Your Guide to Money Etiquette
Q: Can I buy something in another state and ship it to myself to avoid paying sales tax?
A: If you shop at a brick-and-mortar store in one of the five sales tax–free states—Alaska, Delaware, Montana, New Hampshire, and Oregon—feel free to make your purchases, then take the goods with you or have them shipped. It’s legal and appropriate, says Lauren Bloom, a business-ethics consultant in Springfield, Virginia. But take note: If you habitually engage in such sprees, you might end up owing some or all of those sales-tax savings to your home state. “In Missouri, for example, residents must report tax-free purchases that total more than $2,000 annually and pay at least a 4.2 percent use tax on them,” says Michael Brennan, the owner of the Brennan Group, a tax-consulting firm in St. Louis. (Check with your state’s department of revenue for its policy.) If you skip reporting and paying, you might not get caught, but your behavior is unethical, says Bloom. And if scores of others follow suit, your state could be forced to raise its sales tax in the future.
When it comes to shopping online, you’re entitled to buy tax-free “as long as the retailer has no physical presence in your state—meaning salespeople, storefronts, a warehouse, an office, or outlets,” says Brennan. But what if you have a pal in Montana? Can you have your purchase shipped to her house, then have her send it along to you? In theory, you can, says Bloom: “But her home is not the final destination, so it’s still an ethical breach.” And by the time you add in the extra shipping, you may not save enough to make it worthwhile.