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Do You Buy Online To Avoid Paying Sales Tax?

Posted By Jim On 03/30/2007 @ 3:16 pm In Taxes | 21 Comments

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 [3] versus a CNET [4] article three years later in 2006.

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


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[3] US News: http://www.usnews.com/usnews/biztech/articles/031103/3tax.htm

[4] CNET: http://news.com.com/States+push+to+tax+Net+shopping/2100-1028_3-6060450.html

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