In state sales tax

[stubee77]

Hi Guys,
I''ll be over in NY for December to propose to my girlfriend. Thus, at the moment, I''m immersed in the hunt for a ring. As i understand it - without complete knowledge of the tax system (we''re in Europe) - that if, for example I bought the diamond (plus possibly the setting) from a vendor based in NY, I will be charged sales tax applicable to the state (as we''ll be staying in NY). That''s cool, but i''m wondering if any of the vendors here can chime in on if, as a tourist to the US, I may be able to claim this tax back - either at time of purchase, or later on (eg the airport, etc).. Perhaps i''ve got it all wrong and i look like an idiot asking - in that case, feel free to correct me !

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Thanks in advance ot all the aspiring tax lawyers present!

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Stu.

 

[denverappraiser]

In a word, No.

Sales Tax is administered slightly differently from the VAT in Europe. It''s based on where the ownership transfer takes place to the final consumer. In your case, this would clearly be New York.

Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver

 

[stubee77]

Ahh schucks... It''s a shame their doesn''t seem to be a "taxback" system for foreign visitors (kinda like in my native Australia)... But, even if such a system did exist, maybe it wouldn''t apply to state collected taxes anyways???
VAT, GST, State Sales Tax - It''s doing my head in as much as the diamond search!!!

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Thanks for the response anyways Neil!

Stu.

 

[kace]

Stu,

If you''re in the US for more than couple of days, you can have the ring shipped out of state to avoid the sales tax, as long as the vendor does not have a store in that state. For instance, if you have an address in NJ (NJ hotel could do, I guess), then you can have the NY vendor ship the ring there, provided the NY vendor does not have a location in NJ. My fiance purchased the ring this way and avoided the NY sales tax.

-Kace

 

[boston33]

When I went shopping, (in MA) i went in and one of my questions to them was that if I have my ring shipped to a different state (to my grandparents in NY) then would I have to pay the tax, and they said I wouldn''t. It is totally legal. So at least i knew I wouldnt have to pay the tax, but I would have to wait for my ring. If you know someone in the states you could overnight it to them, and then have them overnight it right back to you. Its insured so you should be fine. Just a thought.

 

[boston33]

Sorry, i didnt read everyone reply, but i totally agree with Kace. Just make sure its insured with the post office, and with you.

 

[stubee77]

Thanks for all the thoughts guys.
Unfortunately - well maybe not, for it being the busiest time of year - I have already got an apartment in NYC sorted out, so it doesn''t look like i''ll get the ring sent directly to us. But I suppose i could get it held at a FedEx/UPS holding station over in Jersey?

 

[kace]

Stu,

Good idea. WF sent us some stuff to a FedEx holding station in NJ, and there was no tax with that purchase. But, best to check the exact location of the FedEx holding station though. We didn''t check and had to drive further than necessary to a FedEx holding station chosen by WF when there was a closer one.

-Kace

 

[stubee77]

Thanks for the tip Re: location of the holding station:
drive?!?!

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[WinkHPD]

Date: 10/6/2005 10:44:18 AM
Author: stubee77
Ahh schucks... It''s a shame their doesn''t seem to be a ''taxback'' system for foreign visitors (kinda like in my native Australia)... But, even if such a system did exist, maybe it wouldn''t apply to state collected taxes anyways???
VAT, GST, State Sales Tax - It''s doing my head in as much as the diamond search!!!

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Thanks for the response anyways Neil!

Stu.

I have twice filled in all the paper work for my tax back, once in France and once in Belgium. I am sure the stores got the money back from the government, but I never received a dime.

Wink, not a big fan of giving the money to the government in any country and expecting it back...

 

[WinkHPD]

Date: 10/6/2005 11:29:58 AM
Author: stubee77
Thanks for all the thoughts guys.
Unfortunately - well maybe not, for it being the busiest time of year - I have already got an apartment in NYC sorted out, so it doesn''t look like i''ll get the ring sent directly to us. But I suppose i could get it held at a FedEx/UPS holding station over in Jersey?

That is actually technically not legal. If your vendor gets caught aiding you to illegally avoid the tax they could be in large trouble also. It is not likely that you or they will get caught, but you might want to talk to an attorney before attemping it. It may actually be legal in NY/NJ, but it would land you in trouble in many states. It is the same reason I can not send a package to an address just accross the state line if I know that the buyer lives and works here in Idaho. (I know that this does not apply in your situation, so you might actually be legal, which is why I suggest speaking to an attorney.) My attorney assures me that I will be in boiling hot water with the state should I ever do anything remotely like what is being suggested with the knowledge that I was helping beat the state out of money that they feel they rightfully deserve.

My earning power will be greatly reduced during any time spent at court so I try to play always by the rules!

