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Do You Buy Online To Avoid Paying Sales Tax?

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Did you decide to buy something online recently because you knew that, in addition to perhaps getting it a little cheaper, you wouldn’t have to pay sales tax? While it would be very hard to convince me that anyone who reads blogs isn’t also savvy enough to order from Amazon.com instead of walking into a Best Buy (unless they need something in under a few days) to buy something, the price difference is staggering sometimes, but I might believe you if you answered “No.” Either way, an online vendor isn’t obligated to collect sales tax unless they have a physical location in the state they are shipping to and Amazon.com for example, will only collect tax if you live in Kansas, Kentucky, North Dakota, or Washington.

Now, would it surprise you to learn that what you are doing is actually somewhat illegal? First off, if you go to another state to buy something to avoid taxes, that’s technically illegal. (So is buying alcohol and transporting across state lines, but unless you’re talking large quantities, usually people let it slide) In fact, when you fill out your state tax returns, you’re supposed to write how much you’ve bought without paying for a “use tax” (which is the sales tax equivalent for out of state purchases that you bring in state). A use tax!

I honestly don’t know what I put down this year because I did everything through TurboTax (maybe they filled something in based on tables or just set it at $0, I have no idea but I don’t remember filling anything out) but the only time you ever hear of this use tax is around tax time and its because some writer for a mainstream publication needed to fill up some space (okay okay, I’m not mainstream but I didn’t put this here to fill up space, I understand the hypocrisy of my last statement) but check out the differences between a 2003 article in US News versus a CNET article three years later in 2006.

What did you do and did you know about this use tax?

{ 21 comments, please add your thoughts now! }

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21 Responses to “Do You Buy Online To Avoid Paying Sales Tax?”

  1. Jeremy says:

    This is interesting. I live just a few miles from the state line and actually work in a different state so nearly everything I purchase is from the other state than I reside in. I never really thought about it since the sales tax is 6% in both states, so I’m not really buying anything without paying taxes.

    The only thing I wonder about is alcohol like you said. We usually go grocery shopping at the store across the border, but I didn’t know that bottle of Merlot I brought home could land me in the slammer :D

  2. I buy things online as a conveniance or because it is cheaper, not to get around sales taxes. I not only know about the use tax, but I paid my use tax on my taxes this year. It added about $20 to my tax bill.

  3. Dustin says:

    On a slightly different topic…

    Around the holidays here the city (Vancouver, WA) put up ads saying, ‘Shop Vancouver’ since I guess a ton of people jump the border to Oregon to do their shopping and it is enough of a problem to have self-help ads to stop it.

    For me the shopping is better in Oregon and typically closer too since I live very close to the border, thus I normally skip over. I doubt knowing about the use tax will make me actually put it on my taxes.

  4. broknowrchlatr says:

    I buy a lot of stuff on ebay. Then, when it comes to tax time, I put in a rough estimate number for use tax (in the State section of Turbo tax). To be honest, this may be a slightly low estimate. I am never exactly sure and don’t want to overpay.

  5. samerwriter says:

    I solve that dilemma by living in Oregon, which has no sales tax (though we make up for it with income tax…)

    When I go to Washington and buy something, I can ask for a sales tax waiver form. They check my drivers license, make me sign something saying I live in Oregon, and then I don’t pay sales tax.

    How’s this for a scam… An acquaintance of mine bought a $400 iPod at Fry’s in Oregon, then returned it without a receipt in California (it hadn’t been opened). Even though he told the return desk at Fry’s that he hadn’t paid sales tax, they still refunded him the iPod’s value PLUS sales tax. In fact despite his objections they claimed they were not able to refund his money *without* also refunding sales tax. That he never paid.

  6. wanzman says:

    Often times, if I am buying something online and the company is not offering free shipping, any savings I would get from avoiding the applicable taxes are usually wiped out by the shipping charges. Sometimes the shipping is even alot more than the tax, expecially on less expensive items.

