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Getting around import duties?


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#1 Dan Coplan

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Posted 22 November 2006 - 08:06 AM

I recently purchased a monitor from Marell in the UK. UPS called me to find out what it was so they could determine if they should slap me with a big ol' import tax or not.

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
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#2 Afton Grant

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Posted 22 November 2006 - 09:21 AM

Yes, you could've avoided the tax by telling a "white" lie. Overall though, import taxes are a pain in the neck. Probably the best thing to do is just be aware of them and prepared for them - factoring them into the purchase or sale price.

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.

Best,
Afton
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#3 Jerry Holway

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Posted 22 November 2006 - 02:27 PM

I can't believe anyone would want to mess with customs or the IRS for $200 (or $10,000 or )

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.

Jerry
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#4 Dan Coplan

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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.

Dan
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#5 David George Ellis

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Posted 25 November 2006 - 06:26 AM

Hey Dan,

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...
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#6 Dan Coplan

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Posted 29 November 2006 - 03:34 PM

Some success. Rather than shrug and pay the full duty, I got the woman in charge of assessing duties on the phone. 5 mins. later and she reduced it by $45. Here's the key - anyone that has to deal with customers suffers a fair share of abuse. Talk to them kindly, treat them with respect, walk home $45 richer.

And as suggested above, I'll take this to my tax person as well - thanks.

Dan
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#7 Jon Myers

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Posted 07 December 2006 - 09:02 PM

Hey Dan be prepared to get a sales tax bill from the state of California. I had to pay duty on my back mounted vest and my Steadirig arm. I bought both of them in 2004. I just got a bill for 1200.00$ of sales tax from the state. The state of California decided to enact a law that's been around since the 1930's. They'll tax at what ever rate sales tax is in the county that you live in (LA is 8.25%). Good luck everyone on avoiding this. I hope they don't catch everyone but stuff some money in a sock for a rainy day.

Jon Myers
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#8 Dan Coplan

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Posted 08 December 2006 - 07:05 AM

We don't have to pay sales tax if we purchase out of state but we do if we purchase out of country? Bastards. Maybe I'd be more willing to keep my purchases "Made In America" if any of it was.

Dan
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#9 Dean Gunderson

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Posted 19 December 2006 - 04:44 PM

"We don't have to pay sales tax if we purchase out of state but we do if we purchase out of country? Bastards. Maybe I'd be more willing to keep my purchases "Made In America" if any of it was."

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.

http://www.boe.ca.go...setaxreturn.htm

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.

http://www.boe.ca.gov/pdf/pub46.pdf

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.

Fly safe
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