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My understanding of US practice is if I buy something from a seller who doesn't have a business presence in my state then I don't pay sales tax if it's being shipped to my state.

If I live in state A and go across the river to a store in state B, can I purchase an item and ship the package back to my house in the back of my car, and thereby avoid sales tax?

There's two parts to this:

  • What kind of contract would we have to sign, if any, to authorize me to be a short term shipping-carrier for the seller? Would a simple verbal agreement suffice? I suppose we'd want to specify I'd be liable for loss during shipment.
  • Is this fraud of some sort? I'm not trying to break any laws here, but I don't understand how this would be fraud. I'm actually delivering the item to a different state, and I can offer a shipping service no more or less (though somewhat less efficient) than some big corporation. There's no lying.

I've never heard of or seen this done so maybe I'm missing something about why it wouldn't work legally or practically.

Partial Fraction
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1 Answers1

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Your understanding is incorrect. Unless you live in a state that does not have sales tax, you are obligated to pay tax on that purchase. Whether you are paying origin-based tax or destination-based tax is determined by where the business selling you the item is located. Reference: https://www.thebalance.com/which-sales-tax-rate-do-i-charge-my-customers-3193251

It used to be that online sellers and sellers without physical locations in your state did not have to charge sales tax. This is one of the reasons Amazon became such a popular purchasing option. However, if you lived in a state with sales tax, you were obligated to report those purchases on your tax returns (state-dependent, of course). It was rarely, if ever, enforced. Individual states have started passing laws requiring it and major retailers like Amazon have moved to just apply the rules to all states regardless of legislation to save themselves more headaches over the calculations.

BobbyScon
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