Hardware Sales Tax bought outside of U.S.A

[SimCity]

Bought hardware from bitmain.

Has anyone recieved a letter like this from DEPARTMENT OF FINANCE AND ADMINISTRATION
tax auditor

Re: Customs's Related Purchase
DEAR TAXPAYER:

Like most states, Arkansas law requires sales tax to be paid on items purchased in Arkansas, and compensating use tax to be paid on items purchased from outside of the state that are delivered, and brought into Arkansas unless there is an exemption granted for the specific item.

The Arkansas Department of Finance and Administration currently has information from the United States Customs office, which indicates that you made purchases from outside the United States, and had the items shipped into the States of Arkansas.

Please provide a description of the items purchased, and any sales tax exemption that you think might be applicable. If the items purchased are not exempt, Arkansas Compensating Use Tax is due on the purchase.

If you have previously paid use tax on this merchandise, please send appropriate documentation to substantiate your position.

Entry Date:  01-Dec-2015
Export Country:  CN
Tariff Section:  MACHINERY AND MECHANICAL APPLIANCES; ELECTRICAL EQUIPMENT; PARTS THEREOF; SOUND RECORDERS AND REPRODUCERS, TELEVISION IMAGE AND SOUND RECORDERS AND REPRODUCERS, AND PARTS AND ACCESSORIES OF SUCH ARTICLES
Tariff Description:  AUTOMATIC DATA PROCESSING MACHINES AND UNITS THEREOF; MAGNETIC OR OPTICAL READERS, MACHINES FOR TRANSCRIBING DATA ONTO DATA MEDIA IN CODED FORM AND MACHINES FOR PROCESSING SUCH DATA, NOT ELSEWHERE SPECIFIED OR INCLUDED: CONTROL OR ADAPTER UNITS
Amount:  14,984.00

Failure to respond to this letter within 30 days could result in an assessment being issued on the amount mentioned above.   

[Erumara]

Importing miners into Canada I had to pay 5% GST and was happy to do so. In much of Europe you will pay up to 20% value-added tax. It seems to me that your state (In the US obviously this will differ from state to state on what goods and how much tax is owed) has some kind of import/sales tax and your miners will almost certainly qualify, especially in an amount that would require $15,000 worth of tax!

It is up to you to determine what taxes may be applicable and what rate is applied in your state.

According to http://www.taxrates.com/state-rates/arkansas/ states that depending on municipality you may owe between 6.5% ($200,000 worth of miners!) and 11.25% ($180,000 worth of miners!) sales tax on imported items

Either way I'm impressed with that number being hosted in North America

Interesting side note: In Canada bitcoin generation is GST-exempt (receiving bitcoins by mining). Receiving fiat for bitcoin amounts to capital gain at a minimal tax rate, all for some very good reasons. However I determined that hosting services ie. hosting someone else's miners for a % or flat-rate fee would be GST applicable at 5%.

[toptek]

HM some one at bitmain may have screwed up or did you use FEDEX which is a bad  idea . you may end up paying more then you save using FEDEX from Past buys with them and buying direct from Bitmain. Then they ( FEDEX ) lied to me over the phone about why, told me i wouldn't be charge they took care of it i got charged any way . i had to pay it or they would have messed up my credit . That sounds like one of two things either bitmain marked it wrong if you did pay the import tax or you used FedEx if neither then maybe be the laws changed sense i last bought form them other wise can't say customs is a pain any way.  

[sidehack]

Seems more likely he bought $15k worth of miners, so a 6% tax on that would be in the $900 neighborhood. I don't think it would matter who the carrier was (FedEx vs UPS), any importation over $2500 has to be filed with US Customs who, according to the poster, passed that information on to the Arkansas tax department.

[toptek]

maybe the law changed i have never been charged sales buying imports maybe import taxes , i know i read some place they were trying to change that what state Arkansas sales tax some thing doesn't seem right but dealing with custom is a pain any way if the seller and or shipper mess up the order on the paper work then you eat it .according to that he bought it in Arkansas but if he bought it form bitmain direct  hows that poss it was a import right  ? . like i said the US was tiring to change that maybe they did for 2016 he being hit for it now i never really understood some of the stuff customs seems to do and try my best to not order out of the US .


it does say


Please provide a description of the items purchased, and any sales tax exemption that you think might be applicable. If the items purchased are not exempt, Arkansas Compensating Use Tax is due on the purchase.

