Sales tax conundrum

[CCC]

This is probably a unique situation, but I'd be interested to hear the perspectives of people in the know. If you don't live in or near a no sales tax state/province this will probably bore you.

I live on the Washington/Oregon Border about 70 miles from Portland. We have 7-9.5% sales tax (depending on what county you live in) while Oregon has no sales tax. Needless to say, a lot of people go to Oregon to buy big ticket items. Politics aside, it's mighty tempting to cheat the tax man when it's your own money, as much as I like roads/police/etc. Everybody who lives on my side of the river buys stuff in Oregon. You can't get away with it on a car, though, because they charge you tax when you register the vehicle.

Hot tubs, on the other hand, aren't registered. I am no goody-two-shoes, but on some purchases it's just is too much effort to be a scofflaw. I have a decent job and I'm reticent to go through some cloak and dagger bullshit to save the sales tax sometimes. If you go to Oregon and buy appliances or furniture and you have them delivered to Washington they charge you sales tax. If you haul it away with a trailer from their store, they don't. For example, I bought a 2,000 dollar refrigerator recently and even though I could have hauled the thing over the bridge and saved tax I chose to pay tax and have it delivered because I have a very difficult stairway and a steep driveway, and it's worth the peace of mind to just be on the up-and-up.

All of the hot tub dealers that can service me are in Oregon. A few of them say they will put on the bill of sale that "customer is responsible for delivery", and then give you the phone number of people that will set it up for you professionally after you haul the thing over the river, or even go so far as to arrange delivery through a private company for you and have somebody from the store be there to give you an orientation and show you the ropes. On the other hand, several dealers just flat out refuse to play that game and automatically charge tax to Washington customers. Honestly, I respect that and I kind of figured all along that I was just going to pay the sales tax and have the dealer be responsible for delivering whatever I choose to buy up my steep and gnarly driveway and landscaped steps, or hire a crane.

Now a 2,000 dollar refrigerator is one thing, but a 10K+ hot tub is tempting to do a jig and save yourself over $1000 bucks. I ran into a good deal on a tub that was over my budget that I could only justify by dodging the sales tax, bringing it closer to what I've budgeted. Man, am I tempted. I think I have chickened out, though, and am not going to buy it because it just seems too risky to buy something that expensive and be responsible for delivering it and having it serviced when I am not really qualified to know what I'm getting myself into. I'm curious what anybody else in my situation would do. Am I being overly worrisome? It just feels too cheesy and risky to me when I am depending on service on a big ticket item to have any kind of "wink-and-a-nod" malfeasance going on.

Note: I am in no way sitting on a high horse. I have bought plenty of stuff in Oregon and never paid tax on it.

Just fodder for discussion.

[Jacuzzi Jim]

 Do it.

[Hottubguy]

Do it. I don't live close enough to make it worthwhile where I am. New Hampshire is the nearest and its 100+ miles Away from me or I would do it

[The Wizard of Spas]

One way or the other you're going to pay. 

I'd still look into if there are any trip charges on service calls for something 70miles away, vs something purchased closer.  Additionally, delivery could be an issue, as you noted.  If there is an extra $50, $100 per trip (and you may have a few service calls during its lifespan), and you're paying for your own delivery vs having it free with a closer dealer, the gap between the units at hand may not be nearly as big as perceived.

Furthermore- the tub being purchased is only half the equation.  Is the dealer reputable?  Are there dealers closer to your home that are more reputable, will not charge you trip charges, and will offer a professional delivery for free?  The initial purchase offers a lot of sex appeal.  But long term you need someone you can trust and to know that your tub will be serviced, serviced the proper way, and at a reasonable rate.

Im not trying to talk you out of not paying the taxes.  I am just trying to make you aware of the total cost of doing business- short term AND long term.

I hope this helps with perspective.  Good luck moving forward.

[Spatech_tuo]

Man, am I tempted. I think I have chickened out, though, and am not going to buy it because it just seems too risky to buy something that expensive and be responsible for delivering it and having it serviced when I am not really qualified to know what I'm getting myself into.

On the delivery end, if you are going through a 3rd party that actually is experienced in delivering spas then I don't see much downside as far as delivery risk. The upside is obvious and tangible though I'll only say proceed at your own risk on that end. What I'm curious about is your comment above regarding service. You say you're 70 miles from Portland but did not quote the dealers as saying this was a service issue for them but then later you mention you'd be responsible for getting it serviced. I could see them tacking on a travel fee to service at that distance but you could easily justify that fee with the up front tax savings. Are they saying you are too far away for the dealer to service you or was this just a wording issue?

