Tax Organizer Questions Not Asked

[Lee B]

Pub 17:

"Found property. If you find and keep property that doesn’t belong to you that has been lost or abandoned (treasure trove), it’s taxable to you at its fair market value in the first year it’s your undisputed possession. "

"Stolen property. If you steal property, you must report its fair market value in your income in the year you steal it unless you return it to its rightful owner in the same year."

 

[Sara EA]

I always chuckled over that when I saw it in Pub 17 (remember that bible?).  In over 20 years I have never had a single client report stolen loot to me. I think I counted a total of five clients who reported use tax.  Had one this year who got a letter from DRS demanding use tax, saying it got the info from US Customs (client bought a fancy computer from overseas).  That was a new one to me.

[Corduroy Frog]

Due the reversal of the Supreme Court decision on interstate taxation, Amazon finally gave up and had to begin charging sales tax.  Since then, states have made every ridiculous effort to waste getting consumers to report sales tax due.  Alabama, for example, requires a sworn statement from taxpayers before a practitioner can electronically file.  And still, very much like Sara, the vast majority of taxable incidents is not reported.

It seems to me that the states would do much, much better going after E-bay, PayPal, and other electronic commerce making it taxable in similar fashion to Amazon.  They wouldn't be able to collect from all online sellers, but they could get the vast majority of it with E-bay, PayPal, and Facebook whatever.  Much more effective than trying to beat up on their residents and getting practitioners to twist their arms.

 

 

[Catherine]

Massachusetts got really nasty about Use Tax for a few years (people go to NH to buy stuff and bring home). Then they got NH stores to charge MA sales tax to all MA deliveries (that gets the big stuff, like appliances and large furniture), and Amazon too.  They quieted down a lot after that. I have a few who still claim the "safe harbor" figure (based on income) but most once again skip it.  

I tracked our Use Tax for years, and once Amazon started collecting tax it was less than $10 for the year, so I stopped tracking.  Plus, now eBay charges tax even on used items from individuals (not stores) that technically are not subject to sales tax in MA.  So I no longer press people for details, but the query is still on my documents checklist.

[Corduroy Frog]

Probably doesn't add to the discussion, but one of my govt contractors had a contract with the Navy at Newport, RI for three years.  During that time, I had occasion to speak with an assortment of different RI people.  I was surprised to hear them volunteer how they detested Massachusetts, calling them  "Taxachusetts" and other names which were really unmentionable.  I have a friend in Boston who reported that the taxation in RI is even worse.  All this to say that it appears these two neighbors don't really like each other.

[Lee B]

A tsunami of anger, finger pointing and scapegoating seems to make many people feel better.