Ive heard some bad story's about packages being marked wrong for custom even below 2500 .  SO GL i hope he fixes it .


Your right each state in the US has it's own sells tax unlike other places in the World.  guess hes luckly it wasn't one of them with a 8 % st


was trying to offer some possibility , i know that feeling of getting those kind of letters and you thought you had it all covered .

[notlist3d]

maybe the law changed i have never been charged sales buying imports maybe import taxes , i know i read some place they were trying to change that what state Arkansas sales tax some thing doesn't seem right but dealing with custom is a pain any way if the seller and or shipper mess up the order on the paper work then you eat it .according to that he bought it in Arkansas but if he bought it form bitmain direct  hows that poss it was a import right  ? . like i said the US was tiring to change that maybe they did for 2016 he being hit for it now i never really understood some of the stuff customs seems to do and try my best to not order out of the US .


it does say


Please provide a description of the items purchased, and any sales tax exemption that you think might be applicable. If the items purchased are not exempt, Arkansas Compensating Use Tax is due on the purchase.

Ive heard some bad story's about packages being marked wrong for custom even below 2500 .  SO GL i hope he fixes it .


Your right each state in the US has it's own sells tax unlike other places in the World.  guess hes luckly it wasn't one of them with a 8 % st


was trying to offer some possibility , i know that feeling of getting those kind of letters and you thought you had it all covered .

Most stories are coded wrong, and can be fixed after with carrier.   If he has to pay that is bad luck or bad error.   I can say I have not ordered to AR though.   But I would contact the company you shipped with as they likely are ones to report this.    Ask what it is coded as and check around board what others had in similar incidents.  As most I think got recoded and paid much less if any.

Only one I have had to pay was Bitmain shipped a PSU with a weight lower then actual weight.  I was charged the difference in price of shipping for a more heavy item.. which I found to be fair. 

I also am curious on what carrier he used.  Please add more to story OP.

[spazzdla]

Oh god I hate the gov so much.

[toptek]

maybe the law changed i have never been charged sales buying imports maybe import taxes , i know i read some place they were trying to change that what state Arkansas sales tax some thing doesn't seem right but dealing with custom is a pain any way if the seller and or shipper mess up the order on the paper work then you eat it .according to that he bought it in Arkansas but if he bought it form bitmain direct  hows that poss it was a import right  ? . like i said the US was tiring to change that maybe they did for 2016 he being hit for it now i never really understood some of the stuff customs seems to do and try my best to not order out of the US .


it does say


Please provide a description of the items purchased, and any sales tax exemption that you think might be applicable. If the items purchased are not exempt, Arkansas Compensating Use Tax is due on the purchase.

Ive heard some bad story's about packages being marked wrong for custom even below 2500 .  SO GL i hope he fixes it .


Your right each state in the US has it's own sells tax unlike other places in the World.  guess hes luckly it wasn't one of them with a 8 % st


was trying to offer some possibility , i know that feeling of getting those kind of letters and you thought you had it all covered .

Most stories are coded wrong, and can be fixed after with carrier.   If he has to pay that is bad luck or bad error.   I can say I have not ordered to AR though.   But I would contact the company you shipped with as they likely are ones to report this.    Ask what it is coded as and check around board what others had in similar incidents.  As most I think got recoded and paid much less if any.

Only one I have had to pay was Bitmain shipped a PSU with a weight lower then actual weight.  I was charged the difference in price of shipping for a more heavy item.. which I found to be fair. 

I also am curious on what carrier he used.  Please add more to story OP.

I got a feeling that was FedEx they are none for pulling stuff  like that so he may end up paying it if was them sadly there asses and will lie to you ..that's a lot of cash they won't eat if it can't fixed other wise.