    As for transporting alcohol over state lines, I have definitely been guilty of that several times, mainly because the state where I live (Oklahoma) only allows 3.2 beer….so tons of people cross the border to Kansas or Texas for the REAL BEER. What ever happened to America being a free country?

  7. @samewriter – Now just upgrade to bigger appliances like plasma tvs, repeat a couple hundred times, and you got yourself a business ;-)

    I had a similar return arbitrage experience with my rewards card. One wal-mart is treated as grocery so I get 5% back and the other is considered retail so I get 1% back. Note I did it the wrong way (bought $2000 of PS3s at 1% rewards and returned to 5% store costing me about $80 in rewards points)

  8. I buy online to avoid paying sales tax. It’s expensive in some parts of the Bay Area. It’s like 8.75% sales tax in some parts. I bidded on an auction and didn’t find out until after the I won that the seller was charging sales tax! I had the seller cancel my bid and give it to the next higher buyer. He’s the first one on ebay to charge sales tax in the same state.

  9. DanyO says:

    When I shop online, it’s to save money, period. Whether I save on taxes, or base price, if the bottom line is cheaper than I get at the mall, I buy online.

  10. Debt Hater says:

    I didn’t know about this, except for alcohol and great big purchases like a car. I bought my first car (and the second one that I own now) in DE where there is no sales tax rather than in NY where I lived, but where the tax would be huge.
    I also just bought some shoes online just to avoid the sales tax (it’s 9.25% in TN which adds up!).
    Well… just call me a tax evader! I’m going to keep buying things in DE and bringing them back home with me and I ain’t claiming nothing!

  11. Tinyhands says:

    I’m in the same category as DanyO: I shop by price. If (online price + shipping)

  12. I just paid my New York State use tax – $5. I grumbled a bit, but I don’t really blame New York for trying to take their cut.

  13. Savvy Steward says:

    For me, most of the use tax comes from purchases on Amazon. So when I go to file my taxes, I total up all my purchases made on Amazon.com.

  14. ummm... says:

    As much as I already pay in taxes I say screw use tax! I have to make a living just like those in the government using tax dollars for everything under the sun except what its supposed to be used for. I’ll never report it.

  15. AAA says:

    Well this stinks since I live on the state line and have been buying groceries across the border for over a year now, same with alcohol and I go out of state monthy and buy things over there. How stupid

  16. HEHEHE says:

    LMAO I have been buying illegal groceries and clothing for over a year now! I live on the state line and live closier to the other states’ stores than I do my own. do I care? NO Did I know about this illegal activity I was involved in…NO

  17. Jane Doe says:

    I always purchase from the internet because I live in a rural area in Colorado and find the internet much cheaper and convient. Now Colorado passed this new law. I dont mind my internet sales being taxed however, I am greatly appalled at the companies that refuse to take sales tax yet give my name and amount to the Colorado Department of Revenue. Why? Because I have had severe problems in the state of Colorado. First of all we were a military family and paid Alaska tax but when my husband got out the state of Colorado felt it needed $774 for the year 2000 even though they refused my nonverbal son schooling. We fought and won had the DD form 214. Then in 2006 had another audit at the same time my son was denied an education in pueblo west. Had to get a tax payer advocate then. My due process case number is 2009-506. Anyway now we have to pay a tax lady because they can deal with the harassment of the Colorado department of education. So if all these business give my name and purchase amount to the Colorado Department of Education that means more harassment from those folks and also more money to pay our tax lady to do more forms!

  18. Jane Doe says:

    Colorado Department of Revenue receiving my name and purchase amount means more harassment from the Colorado Department of Revenue and also more money I have to pay the tax lady to fill out more forms!
    If only businesses could collect my online sales purchases and leave my name out of the Colorado Department of Revenues hungry grip!

  19. Navin Johnson says:

    Its also illegal to go 35mph in a 30mph zone. I do that all the time, too. Who doesn’t. What’s your point?

  20. Mark says:

    Am I suppowsed to feel guilty because I am avoiding paying ransom to the narcissist politicians so that they can grab more welfare votes? Wussies like you make me sick.


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