Wink

 

[stubee77]

Wink, your form/s are probably doing the rounds in an advisory sub-commitee somewhere deep within the EU. Don''t give up all hope yet!

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[WinkHPD]

This was five years or so ago, I would think the forms would have been processed by now...

 

[cinnabar]

Date: 10/6/2005 11:14:33 AM
Author: boston33
When I went shopping, (in MA) i went in and one of my questions to them was that if I have my ring shipped to a different state (to my grandparents in NY) then would I have to pay the tax, and they said I wouldn''t. It is totally legal. So at least i knew I wouldnt have to pay the tax, but I would have to wait for my ring. If you know someone in the states you could overnight it to them, and then have them overnight it right back to you. Its insured so you should be fine. Just a thought.

My understanding of the tax question is that you don''t have to pay SALES tax if you buy from a vendor in another state (as a US resident), but that your own state has the right to charge a USE tax on something you didn''t pay sales tax on. Most people don''t inform the IRS about any purchases they didn''t pay sales tax on, and there isn''t a clear section for it - yet - on the tax return forms, so it''s a bit of a muddy area. And I''m definitely no expert. But as this thread isn''t about a US taxpayer, it doesn''t matter anyway

 

[stubee77]

Good advice Wink. I''ll check what some of the vendors have say, and start devling into some of the lovely online .gov tax sites. Wouldn''t be best way to start an engagement by being bailed by my fiance, methinks !

 

[stubee77]

Wink: only five years hey? hmm, maybe they''ve made it to the sub-commitee by know..

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[Hamster]

Date: 10/6/2005 11:14:33 AM
Author: boston33
When I went shopping, (in MA) i went in and one of my questions to them was that if I have my ring shipped to a different state (to my grandparents in NY) then would I have to pay the tax, and they said I wouldn''t. It is totally legal. So at least i knew I wouldnt have to pay the tax, but I would have to wait for my ring. If you know someone in the states you could overnight it to them, and then have them overnight it right back to you. Its insured so you should be fine. Just a thought.

Just an FYI to anyone who ships a ring out of state to save on the sales tax:

Many states have a "sales and use tax" (e.g. like IL) to recover tax on large purchases when people make them outside of the state.

When you purchase an item in one state and have it sent out of state, the vendor is not obligated to collect local state sales tax and you will not be charged sales tax so long as there are no branches of the store in the state that it ships to. It is true that this is legal. HOWEVER, it does not mean that you are legally off the hook for sales and use tax. So, for example, if I were to go buy a $10,000 piece of jewelry in downtown Chicago and have it shipped to friends in Indiana, the vendor would not charge me sales tax. But when I do my income tax return at the end of the year, there is a mandatory form that I must fill out to report the "out of state" purchase and to pay the 6.25% tax ($625). In another example, had I purchased the item from a store in Indiana, took possession of it there, and paid sales tax in Indiana, I will STILL be on the hook for the difference in sales tax between Illinois and Indiana. However, if I purchased the item in NY, took possession of it there, and paid the 8.75% (I think that''s right) sales tax, no additional tax would be due because I paid "at least" as much as I would have paid Illinios.

What''s worse is that depending on the amount of tax due (in IL, if it is over $600), you can''t just pay it when you file your return, but it is due during the month of the purchase.

Penalties and interest can start accruing after that, even if you pay when you file.

The rationale for this rule is twofold: 1) It allows "local" retailers to compete fairly with out of state vendors, instead of just on the basis of differences in tax rates, and 2) It ensures that local governments maintain the revenue base that they get from sales tax.

Now, the question is how do the states know that you''ve made a purchase without paying sales tax? I don''t know and I don''t know how aggressively they audit these things (I am in corporate tax, not personal tax, so not as knowledgeable here). I DO know that many jewelry stores (e-tailers and B&Ms) will have a disclaimer that you may be liable for local sales and use tax if they ship the item out of state. If the tax man is gonna come after someone, it will be you, not the store.

My guess is that enforcement is fairly low, but I don''t really know. For some of us though, it is not worth the risk. I am fairly certain that as a tax practitioner, my company will fire anyone involved in ANY sort of tax evasion. In fact, as a member of the "management group" of my firm, I was required to disclose whether I was involved in any tax related disputes or if I had been delinquent in paying any taxes during my annual independence representation. As tax advisors, they do not want anyone that could be perceived as engaging in "unethical" or "fraudulent" behavior giving tax advice to their clients. I could legitimately get fired if under investigation, they found out that I failed to pay sales and use tax.

The bottom line is to be aware of the tax laws in your state and understand the risk you assume if you do not pay any local sales and use tax that might be due. I am not intending to dispense any tax advice here - should you have questions about your tax obligations, seek the advice of a qualified professional.