[NewRedCar59]

CCC,

Tips and strategies on tax avoidance is what a good CPA can provide for you.

This forum is a bad place to get tips and stratigies on tax evasion. It is more than just a political hot potato; it's a crime.

It is not uncommon for the state of Washington to stop vehicles to check for sales tax compliance.

Go with you gut and don't play the "pick-up or 3rd party direct pay" game.

[CCC]

No matter what I buy it will be in Portland 70 miles or so away, whether I pay sales tax or not. The drill seems to be that there are no trip charges during the first year of the warranty, and after that they will charge you $50 or so. The only dealer in my local area sells Maxx and L.A. Spas (In OR). Oh, and the Bullfrog dealer is closer, but still in Oregon. They actually assume anyone in Washington is going to haul it over the border themselves and then they have somebody from the store come over and go over things with you. If you want them to move it once you get it over the river you pay the movers under the table.

Tips and strategies on tax avoidance is what a good CPA can provide for you.

This forum is a bad place to get tips and stratigies on tax evasion. It is more than just a political hot potato; it's a crime.

No need for tips and strategies. There's a reason that the 2 Best Buy stores in Vancouver, WA were closed a few years ago.

The hot tub dealers in Oregon who refuse to play this game won't do it because THEY'VE BEEN BUSTED. The state of WA goes after the dealers, not the customers. I don't know exactly how it works, but once bitten, twice shy it seems.

Again, very interesting to see other's perspectives and I appreciate all points of view.

[JustAnotherNewbie]

CCC,
Buddy, you're wasting your time and energy. You need to "Think Big".
Didn't you recently suffer a serious and debilitating injury?  Speak to your doctor  about the benefits of the hot tub to , cure ,mitigate, and treat your injury. As long as he can state the tub is a "medical necessity" you are golden. Firstly, you won't have to pay tax on the purchase regardless of where you buy it. Second, was your injury caused by a work related event? Was it due to a vehicle accident? Did it occur on someone's private property,  or the proprietary of a business or government entiry? Put in an insurance  claim, you have so many options to minimize your outlay for this medically necessary item. Best case scenario, you can write off the entire purchase including supplies, upkeep and operation until it is no longer medically necessary. You may even be able to write off the depreciation of this asset. Oh, isn't your back hurting? Suffering from leg spasms? You get the picture.

Stop thinking small.

http://www.hurt911.org/therapeutic/hot-tub-insurance-tax-deduction.html

Only down side is a complete IRS audit, which you would most likely win, or at the worst pay back some tax owed but you would still come out ahead. The IRS audited only .005 % of all tax payers last year and if your AGI  is less than $300,000 the chance of audit is even lower.
Think like a rich guy, that's how they stay rich.

Good luck

[NewRedCar59]

No matter what I buy it will be in Portland 70 miles or so away, whether I pay sales tax or not. The drill seems to be that there are no trip charges during the first year of the warranty, and after that they will charge you $50 or so. The only dealer in my local area sells Maxx and L.A. Spas (In OR). Oh, and the Bullfrog dealer is closer, but still in Oregon. They actually assume anyone in Washington is going to haul it over the border themselves and then they have somebody from the store come over and go over things with you. If you want them to move it once you get it over the river you pay the movers under the table.

Tips and strategies on tax avoidance is what a good CPA can provide for you.

This forum is a bad place to get tips and stratigies on tax evasion. It is more than just a political hot potato; it's a crime.

No need for tips and strategies. There's a reason that the 2 Best Buy stores in Vancouver, WA were closed a few years ago.

The hot tub dealers in Oregon who refuse to play this game won't do it because THEY'VE BEEN BUSTED. The state of WA goes after the dealers, not the customers. I don't know exactly how it works, but once bitten, twice shy it seems.

Again, very interesting to see other's perspectives and I appreciate all points of view.

Best Buy is a great example.  I totally get that. Buy an Apple laptop, toss it in the trunk and off you go.
No tax collected. Now you owe Wash State Use Tax (surprisingly it is equal to the sales tax the merchant would have collected if you bought it in Washington)

Chances of being caught pretty slim.

However, I have a friend in Centralia who was unable to produce the receipts for 20 newish  workstation computers in his business.
For obvious reasons, he was unable to produce the receipts and was hit with use tax on the computers.

Tubs, building supplies, mattresses, etc., the state is actively looking for those trucks.

[CCC]

However, I have a friend in Centralia who was unable to produce the receipts for 20 newish  workstation computers in his business.
For obvious reasons, he was unable to produce the receipts and was hit with use tax on the computers.