[notlist3d]

maybe the law changed i have never been charged sales buying imports maybe import taxes , i know i read some place they were trying to change that what state Arkansas sales tax some thing doesn't seem right but dealing with custom is a pain any way if the seller and or shipper mess up the order on the paper work then you eat it .according to that he bought it in Arkansas but if he bought it form bitmain direct  hows that poss it was a import right  ? . like i said the US was tiring to change that maybe they did for 2016 he being hit for it now i never really understood some of the stuff customs seems to do and try my best to not order out of the US .


it does say


Please provide a description of the items purchased, and any sales tax exemption that you think might be applicable. If the items purchased are not exempt, Arkansas Compensating Use Tax is due on the purchase.

Ive heard some bad story's about packages being marked wrong for custom even below 2500 .  SO GL i hope he fixes it .


Your right each state in the US has it's own sells tax unlike other places in the World.  guess hes luckly it wasn't one of them with a 8 % st


was trying to offer some possibility , i know that feeling of getting those kind of letters and you thought you had it all covered .

Most stories are coded wrong, and can be fixed after with carrier.   If he has to pay that is bad luck or bad error.   I can say I have not ordered to AR though.   But I would contact the company you shipped with as they likely are ones to report this.    Ask what it is coded as and check around board what others had in similar incidents.  As most I think got recoded and paid much less if any.

Only one I have had to pay was Bitmain shipped a PSU with a weight lower then actual weight.  I was charged the difference in price of shipping for a more heavy item.. which I found to be fair. 

I also am curious on what carrier he used.  Please add more to story OP.

I got a feeling that was FedEx they are none for pulling stuff  like that so he may end up paying it if was them sadly there asses and will lie to you ..that's a lot of cash they won't eat if it can't fixed other wise.

I wish OP would update and tell carrier as that will show some more to story.   I think stay away from FedEx seems to be common for a lot at this point.  I would like to know if it was code or value that got it escalated is second part I want to know.

As if it was value... likely people using that carrier will just do multiple orders.  If it's due to coding then not much you can do but try to get it fixed.

[SimCity]

I used fedex.

[notlist3d]

I used fedex.

I think that likely is cause of it.  I'm not sure process with it sounding like government.  But I would read past Fedex issues and I know there are multiple codes.  Call them with the codes and say it was coded wrong.

Assuming you can get Fedex to re-code it right show that to the government agency and hopefully makes it really small or none.

[jmumich]

maybe the law changed i have never been charged sales buying imports maybe import taxes , i know i read some place they were trying to change that what state Arkansas sales tax some thing doesn't seem right but dealing with custom is a pain any way if the seller and or shipper mess up the order on the paper work then you eat it .according to that he bought it in Arkansas but if he bought it form bitmain direct  hows that poss it was a import right  ? . like i said the US was tiring to change that maybe they did for 2016 he being hit for it now i never really understood some of the stuff customs seems to do and try my best to not order out of the US .

The issue is separate from any customs or import taxes. Most states that have a sales tax also have a "use tax" that requires residents of a state that purchase something from out-of-state to pay sales tax on the item. I don't think many people are aware of this - but it means that any time you order something from a company that doesn't have a physical presence in your state (and thus does not have to collect sales tax on behalf of your state), you still have to declare the cost of the item and pay your state's sales tax.

[notlist3d]

maybe the law changed i have never been charged sales buying imports maybe import taxes , i know i read some place they were trying to change that what state Arkansas sales tax some thing doesn't seem right but dealing with custom is a pain any way if the seller and or shipper mess up the order on the paper work then you eat it .according to that he bought it in Arkansas but if he bought it form bitmain direct  hows that poss it was a import right  ? . like i said the US was tiring to change that maybe they did for 2016 he being hit for it now i never really understood some of the stuff customs seems to do and try my best to not order out of the US .

The issue is separate from any customs or import taxes. Most states that have a sales tax also have a "use tax" that requires residents of a state that purchase something from out-of-state to pay sales tax on the item. I don't think many people are aware of this - but it means that any time you order something from a company that doesn't have a physical presence in your state (and thus does not have to collect sales tax on behalf of your state), you still have to declare the cost of the item and pay your state's sales tax.

Seems kinda opposite as my experience with online buying.  But maybe I have been lucky.  If I order from say amazon since they have a physical distribution center in my state I owe tax to them and pay it.   But if I choose a seller on amazon that has product and is not the official amazon item for sell I owe no taxes.

