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When to Pay Use Tax? NY has a nice guide, but does it work?

Posted by salestax on January 6, 2010

So, I generally give kudos, where it is due, so here is one such instance, or is it?

Not only am I pleased with the way New York State is going after persons involved in tax fraud, but this publication looks like a good one for explaining what Use Tax is in relation to sales taxes, how to know if you owe it and how to submit it.

But, I’m wondering…do all NY residents get this publication mailed to them? Or is the typical layperson supposed to know to go to the NY Tax Website and look up publications related to use tax?

Are Jurisdictional Tax/Revenue administrators so far removed from Sally and Joe Public that they seriously think every consumer inherently knows that if they buy something from the internet without sales tax that they owe the unpaid sales tax to the state in which they live?

I can see this being the thought process for small business owners, who at least employ a CPA, a Lawyer, etc. who should know about such things – although, I’ve had plenty of run-ins with CPAs representing small businesses that knew absolutely nothing about sales and use tax rules and regulations in their own state, let alone nationally (a little pet peeve of mine). But really, unless it’s distributed in mass to all residents of NY State, how can the NY tax department seriously think this is the way to gain better compliance?

Yes, I’m sure this is just a way to have something published that covers someone’s “you know what” in the case of another fraudulent exec that purchases Fine Art for personal reasons in the amount of umpteen thousand dollars without paying any sales taxes on it.

Now, on the other hand, go to page 15/24 of the .pdf. Here’s a saving grace for individuals. If you purchase 3 flat-screen TV’s throughout the year at a price of $950 each and have them shipped from NJ, PA and MA without sales tax, how is this working out for the NY Tax Department?

$950×3=$2,850.00 taxable items. Avg. NY State/Local tax rates: 8.25% = $235.13 use tax owed to NY on next year’s income tax return. Don’t send the check yet!

Hmmm… but if I use the handy, dandy little estimating chart because each item was under $1,000, and I’m pulling in 200K Adjusted Gross Income, then I only have to send $78. SWEET, that’s only 2.75% tax due! Or heck, I can make $1M and still only pay $225 max. Interesting.

A lesson learned New Yorkers. If you buy from the internet, do it a lot, but make sure each item costs less than $1,000 (before S&H). If you’re ever audited, you’ll be safe, uh, Right?

So, I ask again… what is NY really expecting to get out of this publication? Other than something cool that persons interested and who’s job it is (like me) can give to small business customers who might need some assistance in this area?

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