Me and my friends were chatting in dinner in California. Some were complaining about the high sales tax rate in our state. One suggested that if any of us had an Oregon address, we could have our stuff shipped there, then shipped to our residences so that we could take advantage of Oregon's 0% sales tax. We were split on the legality of this idea: some argued that it is a textbook example of tax evasion while others claimed that this does not raise any legal issues. Which side is right here?
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17Questions like this always remind me of xkcd.com/1494– Nate EldredgeSep 26 at 15:04
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25@NateEldredge: The thing is, there are a ton of tax avoidance strategies that are perfectly legal and effective. It's not always obvious to the public where the tax code draws the line between avoidance and evasion.– KevinSep 26 at 15:21
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6Tax avoidance isn't illegal. evasion is when you owe money and don't pay it. The questions is, would they owe money? - Bought on the net to be shipped to OG, by my friend, to my friend. Then I come and take it back to CA. Then what? - "evading more than $1 million of sales taxes on six paintings that he bought last fall." - You've got better friends then me if they're willing to be participant in tax fraud, that I'd assume they'd then be more on the hook for it than you if they're the buyer.– MazuraSep 27 at 0:17
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Oregonian lore: Folks from Vancouver, WA commonly do this, usually justified by working in Portland, OR. Rumor is that you should buy cars on the side where you live, for tax purposes; the IRS is wise to the avoidance tactic when it comes to titled/deeded property.– CorbinSep 27 at 20:32
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@Corbin Every state DMV I've dealt with verifies sales/use tax payment, if applicable, when registering the plate. This is where it's collected in a person-to-person used car sale. California's DMV collects use tax when you move your already-owned car into the state. Also, in some states, cars/boats/planes/homes aren't subject to sales tax, or subject to a different tax, as they are subject to property taxes. Oregon, for example, has no sales tax but a 0.5% vehicle privilege tax.– user71659Sep 27 at 21:49
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1 Answer
You need to pay tax on it. From CA FAQ on use tax. -
Generally, if sales tax would apply when you buy physical merchandise in California, use tax applies when you make a similar purchase without tax from a business located outside the state.
For these purchases, the buyer is required to pay use tax separately.
I see comments about bags of chips bought on a trip off of state. If the dollars are big enough this gets enforced,
Ex-Tyco Chief Is Indicted In Tax Case
By Alex Berenson and Carol Vogel
June 5, 2002
L. Dennis Kozlowski, former chairman and chief executive of Tyco International, was indicted yesterday by a grand jury in Manhattan on charges of evading more than $1 million of sales taxes on six paintings that he bought last fall.
Mr. Kozlowski bought the paintings, which included a Renoir and a Monet, for $13.1 million for his 13-room apartment at 950 Fifth Avenue. To avoid paying New York sales taxes, prosecutors said, he shipped empty crates to Tyco's headquarters in Exeter, N.H., and transported paintings back and forth from New Hampshire to Manhattan.
He went to jail.
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Comments have been moved to chat; please do not continue the discussion here. Before posting a comment below this one, please review the purposes of comments. Comments that do not request clarification or suggest improvements usually belong as an answer, on Law Meta, or in Law Chat. Comments continuing discussion may be removed.– Dale M ♦Sep 28 at 10:17
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The state of Texas used to have a Use Tax form Texas residents had to fill out when they bought something online, from a retailer that didn't have physical store locations in Texas. Back then, Amazon had no physical stores in Texas. I did file a couple of those returns once I found out I was a scofflaw. Then Amazon (and other online retailers) started gathering sales tax from the customer. Oct 10 at 22:14