So seems kinda backwards from my amazon I use they never once ask for tax on out of state orders from 3rd parties, even if it's in their distribution center and prime.  As long as not amazon official... no tax so far.

Is this tax just in certain states?

[sidehack]

It's on you to report your purchases to the state's revenue department. Most people just ignore it.

[sloopy]

Many states have adopted new laws regarding sales tax.
I don't remember the document because I finished my taxes last week but I literally spent days, days, and more days total going through every tax code I could find and still worked with an accountant to make sure I did everything right.
There are some useful sites on the internet, and one phone call or email will answer this correctly.

One thing I found, and upthread someone mentioned is the code.

There is a code custom assigns, and then there is also a code assigned when you file taxes on say a sole proprietorship business.
The code 9999-BITCOIN_MINING will probably draw some attention because they are still trying to figure out what they are doing. In my thoughts, they are looking for big, medium, and small cases to run up the flagpole and get the system in place. It was only 2014 when they gave us the little bit we have regarding virtual currency and taxes. IMO mining is the worst because you owe tax on whatever the value is the second it is mined.

I did this the right way, or doing everything possible to do it the right way short of hiring a dedicated virtual currency attorney, of which there are a few, but they are not inexpensive, and I did not have anything so difficult I couldn't work it out.

Getting a letter like that from the state will also probably draw some attention.

In my opinion IF anyone has anything to be concerned about, don't screw with the IRS, either through the state or directly. I have another business, my MAIN business to be concerned with and the income there is far more than the amount of BTC I earned, which actually I showed a loss on bitcoin mining last year. This year I will show a profit and pay my taxes. It sucks, and most don't worry about it, and hey, if you don't have anything to risk and you are willing to roll the dice you are probably fine for several more years regarding cryptocurrency.

If you have important things to lose, and don't want to ever even consider an audit, much less jail time of magnificent fines, do things the way your city, county, state, and gubment set out.

I do not like doing it, but in my situation it is like insurance, and it isn't as though there aren't many ways to use the tax code to your advantage.

One last thing, don't buy more than 2,500 at a time unless you are doing a big enough deal to get a discount larger than the potential tax rate. Besides the fact depending on your state you will owe the money, it is a flag, albeit a small one.

Good luck, and consult a tax attorney. Not just someone at a tax place. You have attorney - client privilege with a licensed attorney. Anything else, is not confidential.

[SimCity]

so i just spoke with the tax auditor and she says i'd have to pay 9.5% sales tax which is probably gonna be $1,425. Dayum!!!! I explained to her it was a bitcoin mining machine and she says she is familiar with that... And also even for purchases is under 2,500 will still be taxed.

[fr4nkthetank]

Importing miners into Canada I had to pay 5% GST and was happy to do so. In much of Europe you will pay up to 20% value-added tax. It seems to me that your state (In the US obviously this will differ from state to state on what goods and how much tax is owed) has some kind of import/sales tax and your miners will almost certainly qualify, especially in an amount that would require $15,000 worth of tax!

It is up to you to determine what taxes may be applicable and what rate is applied in your state.

According to http://www.taxrates.com/state-rates/arkansas/ states that depending on municipality you may owe between 6.5% ($200,000 worth of miners!) and 11.25% ($180,000 worth of miners!) sales tax on imported items

Either way I'm impressed with that number being hosted in North America

Interesting side note: In Canada bitcoin generation is GST-exempt (receiving bitcoins by mining). Receiving fiat for bitcoin amounts to capital gain at a minimal tax rate, all for some very good reasons. However I determined that hosting services ie. hosting someone else's miners for a % or flat-rate fee would be GST applicable at 5%.

lucky you, my single antminer s7 cost me 15% tax in quebec i cry

[HagssFIN]

Well, nothing beats Finland's VAT 24% 

[JaredKaragen]

If they mark the slip in BTC for value;  doesnt it suddenly change the game as far as taxes go?   Kind of a funny thought.


But;  Id sucker up and pay the tax.  It's avoidable by not ordering in, or doing cash business.   Kinda sucks how the world works, and how they try and take every little bit of everything from you that they can.

[sidehack]

No business can operate without revenue, and that includes the government. Taxes on imports were the main funding for the US government for its first hundred years or so.