The Tax Most People Forget to Pay

“Its a lot of fun,” Daniel Gottfried, a lawyer at Rogin Nassau in Connecticut, told me “I go through my credit card receipts … page by page.”

He finds something he bought from Amazon last May for $22.98. He didn’t get charged sales tax on the purchase, which means he owes the state of Connecticut $1.40 for that purchase.

Chana Joffe-Walt reports that most Americans—except for tax lawyers and accountants—forget to pay use taxes when they file our taxes every year. Use taxes are taxes we’re suppose to pay when we buy tax-free items online from retailers like Amazon, or from out of state.

In New York, Amazon charges sales tax at the point of sale so we don’t have to go through our statements to figure out what we bought on Amazon and how much we owe the state for those purchases, but there are plenty of other states where buyers don’t have to pay any taxes (currently, nine states are subject to taxes). I am generally a law-abider, but like the majority of people who don’t pay their use taxes, I doubt that I would spend hours going through statements to figure out what I owed, or find the process fun like Daniel Gottfried does. I’m curious to know if anyone reading this post goes through their statements to do just this.

Photo: alisdair

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18 Comments / Post A Comment

The state of Pennsylvania, where I live, allows you to estimate unpaid sales tax based on your income. So no, I don’t go through my credit card statements. I pay the estimate instead but it satisfies the requirement.

trueparallels (#3,439)

Amazon is required to report the information to SC taxpayers, so I go ahead and pay it while I’m filing my taxes. Amazon sends an email with the amount for the year. Not really a big deal. I don’t buy enough from other sites to worry about it too much, and I’m pretty sure most of them collect sales tax anyway.

bgprincipessa (#699)

I had no idea this was a requirement… hmm…
Last year I got rid of my car and subsequently signed up for Amazon Prime to get free shipping, because I started relying more on Amazon for products that I didn’t want to make a special trip to the store for, since I was going less often. I would probably owe a decent amount…
But I thought this statement was interesting: “There’s a rumor floating around among Connecticut tax professionals that the state’s tax department would love to nail a tax lawyer or CPA on use taxes — someone they could easily prove was aware of the use tax and did not pay it.” — it’s a rumor of course, but doesn’t it seem silly that you could only get in trouble if you knew about it? “Oh, sorry I killed that person, didn’t realize that was illegal in this state.”

ETA: love the alt text. win.

@bgprincipessa And now Mike Dang has removed plausible deniability from all of us. BOO!

readyornot (#816)

I have done the combing through of receipts and credit card statements. I live in California, and it was only in 2012 that Amazon and many other online retailers started charging sales tax at the point of sale. It was my husband’s insistence that we pay the use tax for the years prior that got me to give a careful look at records. Our accountant thought we were crazy, and I really thought there should be a better way. So I’m grateful the retailers are handling it no.

limenotapple (#1,748)

I’m…not doing this. I, too, am generally law-abiding, but they need to make it easier for me or it’s not going to happen. I guess this is another way where online sales grew before states had a chance to figure out how to deal with it.

I’ve known about this for a long time, but I live in Washington state, so, yeah, I’m already paying taxes on Amazon purchases. I actually don’t order much online that doesn’t include sales tax, almost all of it comes from Amazon or from clothing stores that I can return things to in person. There’s a few miscellaneous things I guess, but since Washington doesn’t have a state income tax I don’t even know how I’d go about paying it.

Not that I did anything about it before I moved here either, but I was a penniless student hardly paying enough in state income taxes to be worth processing (Pennsylvania straight-up mailed back my check, once), so an extra $20 or whatever in sales tax for my textbooks did not seem worth bothering about.

oh hey I looked it up and there is an online form I can fill out. Eh. Maybe next year if I suddenly spend lots of money online at places that don’t charge sales tax.

@Lorelei@twitter Yeah, I had completely forgotten that I didn’t pay sales taxes on Amazon stuff before I moved here.

LOL ARE YOU KIDDING ME

jfruh (#161)

I’m usually of the “let’s pay the taxes we owe” camp; I actually keep track of freelance payments to me that aren’t big enough to trigger a 1099, and even some that are in cash, to make sure I pay the right amount of income and self-employment taxes. But I think expecting someone to keep meticulous track of purchases they made online that didn’t charge sales tax (keeping in mind that some do and some don’t) is completely unreasonable. If Maryland law required that retailers send out a form to me I’d probably do it, but the record keeping of doing it the other way is way, way too burdensome.

nogreeneggs (#154)

I’ve known about this and I also worked as a NYS Sales Tax Auditor (thrilling, I know) for a time and it’s really not that big a deal. I can tell you that NYS does not generally go after individuals for sales/use tax. Maybe the IRS would but NYS prefers to go after businesses that are not paying sales tax on stuff they buy and not collecting it from their customers. Also, if you are a business and collecting sales tax from your customers and not remitting it to the State you are probs going to jail.

runningpig (#1,244)

In Massachusetts you can pay a flat fee ($20) or itemize. That was probably too low for me as I have amazon prime – those of you who used turbo tax, what did you think of the refund giftcard offer from amazon with the extra 5%? I can’t decide, but my visceral reaction was more along the lines of being creeped out that amazon is now insinuated into taxes rather than ‘free money!’.

I can’t take my eyes off of this cat.

bgprincipessa (#699)

@werewolfbarmitzvah Maybe because the cat won’t take its eyes off you… so stare-y.

Worker Parasite (#2,292)

@werewolfbarmitzvah My wife’s cat, who looks exactly like that cat, can’t take his eyes off of it either. I need to scroll up now so they can resume their staring contest.

Yogi (#2,872)

I don’t, but my dad (a CPA) does!

wallrock (#1,003)

The past two years I have gone through and totaled my online purchases that weren’t taxed, if only because my accountant asked me if I was able to do so. I’m apparently fortunate in that I never delete receipt emails so it only took 20 minutes to sort through my 2012 totals. It turns out I spent $1,100 last year, down a grand from the year before.

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