Buying Weapons and Tax Returns

[ladyofshalott99]

Not sure if this should go in off-topic, but it *does* involve fencing equipment...

I have a rather bizzare question for anyone who fences and happens to know something about tax accounting (a CPA would be good).

I live in Indiana and I'm working on my taxes for 2003. A question on my state return asks if I bought anything while a resident outside the state of Indiana, and the amt. of the purchase.

I made a fax order *directly* to Uhlmann (as in the pmt went directly to the company in Germany), and I'm not sure that I had to pay taxes on the order (well everything is listed in Euros). My credit card statement records how much was in US dollars, so I have access to that info.

My question is, do I really have to declare my weapon purchase on my tax returns? I'm not sure what the policy is if you're buying something from a vendor outside the country.

Thanks...

[D'Artagnan1673]

This is totally irrelevant to your question, but are you a big fan of Loreena McKennit?

[MyraTrue]

Hmm... my personal experiences have been that you DON'T need to, but I am in NO WAY qualified. I have ordered from Uhlmann, LP and a few others, but I'm also one of those poor students without a large income.

(And D'Artagnan1673- wasn't "The Lady Of Shalott" by Tennyson? Though Loreena McKennit did do a nice job with it, it IS abridged. The full version is even better. )

[D'Artagnan1673]

hehe, I guess her's is a bit abridged

I am not well read in American Literature. Then again, I am not well read in British or French. I therefore claim ignorance I have only heard Loreen McKeenit's version

[yamashk]

I'm by no means a CPA nor do I have to file a state tax return...so take my response for what it's worth. But, it seems that even though you ordered your gear directly from Uhlmann, you ordered it while remaining a resident of Indiana...not another state. So my gut feeling would be, don't bother declaring it.

[MyrddinsPrecint]

Originally posted by yamashk
you ordered it while remaining a resident of Indiana...not another state. So my gut feeling would be, don't bother declaring it.

yeah. i kinda get the sense that while you might need to declare it somewhere, there is not the place.

[Craig]

Indiana is one of a few states whose tax code deems that you are to pay state sales tax on all of your mail order purchases. They are asking you to own up to what sales tax you owe the state and then to cough it up with your tax return.

As to the outside the country thing, no clue. I'm not a CPA. You may want to go to www.smartmoney.com or www.taxcut.com and see if those sites help you find any info.

Craig

[mfp]

Originally posted by Craig
Whether you want to pay the state of Indiana for the right to order a product via mail order is your decision, but you become technically guilty of tax evasion if you do.

Wow, you're guilty of tax evasion if you want to pay Indiana tax on your mail order purchase -- that is one harsh state

Either that or I think you missed a negative somewhere Craig.

[ladyofshalott99]

#1 Yes I am a Loreena McKennitt fan, though I knew of the poem first by seeing a John William Waterhouse painting.

#2 Still haven't found out about the equipment & taxes thing. Will ask some of the fencers in my club tomorrow and let you know just for the pointless FYI.

Thanks!

[Philistine]

Originally posted by Craig
Indiana is one of a few states whose tax code deems that you are to pay state sales tax on all of your mail order purchases. They are asking you to own up to what sales tax you owe the state and then to cough it up with your tax return.
{snip}

Actually, this is fairly common. Most (I think) states require this--although it is not referred to as a sales tax, but is instead called a "use tax" (theoretically it is for the use of personal property within the state ) which is generally calculated at the sales-tax rate.

My understanding is that this would also apply to items purchased from a foreign country, but your state may vary.

--Philistine

[R. Exnicios]

Taxes

Ouch. The legal answer is yes you must report it and pay. States are trying to collect taxes on items purchased via the Internet and mail order. The first attempt was to go after the companies and have them pay the tax. The Sup. Court said "nice try but no, you can't tax an entity that is completely outside your jurisdiction." The states have taken a new stab at it and are requiring he state taxpayers to claim items purchased outside of the state. The states do this with cars by tagging the tax onto the license plate fee.

Now for the practical answer. Most people do not report such purchases (especially lawyers) and to my knowledge no one has been pulled into court yet. At some point some one will challenge these state tax laws but since the tax is aimed at the little people and they vary greatly from state to state it may be a while.

Good luck on your taxes. And for the record I have stated that you ARE legally required to pay these taxes....drive 55mph, walk on the right side of the sidewalk, etc.

Cheers

[MikeHarm]

Being that Michigan is a use tax state, to get more insight on the matter I emailed the state of Michigan's website and they sent me some info about the use tax and its enforcement. I don't agree with their position about the funds being legally owed. Under US law congress regulates trade between different states, and the use tax was not authorized by congress.

However, here is their position on the matter. Note the key point, you get burned if you're in a use tax state and the sale is purchased from someone in a state your state has an agreement with to rat buyers out to them for use tax purpouses.

The second issue isn't one that most people know about which is they're fine with nailing you with the use tax even if you've already paid sales tax in another state if they decide its a lower tax rate than in your state so you can get a a double tax whammy from sales tax + use tax out of the blue :


Response from
Trudy Atwood
MEDC Customer Contact Center
517.373.9808

Other Possible License(s): "Great Lakes States Tax Enforcement Pact." This compact is a mutual tax enforcement agreement designed to increase compliance with each state's sales and use tax laws. The member states (Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin) have agreed to exchange information and cooperate in enforcement efforts.

The use tax is imposed on goods purchased tax free or at a lower rate in one state for use in another. If the use tax is not collected voluntarily by the seller, customers are required to remit the use tax to their home state [every year, millions of dollars in taxes legally owed to states are lost when individuals and businesses buy goods from out-of-state merchants who do not collect and remit the use tax and the customer fails to file and pay based on those purchases]. Use tax protects in-state sellers against unfair price competition from out-of-state sellers based solely on tax advantages. Forty-five states which impose sales tax also have a complementary use tax.

The states want you to voluntarily register to collect use tax from your customers. If you are selling merchandise into any of the Great Lakes states and aren't registered to collect the use tax, you and your customers may be hearing the "Compact." It also means you can notify the tax agency in your state or any of the five states if you are facing unfair competition due to a competitor's tax advantage.

[pkt]

Official Loreena McKennitt website
http://www.quinlanroad.com/

She's vertically integrated: Has everything under her control from writing the songs to distributing the CDs through her Quinland Road company.

Even her version of "Lady of Shalott" was out of necessity abridged, it still convey the mood of Tennyson's orinal poem. A great poem and a great song.

Here's the poem:
http://charon.sfsu.edu/TENNYSON/TENNLADY.HTML

I had to study it for Eng Lit. in high school in Hong Kong

Enjoy.

PK