. He bought multi-million dollars worth of art from the major auction houses. Sales tax was not charged as noted the items were shipped out of state - only to have a delivery record from a local shipper that the item was delivered to NYC. This guy is facing jail time. The auction houses rolled. What burns my butt about taxing Antiques is that the sales tax is paid over & over & over & over again. But, don't get me started about taxes.

On the flip side, I had a friend that *did* report out of state sale. They became a target every year for reporting. On year they legitimately did not buy anything. They were audited. Sometimes you call attention to yourself by reporting. But, some professions need to cross their T's & dot their I's.

I can remember one year we filled out a form for personal property that we owned. I thought I was doing the right thing. We received a tax bill for an inflated value of our personal property. We were very young & had a hard time meeting the obligation. It would have taken an act of congress to adjust the bill. Fortunately for us, we moved out of the county the following year.

And, with so many other morality issues, not reporting your purchases of out of state taxes is very low on my moral compass. I don't think because one forgets to report their out of state purchases makes one dishonest.
 
I live in NYC and I and my friends have often had stuff shipped to friends in NJ or CT to avoid tax. None of us has ever been caught over the spans of decades. I think you are worrying too much about it. Frankly, I never knew it was supposed to claim it on my tax forms. And I don't intend to start now considering how darn much money the governmetn takes outta my paycheck!
 
Currently, there are 21 states that are requiring the reporting of purchases from out of state. The Items of major purchases ie autos, furniture, antiques and other larger ticket sale items are what the States seem to focus on. But they are claiming that all sales are to be reported by the buyer.

It's not just sales tax, but USE TAX that is incorporated into the regulations. The states take the stance that if you purchase from out of state and use it within the state you reside, they are entitled to collect--not fair-yes. But it is regulation that can get you into some hot water if you try to avoid reporting.

It is not up to the business/seller to collect the out of state tax liability of the buyer. It is up to the buyer to report the purchase-with those 21 states additionally providing a out of state purchase/sale declartion line on their tax forms.


Say, for example, a Northern Califorian couple takes a drive up to central/southern Oregon for the weekend to do a little Salmon fishing. While on this trip, the wife is not satisfied with the silver flash scales of the Salmon and urges the husband to take her in town to a jewelry store she spotted.

The wife spots a charming little diamond and promises her husband she will clean and filet all fish for the rest of the season if she can have the gem.
The transaction is made and the husband purchases the diamond and pays by Visa thinking he has saved $362.50 in taxes that he would of paid had he purchase this in Calif.

Right out from the shoot, you have the paper trail that can be easily found out and shared. Transactions from lending institutions ie banks or credit unions in amounts of 5K and over, are reported to the big boys--that being the IRS(just a little know fact) It is just that easy for such a purchase to be reported to your state.

The following states are actively practicing collection on out of state purchases:

Al,Ca, Conn, Id, Ind, Ky, La, Ma, Mass, Mi, NJ, NY, NC, OH, OK, RI, SC, UT, VT, VA & WI

I live in a state that is so desparate to locate any revenue possible to give to the undeserved. While not fair, I am not willing to take the chance in not reporting a large purchase--yep I'm chicken.
 
All these posts are great. The situation I'm really talking about isn't really "out of state" purchasing. From the various posts, I gather that even if you buy a diamond over the net, you might still have to pay/report taxes. It seems that it is determined on a state-by-state basis. On the other hand, I want to buy a diamond in my state, but have it shipped out to another state. If I were to do that, could I even put my name on the mailing address in the other state? I would hate to put my parents down and them wonder what is going on. I'm sure people have faced this situation before so reports of experience are helpful. Thanks everyone!
 
You are correct, technically by not reporting and paying the tax you are breaking the law, but it is commonly done. What you are talking about is even more illegal. You live in the state and you are asking a merchant to risk going to jail for you because he knows you are having it shipped only to avoid paying the tax. For him to even go further in this by suggesting it to you is insanity on his part, but it illustrates how widely the avoid the tax disease has spread.

Don't get me wrong, I hate taxes and I hate being a collector of them. I also hate paying my fair share, especially when I know that so many do not. I am an easy target for the government boys, so I play by all the rules. A comment was made about buying from Nice Ice because they did not have to and could not collect the taxes. That was a spurious reason in my book. Any one who buys from them should do so because they have a great product at fair prices and they are really nice people to boot.

I do not have to collect taxes from you and wont, unless you have the product delivered here in Idaho. But If I know you live in Idaho and want me to ship to your Aunt in Oregon, well I just won't do it, unless I really believe it is a present for your Aunt.

Yes, it is not all that bad, every one does it, etc. But THE STATES WILL HAVE TO COLLECT THEIR TAXES, ONE WAY OR ANOTHER. If not they will have to quit offering so many services, which would be just fine with me, so long as it is not one of the services that I need, say like decent roads so I can get to the river to go kayaking, or police so that they can keep the bad guys from taking my safe home with them some night. Trust me, the states will soon have ways to collect those sales taxes and since voluntary compliance is at less than 5% they will find ways to do it involuntarily. When they do, I hope that they will not be allowed to go witch hunting for too many years in the past, it will be very disruptive if they are.

Do it if you wish, your chances of getting caught at this time are VERY low, but do not be too surprised if someday someone sends you a bill for taxes, penalties and interest. When they do that bill will be at least twice what you would have owed today and it may be three to four times, depending on how long and how high the interest and penalties. The tax penalties tend to be draconian and can easily bankrupt a business or person, but guess what, taxes are not voided in a bankruptcy.

Wink
 
Ai Carumba in the immortal words of Mara.

To further add to the brew, certain States have reciprocating (for want of a better word) interstate commerce. I'm haven't had dealings lately. But, Maryland used to have to charge tax if it was being shipped to DC or VA even if the vendor did not have a store front in the other states.
 
I don't think because one forgets to report their out of state purchases makes one dishonest.


I can see forgetting a pair of pants or a shirt ordered out of state, but for most the diamond purchase is a very memorable time. I would think this one is rather difficult for most people to simply forget.
 
Wait...so when i buy a stereo online, or a hard drive, or a computer, or a car, or a diamond, i have to pay tax on all of those, even though they are shipped from california and i live in indiana? What if I'm a student, and have no income and then therefore have no tax return. I had no idea, and just thought if you bought something and there wasn't a vendor in your state, you didn't pay tax. since i will be buying a diamond from superbcert in NY within the week, and not pay tax on it, i will have to later?
 
Legally yes, practically, almost no one does. (Less than 1% currently voluntarily pay the taxes due.) Eventually the states will have a means of finding you and collecting the taxes owed. Assuming of course that you live in a state that has a sales and use tax. You owe tax on the use, even if you did not buy it in the state where you live.

Wink
 
guess i'd better pay for like 5000 worth of stuff i've bought over the 'net over the past 5 years
 
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