Lateralus

A friend of mine is about to purchase a 50 inch LCD tv from Best Buy, the cost is about $3000.00. Since we live in Pennsylvania I was wondering if it would be in his best interest to drive down to Delware where there is no state sales tax and buy the TV.

Delware is about 1 hour from my house and we would save about $180.00. Is this legal? Will they charge us state sales tax because we are from Pennsylvania? Any suggestions?

Thanks!

ben12

I grew up in Maryland near DC, so I'm familiar with the no-tax wonderland of Delaware. Now I'm not 100% sure about this...my knowledge is mainly based on questions I used to ask my parents about hypothetical schemes I'd dream up to avoid paying sales tax on large items. But I think it's okay to do what you're suggesting. If he were to try and buy a REAL big item like a car, he wouldn't get in legal trouble, but Penn would make him pay Penn sales tax. I think. Anyone else know any better?

Nabalab

I don't think there would be a problem?

A few years ago, I bought a computer at a Best Buy in NJ (my gf at the time lived there so it was convenient) - and I live in NY. I was charged NJ sales tax.

dvd-fanman

Is it legal to go to Delaware and buy something there to avoid sales tax? Technically no, it's not legal.

Do people do it? Yes, they do it all the time.

Will they charge you sales tax because you are from Pennsylvania? No, it would be illegal for them to do so as they don't know that you're not just buying it for someone that lives in Delaware and taking it back to their home.

Any merchandise that is purchased over the phone, through the Internet, from mail-order catalogs, or from out-of-state locations, etc. is subject to PA Use Tax. The tax should be reported on the individual's Sales and Use Tax return or a PA-1 Individual Use Tax Return.

Lateralus

Thanks for the answer, thats what I was looking for. If everybody in Pennsylvania would do what you suggested there would be no budget shortfall at all.

movielib

Could I see a show of hands from everyone who's ever reported and paid one of those use taxes in any state?

ben12

Does that mean I can get a refund if I live in Maryland but buy an expensive item in New York or California? I doubt MD would be cool with that...

Heat

Illinois has a use tax also; it's mainly there so that if you buy something over the internet you have a place to report it and pay taxes at the end of the year.

The interesting thing I thought was that *all* oversees purchases are subject to full state sales tax, no matter what tax you paid on it oversees.

resinrats

Its not like the state is going to do anything about it. How would they know you bought a TV from Delaware? Since you are using post-taxed money for it, you don't have to list on your tax return. As far as they know, you could have fed the $3K to your cat. Up near New Hampsire, there are tons of people that live in Mass, VT, or ME that go across the border to do all their shopping. The state knows they do but won't do anything. It would take more resurces to post guard shacks on each border crossing and check cars than any sales tax they would get.

Dave C

I live on the Mass/NH border.

In theory you should report your out of state purchases and pay taxes on it. We do it at work, but we are a large company that is audited by the state every year.

I don't know of any individual (non-business) that even knows how to report and pay that tax (although someone here apparently does).

EVERYONE does what you are describing.

The only thing you can't get away with it on is cars because the state won't let you register them without showing you paid tax. Even if you live in NH and buy the car there, then move to Mass at a later time they make you pay a prorated sales tax before you can register it.

Short story-don't worry about it.

rduncan

I recall several years ago while living in Indiana and active in Amateur Radio one of the members had purchased something like $500 lof radio equipment from a mail order place in Ohio. Being a mail order sale the seller didn't charge any Sales Tax. Indiana did/does have a line item on the State Income Tax Return for such items. Apparently some time later after filing that years return he receives a bill from the State for $50 ($500 x 5%, doubled for penalty). He found out Indiana has exchange of information agreeements with at leat the bordering states for such instances. In any case, in your case I suspect you are certainly safe.