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tax on diamonds?

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lencor15

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is there tax on diamonds? and is it included in price quotes that jewlers give you?//the prices you see online?
 

Angel7

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It''s my understanding that when you buy out of state, you do not pay any tax and the prices from the online vendors have no tax included and you are not charged tax. Assuming you do not live in that stae..(That is my experience so far)
 

denverappraiser

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It depends on where you live. There is no national tax on the sale or even the import of diamonds but most states impose taxes on their residents when they by things from out of state or overseas. If you have to pay sales taxes when you buy something at your local store, you are going to be subject to the ‘use’ tax if you buy a diamond, or pretty much anything else, from an out of state dealer and have it shipped into your state. Check with the website for your own home state department of revenue and you should be able to get the details. Let me know your state and I’ll link you to the page There’s quite a bit of misunderstanding on this issue and most of the states make it very easy to find in the section about who owes sales taxes and how to pay them.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver
 

Regular Guy

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Date: 1/27/2008 8:49:14 AM
Author: denverappraiser
It depends on where you live. There is no national tax on the sale or even the import of diamonds but most states impose taxes on their residents when they by things from out of state or overseas. If you have to pay sales taxes when you buy something at your local store, you are going to be subject to the ‘use’ tax if you buy a diamond, or pretty much anything else, from an out of state dealer and have it shipped into your state. Check with the website for your own home state department of revenue and you should be able to get the details. Let me know your state and I’ll link you to the page There’s quite a bit of misunderstanding on this issue and most of the states make it very easy to find in the section about who owes sales taxes and how to pay them.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver
Neil,

Do you happen to know how different this is from the note on the bottom of chairs that warn you not to remove them, under penalty of law?
 

denverappraiser

Ideal_Rock
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Ira,

The note on the bottom of chairs is a message to retailers that they’re breaking the law if they sell the chair without leaving the tag intact. Consumers are welcome to remove it if they want. I suspect very few merchants cheat on this so I doubt there is much of an enforcement issue.

In the case of sales tax, it’s a tax on the consumer, not the retailer. For the most part, the merchants wouldn’t be allowed to collect tax on their out-of-state customers even if they wanted to. On the other hand, consumers are required to remit it themselves if they don’t have a merchant to do it for them. Lots of people cheat on this.

Several states now have the reporting requirements for the Use tax as part of the same tax return where residents report their income and failure to report it is subject to the same penalties as any other deliberate omission from that return. Looking at this line as well as reconciling banking and credit card records is part of the arsenal of audit procedures used by the taxmen and the penalties can be stiff. That strikes me as a pretty important difference.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver
 

milton333

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Yes, if you buy things on the internet, you''re supposed to self-report to your state and pay the sales tax. In practice, does anyone do this? Well . . . Very few people even know they are supposed to be doing it. The "penalties" will include an additional interest charge on top of what you should have paid, it''s not like you''ll go to jail for buying one diamond online and not paying the sales tax to your state.
 

denverappraiser

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I understand that my position is unpopular but that doesn’t make it wrong. Every state I’ve ever been associated with has penalties as well as interest when a taxpayer is found to have underpaid taxes. Deliberately falsifying a tax return is a felony and by putting it on the income tax form they are REQUIRING you to file so you can’t claim that you didn’t know.

Here, for example, is the 2007 income tax form for New York state residents.

Notice line 35.

Pay your taxes or not as you like, that’s between you and your state, but this is NOT on par with tearing off the tag from a mattress. There's big money at stake here and the states are getting increasingly aggressive about it.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver
 

strmrdr

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Date: 1/27/2008 9:02:54 PM
Author: milton333
Yes, if you buy things on the internet, you''re supposed to self-report to your state and pay the sales tax. In practice, does anyone do this? Well . . . Very few people even know they are supposed to be doing it. The ''penalties'' will include an additional interest charge on top of what you should have paid, it''s not like you''ll go to jail for buying one diamond online and not paying the sales tax to your state.
IL quietly tried to make it a felony on large purchases
didn''t pass but it likely will knowing this messed up state.
 

Regular Guy

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Date: 1/27/2008 9:27:25 PM
Author: denverappraiser

Notice line 35.
Personally...I never notice line 35.

That is...because I, like very many people, do use a service like Turbo Tax to do my taxes.

I''m sure you''re correct about this Neil...but still...I am wondering exactly at what point here the rubber meets the road.

If many people do taxes like me, they''ll only answer questions posed to them on-line, as a function of doing taxes. Now, it sounds like your point, Neil, is that this issue will really come up when you do the state differential tax part. Though I have no specific recollection of being queried on something that would motivate me to answer affirmatively about a diamond purchase...since "sales & use" is so big, and the question only one of many...Intuit must have thought of a generalized way to ask the question, covering their bases, giving the user the chance to say yes, and still....well...I do wonder how the question is posed.

Anyone know?

Either for New York..or virtually any address?
 

denverappraiser

Ideal_Rock
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Colorado, my home state, is one where the income tax form doesn’t contain this question although there is a separate form for it that isn’t prepared by TurboTax. NY seems to have had it on their income tax form for the last several years. Texas, the other state I pay taxes to, has no income tax at all so it’s no great surprise that Turbo doesn’t ask me about it. It’s not necessary. There are several Colorado only items, like whether I want to contribute to the Western Colorado Veterans Cemetery, that they know enough to ask me about so I would think that the NY version would ask the necessary questions to accurately answer the Use tax question but I’ve never used the NY program. The tax rules really do vary quite a bit from state to state. The state returns are quite different from one another and from the the federal form. Surely Intuit understands this. If in doubt, people should ask a qualified tax adviser about their own situation.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver
 
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