Getting around import duties?
Posted 22 November 2006 - 08:06 AM
Being the good patriot that I am, I confirmed that it was a CRT monitor. Ok, I lie. I didn't tell them because I'm a good patriot, I told them because I didn't know what to say.
Two months later I get a call from UPS saying I'm past due for over $200 for the import tax.
Not that that isn't fair, but I wonder if I had told them it was something else without actually lying if I could have avoided the fee.
Dan "I'm Not Cheap, I'm...Frugal" Coplan
Posted 22 November 2006 - 09:21 AM
Should you still wish to get tricky, the common way that I know to completely avoid the taxes is to label the package as a gift. Obviously, this has its limitations. I doubt you could ship an entire sled over and try to pass it off as a friendly gift. However, something the size of the monitor might be passable. Also, its originating address will be a good clue as to the package's true contents. Coming direct from a corporation, the "gift" trick may not work. If you know someone at the company well that would be willing to personally ship it for you, you might get away with it.
The type of item and its value are two great determining factors in the amount of the tax. It seems high end electronics and professional equipment are in two of the highest brackets. Just be wise though. Lying about the contents or even labeling them as a gift might take with it any sort of insurance in the case of loss or damage. I'm sure there is much more about this subject written online somewhere else.
Posted 22 November 2006 - 02:27 PM
How many hours does it take to earn that vs. going through the huge hassle if one is "caught?"
And if they catch you in a "white lie" they may ask you lots of other questions, and you've made your life hell.
Import duties are the just part of the price.
Posted 24 November 2006 - 04:44 PM
I can't believe anyone would want to mess with customs or the IRS for $200 (or $10,000 or )
Import duties are the just part of the price.
I agree completely that it's not worth the time/money risking an investigation and I don't advocate cheating, however, as with income tax, there are often numerous legal and just plain smart loopholes we can take advantage of in order to pay less in taxes. Aside from being someone who is taxed MORE for operating as a sole proprietor (why am I punished for living as a self sustaining entrepreneur?), I'm fully in favor of taking advantage of these opportunities.
Therefore, my question is not so much, how do I cheat the government to pay less, but rather, are there intelligent, legal ways to reduce or eliminate import taxes.
Posted 25 November 2006 - 06:26 AM
Have you talked to your tax advisor to see if you can get that back come April 15th? There may be some way it can be written off as a business expense since you're paying that in order to get gear. That way, you don't cheat Uncle Sam and you may see it as a bonus end of fiscal year. Couldn't hurt to find out...
Posted 29 November 2006 - 03:34 PM
And as suggested above, I'll take this to my tax person as well - thanks.
Posted 07 December 2006 - 09:02 PM
Posted 08 December 2006 - 07:05 AM
Posted 19 December 2006 - 04:44 PM
Hate to bring ya down, but this should be said. Californians are expected to pay sales tax on out of state purchases. It's called "use tax" and is reported in your state return.
Your accountant may not mention this or even tell you the state'll never know; if so, consider getting another accountant. There are much worse things that can come up from not paying this tax on time, mainly if you aren't charging sales tax on your rentals. As far as that goes, there are two schools of billing for rental of tangible property: let's call them the Otto Nemenz school and the Camera House school. Otto Nemenz charges sales tax on rentals. Their rental activity is considered an ongoing sale. They also don't have to pay property tax on all their gear. The Camera House does not charge sales tax on their rentals; instead, they pay property tax on their gear. The latter is especially good if your buisness has less than $100,000 worth of gear because you are exempt from property tax.
That known, a requirement for the Camera House method is that you pay sales tax on your property in a "timely manner," i.e. at the sale, or in that years state return for out of state or out of country purchases. If you don't, you are supposed to pass sales tax on rentals to the BOE. If they find out you haven't, they will want those taxes + some nasty fines. Considering how much we make on rentals, that's a lotta cabbage. Best to just pay the use tax.
Gotta disclaim here...I'm not an accountant. Please correct me if I'm wrong. I learned the basics in a free Small Buisnessmans Association class, and the rest from state websites and various accountants. I think I was lucky to learn this stuff early on. When you file for a DBA, you get a tax bill from the city of LA and that's it; seems you should get a brochure or sumthin'. Tax law is dodgy and changes constantly. Your accountant should know all about this stuff. A great source of information is in-house accountants at rental houses. They are paid to keep up with this specific area of stuff and are usually more than willing to talk to another human, especially in thier area of expertice.