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When I buy virtual items online that do not need to be shipped, sales tax is often calculated by the merchant automatically based on my credit card billing address. My billing address is in California, but I travel a lot, so this can be annoying - I am usually paying a tax rate higher than the sales tax in the state where the purchase occurred, which is what sales tax is normally based on.

The simplest solution seems to be to register a credit card with a billing address in, say, Delaware or New Hampshire where sales tax is not charged so that I will not be charged tax at time of purchase, and can declare it at the end of the year. Is there an easy and cheap way to do this? With online billing, I don't even need to physically visit a PO box to pick up the bills, I just need an address.


To clarify, I am looking for a legal way to reduce the amount of money I pay as sales tax. Currently, I can go out and buy a coffee and pay 6% tax on that sale, then go back to my hotel room and buy an ebook or a movie that gets charged at nearly 10%. It's possible that my premise is flawed, but to a layman like myself, this felt wrong - it seems like I should be paying the tax based on the place of purchase/use - and the simplest solution that came to mind was to simplify things by calculating ALL tax when filing my annual return. I'd also prefer doing that to having to paying the higher rate up front and filing for refunds afterwards.

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Can you not just give your friends address who reside in these states? –  Dheer Nov 9 '11 at 6:26
    
Maybe that could be an answer. But then what happens to my friend if I am delinquent on my debt? Which credit card companies would ask for proof that someone by my name lives at that address? And so on. That's the point of the question. –  anonymous Nov 9 '11 at 6:42
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Please help us understand better the problem you're trying to solve. Do you mean you would like to pretend to a credit card company that you live somewhere else other than your actual state of residence, in order to facilitate the evasion of sales taxes charged by your state of residence? If so this question may need to be closed (we can't help you do something illegal). Or was it something else? –  Chris W. Rea Nov 9 '11 at 14:26
    
@Chris: I updated the question with clarification. If the answer is that there isn't a legal way to do this, then that would be disappointing, but it seems like that would make more sense as an answer than a closure. –  anonymous Nov 10 '11 at 0:26
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4 Answers 4

Many states require that USE tax be paid on items purchased out of state and the subsequently brought to your home state. The vendor has the responsibility to collect based upon the shipping destination. It is the buyers responsibility to declare and pay taxes on purchases where the vendor is not required to collect them for your state(like when you purchase it out of state). So if you have an item shipped out of state to avoid sales tax and then bring it to your home state then you are required to pay sales tax in your home state as well. Some states (Florida for 1) allow for the reduction in sales tax owed by the amount paid in out of state sales taxes. Some states (Like CT) exempt purchases under a certain amount.

Federation of Tax Administrators website has links to state revenue services where you can check the tax requirements for your (and other) states.

Other State Links

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FYI Do not send the check to Illinois Pay to the order of "The current Criminal holding the office of the Governor of the State of Illinios" they respond with a nasty letter... though they did cash it. –  user4127 Dec 5 '11 at 15:52
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Looks like you can get a PO box online for $62 per year: https://www.usps.com/manage/get-a-po-box.htm

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That requires me to go to the post office in person and bring an ID and proof of residence. I was hoping for something easier. –  anonymous Nov 10 '11 at 0:18
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Are you sure about this? I mean your premise. I thought tax was based on shipping address. I've made purchases, live, in NY, and had the choice to pay sales tax or to have the item shipped, in effect paying shipping, for real, instead of sales tax.

It appears that by buying a loaded cash card you'd accomplish your goal. I've seen such cards go fo $1.50, no fees other than that. To save the sales tax, or pay the tax of the state you're in, it may be worth it. But a NH billing address don't solve this, again, I believe tax is based on ship-to.

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It is typically based on the shipping address, which I am fine with. But for virtual goods that are never shipped, I get charged based on the billing address, which feels wrong to me. –  anonymous Nov 10 '11 at 0:17
    
@anonymous - Yes I agree... lots of taxes feel wrong to me. However evasion or even attempt to evade is a federal crime and you may be attempting to turn anyone responding with a solution into co-conspirators. There may be a legal way for you to get an address in another state with out residing there, doing so with the intent of evading taxes probably would make it a crime. I am not accusing you of doing this intentionally but my experience is when the government unleashes its hounds it doesn't care what your actual intent was only what they can make it appear to be. –  user4127 Dec 6 '11 at 19:11
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Services exist that allow you to forward mail anywhere or pay bills on your behalf. A friend who travels constantly for work uses a service that receives his mail (at a street address), scans and shreds most items, and forwards packages as he requests.

Make sure that you understand what your state considers legal or illegal.

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