Tax evasion is ILLEGAL!!!

[Dave1982]

This could go in either Sucky Customers or Morons in Management......

Background: We are a NH store. No sales tax in NH. MA (about 10 minutes south) has 5% sales tax. Purchases made in MA can be returned to a NH store, and the tax can be refunded.

Just as am I about to go home for the day, I walked behind the service dsk to do some damn-fool thing when I stumbled into the following situation.

SC: Tax evading SOB

Mary: Hapless co-worker caught up in this.

Alice: MOD

Me: Dave1982, defender of tax laws.

(All names changed to protect the not so innocent).

SC:.......so I figure why should i have to pay sales tax if I don't have to?

Mary: Um....I dont' know if...we....can...dooo....that..... *turns to me* can we?

Me: What's that?

SC: I want to return this with the tax added in, then rebuy it without the tax.

(It was a $50 or so item that he had purchased in a MA store. Approximately $2.50 in taxes had been assessed at that store).

Me: That's tax evasion. We can't do that.

SC: Ok, then I'm returning it.................then I'll buy it ten mintues later.

Me: Sir, that's illegal and we reserve the right to refuse returns for reasosn such as this.

SC: *rant rant; rave rave*

Me: ALICE!!!!!!

*MOD looks up; I wave her over*

Alice: What's up?

Me: *quietly, so the SC can't hear it* This guy is trying to commit tax evasion; he needs to go*

So what does she do? She walks over, allows the customer and Mary to explain the situation, then ALLOWED THE CUSTOMER TO COMMIT A CRIME!!!!!!!!!!!!!!

OMG I was not happy. This sort of thing is (or should be) a firable offense. I'm just glad that this did not happen on my cashier numbers. Hell, if I had been on the register with this guy, I would have refused to do it. I would have logged out and told the manager that she can log in and do it herself, as I will have no part in doing something illegal.

Although the amount is small, it shouldn't matter. It's still not legal. I still can't believe she let this happen.

[BookstoreEscapee]

That's ridiculous. If he didn't want to pay the tax he should have just bought it from you in the first place. Or returned it to the store he bought it in first.

[myswtghst]

I just wonder how much it cost him in gas to drive there and exchange it. Idiot.

[ZumZum]

Ok, bear with me. Do you carry the same product in your store?
Since you returned the item for him (and the tax), the state will give you the tax back since they essentially didn't collect it.

If you carry the same product in your store I don't really see the problem in it.
Tax evasion really applies to the private citizen or corporation not claiming what they make correctly, thus shorting the government of tax money.

It isn't illegal to return something than buy it back, either because the price went down or to avoid a state's higher tax. Annoying, yes. Illegal, no.

[Dave1982]

I believe that intent plays a role in the matter. Since this was being done with sole purpose of avoiding a tax. Upon doing a bit of research into the matter, it seems that tax avoidance would be a better term, though this probably falls in a gray area between avoidance (legal) and evasion (illegal).

[Dave1982]

OK. I've been reflecting on this some more, and did a little more research into the matter. Bear in mind that I'm no lawyer, so I could well be misinterpreting this (plus I'm using Wikipedia, which is always suspect).

From Wikipedia

"In the United States, the term "tax evasion" (or, more precisely, "attempted tax evasion") generally consists of criminal conduct, the purpose of which is to avoid the assessment or payment of a tax that is already legally owed at the time of the criminal conduct.[2] Tax evasion involves breaking the law, and has no effect on the amount of tax actually owed, although it may give rise to substantial monetary penalties.
By contrast, the term "tax avoidance" describes lawful conduct, the purpose of which is to avoid the creation of a tax liability in the first place. Whereas an evaded tax remains a tax legally owed, an avoided tax is a tax liability that has never existed."

The incident from today could conceiveably go either way. Since he already paid the sales tax in Mass, and is trying to get that back, you could say he was evading an already owed tax. Conversely, you could also say that he's simply trying to erase the situation where he would owe the tax.

Here's the rub: if he is a Mass resident (and in fairness, I have no idea if he is or not) he - technically - is required to pay sales and use tax on the tiem, even if he makes the purchase in New Hampshire.

From Wikipedia:

"A use tax is a type of excise tax levied in the United States. It is assessed upon "tax free" tangible personal property purchased by a resident of the assessing state for use, storage or consumption of goods in that state (not for resale), regardless of where the purchase took place. The use tax is typically assessed at the same rate as the sales tax that would have been owed (if any) had the same goods been purchased in the state of residence. Typical "tax free" purchases that require payment of use tax include those done while traveling (for things carried or sent home), through mail order, or purchases via telephone or internet.
For example, a resident of Massachusetts, which has a five percent "sales and use tax" on certain goods and services, purchases non-exempt goods or services in New Hampshire for use, storage or other consumption in Massachusetts. Under New Hampshire law, the New Hampshire vendor collects no sales taxes on the goods but the purchaser/user must still pay five percent of the sales price directly to the Department of Revenue in Massachusetts as a use tax. If the same goods are purchased in a U.S. state that does collect sales tax for such goods at time of purchase, then whatever taxes were paid by the purchaser to that state can be deducted (as a tax credit) from the five percent owed for subsequent use, storage or consumption in Massachusetts."

Line 15 on Mass tax income returns: [Declare amount of] Purchases subject to Massachusetts.

Technically anything that is taxed in MA will have to be declared, even if you got it in NH. Of course, nobody does this, as it's virtually unenforceable. Still, we as a vendor are required to charge tax - even being in NH - when we KNOW the items will be sent to MA. As a practical matter, this is only done when something is being shipped to MA, since that leaves a paper trail.

It is my believe that in light of the above info, that it what this guy did was at best shady and at worst (and more likely) illegal. (Again assuming that he lives in MA).

But again, I may not be reading this correctly, and I doubt that anyone's going to do anything about this particular incident.

[Girly]

Still, we as a vendor are required to charge tax - even being in NH - when we KNOW the items will be sent to MA. As a practical matter, this is only done when something is being shipped to MA, since that leaves a paper trail.

You are required to collect MA tax when you ship there because you have a business presence in MA.

Some states also have agreements with other states when you are in cities right on the border where you can collect the tax for the adjacent state, even though you aren't actually in that state.

I do sales and payroll taxes all day long : )

[Dips]

You guys are safe as long as you don't know for a fact that the customer lives in Massachusetts. The fact that it was bought here originally doesn't prove that he lives here, just that he bought something here. I don't think you and your employer will have to worry about any liability.

O/T Small world. I work in the same town you live in.

[powerboy]

I honestly do not see the problem in returning it, and buying it back. I do congrat you, for trying to do the good thing.