Tubs, building supplies, mattresses, etc., the state is actively looking for those trucks.

Yeah, I know a couple of contractors and they say the risks are too high to play this game when working in WA. It seems that the small business owners are the only ones who ever get busted in these dragnets and the consequences for them are much higher if they get caught. I would imagine that there is more of a spotlight on the I-5 corridor, as well. Once you drive 70 miles east and cross the river out here in Podunk, your odds of getting busted hauling a trailer full of whatever are pretty minimal. I have never heard of a consumer getting caught. (Not saying it hasn't happened).

It's an interesting ethical discussion because EVERYBODY who lives close to the border is guilty of it, some more than others. Unless you send a check to the state of Washington for sales tax on all the crap you bought in Oregon every year (and on the internet, for that matter), you're living in a glass house if you tsk tsk somebody for doing it on a big-ticket item. It's really kind of bullshit and unfair, to be honest about it, that you can live in WA where there is no income tax, then go buy stuff in Oregon or on the internet and pay no sales tax. But like I said, everybody is guilty. When I lived in Bellingham, close to B.C., Canadians flocked to the stores there because everything was cheaper.  They would unpack stuff from wrappers and boxes in the parking lots, some even going so far as to wear more than one layer of clothes so they wouldn't have to pay duty bringing it back over the border. I don't know how much the duty was, but the cat and mouse games people played to sneak stuff back into Canada tells me it must have been substantial.

[CCC]

Buddy, you're wasting your time and energy. You need to "Think Big".

This post is awesome! 

If only I could sue myself for being clumsy enough to fall down my own stairs! I had a co-worker who had almost the same ankle break as me and got almost a year off with full pay. But, alas, mine was a freak accident at home.

Think like a rich guy, that's how they stay rich.

Indeed, it's hard to think like a rich guy when you're not one. The Federal tax dodge was never even on my radar. I'm a substation electrician and my wife is a teacher, so all of our income is on a W-2. We're not poor, but there are very few ways to fudge things when they take it all out of your paycheck. We have no kids, and our mortgage is modest enough that we never crack the standard deduction except in the years we've bought a new car (can deduct the sales tax), and even then we barely crack it. It's a good problem to have. I'm not complaining.

I'll talk to a tax guy. Thanks for the interesting angle. The thought of ending up on the IRS's shit list is daunting, though, even for a working class schmuck like me.

[Tman122]

If I was a DIY guy and was buying a less expensive value or box store type tub it might be more attractive to haul one/hired haul. Not for tax avoidance for money savings (half) But if I was spending 7-9 grand I might think differently. What do I get for spending twice as much? Is that worth it to me? By the time you add your time/delivery costs? Are you only saving a grand or 2? But getting a mediocre performing tub?

A lot of ifs.

Isn't the state it lands in responsible for collecting taxes based on their property assessments? Wait, it's portable like furniture? Furniture is taxed in the purchasing state only. That state shouldn't care where it lands? Who's a tax accountant?

[CCC]

Thanks Tman 

The state of Oregon doesn't care, but the state of Washington wants you to pay sales tax on everything you buy. It's only fair because we don't have an income tax. So basically, if you're willing to jump through the hoops and don't feel guilty about it, you can save about 7.5-10% of the overall cost of purchase (based on what county you live in).

So yeah, it's like furniture. I bought a couch in Oregon. I borrowed a friend's trailer and hauled it myself from Macy's in Portland to my house and cheated the tax man. If Macy's would have delivered it to my house, they would have charged me Washington sales tax. What I did was technically breaking the law because by the letter of the law I am supposed to send a check to the state of Washington for the value of my purchase based on the county I live in. I know of no person who has ever done that. You can't get away with it on a car because when you register it even if you say your dad gave it to you, they charge you a tax based on the book value of the vehicle.

[wmccall]

Given that hot tub stores set their own prices, to some extent, I have to wonder if big ticket item stores near the border can get 5% more for their products that can another store 100 miles away in the center of the state.

[BullFrogSpasMN]

One day, maybe not tomorrow, or even next year the state may catch on and come after those tax dollars...it happened here in MN/Wisconsin, in turn the dealer could turn your name over to the IRS/State and if they didn't receive the tax that was wrote as "customer assumes" on the invoice it could potentially come back on you.  Who knows, this may never ever effect you and I'm in no way trying to scare you out of making that decision, just simply letting you know that other states are "tightening" up on this practice....My personal opinion is that if you are in posistion to purchase a $10,000 luxury item I find it petty to try and circumvent a few hundred bucks in taxes to your own state, but that's simply my .02