Tax Mistake

Anonymous Poster · Sep 11, 2002

Hello, I have been lurking this great forum for about a year and through your wonderful advise and knowledge, I am a very happy owner of a BX2200. Here is my problem, I purchased my tractor out of state to save on the sales taxes. Somehow, the Department of Revenue in my state found out about it and is now asking for the $1,000 in sales tax that I owe. Yes, I know that I am legally and morally responsible to pay this, but I sure would like to avoid it if at all possible. I thought that I covered all my bases by going to the other state and picked it up myself, no such luck. What I would like to know is HOW did they find out about it???? Since I financed through Kubota Credit, would they have reported it? Or was it me spouting off that I saved the taxes over the internet? I am hoping that if I make the State prove that I own it, then I might find out if they KNOW (Kubota Credit) that I have it or they THINK (Internet) that I have it. I am sure that I will have to pay up anyway. Any advice on this matter would be appreciated.
Thanks, Rookie

DUMBDOG · Sep 11, 2002

My guess is the mistake that you made is when you financed the tractor. Usually the creditor will protect themselves by filing some kind of financing statement on the collateral that is financed, in this case the tractor. This financing statement is called a ucc-1 or used to be anyway.

If you make them prove it, they could prove you into a big fine or worse for tax evasion.

Your best bet would have been is to pay cash or borrow the money against something else. However it is to late for this type of option.

So pay up, if you can afford the tractor you can afford the tax.

Egon · Sep 11, 2002

Best Pay up. It's easier in the long run than finding all your assets and bank accounts have been frozen by the Tax Department till all is settled and you still have to pay the original plus additional fines.

Egon

buppy69 · Sep 11, 2002

In NC, the state sales tax is 6 1/2%. If you use your tractor to farm with, it is only 2%.

Eugene

Gary_in_Indiana · Sep 11, 2002

I agree with the above. Pay the tax and be happy they don't fine you for evasion. If you "make them prove it" that could be what it takes for them to stop looking at this as an oversight on your part and start looking at it as a deliberate attempt to defraud. It could also sound like you're looking to learn how they found out about this so you can circumvent their taxes in the future. I wouldn't think you'd want the powers that be to look at you in that way.

BOTAMAN · Sep 11, 2002

Some states have agreements with each other that require out of state sales be reported to the sate in which the purchaser lives , then the revenue cabinet sends out a tax due notice . Also anytime you finance something there ia a lien filed against it to protect the lender in the event the borrower decides not to repay the loan . The lien is filed in the state in which the borrower lives , this also gives the state the opportunity
to discover your purchase and send out the tax request.

Soundguy · Sep 11, 2002

As buppy69 said below, you may be entitled to a tax break if you are using your tractor for farming.

I live in florida and have a small farm. A-1 land, horses - cows, livestock, etc. When I financed my tractor through new holland credit, that was one of hte questions.... is this going to be used to farm, etc. My sales tax was only 2.5%, not the regular 6% that my area would have been. That wasn't a cheat either... it is a legit tax break for agriculture. If you are farming, etc.. see if your state has some sort of ag tax break.. if so, see if you can pay the tax at the lower ag rate.

On the other hand.. if it is not ag related.. you may be out the thousand.

good luck

soundguy

rmorgan · Sep 11, 2002

They found out because of the UCC-1 financing statement filed with the State and reflecting Kubota's lien on the tractor. Kubota didn't "report it"--it simply protected its financial interest in the machinery. If the "farmer" in your screen name reflects to an attempt to run a for-profit business, you will be either sales tax-exempt (as here in Ohio) or entitled to a reduced sales tax rate. Otherwise, bite the bullet. With state revenues resembling a toboggan track, it's not surprising they're at your door!

Ledgemere Farm · Sep 11, 2002

I have often pondered this question myself. I asked a local JD dealer about (one with a shop in both ME and NH. He informed me that the State of Maine can go audit anyone's books in NH at any time. I agree that the UCC was probably a giveaway.
Anyway, this JD dealer also told me that if you do not pay the tax, you can be, as stated previously, cited for tax evasion. This is a federal offense, meaning that, if charged, you would lose your right to own firearms for one, and could even do some time.

BobT · Sep 11, 2002

It has been said here on TBN many times before, that out of state purchases do NOT "save the sales tax." Each state requires the individual tax payer to report such purchases and remit the "use tax" due on your annual state return.

Granted, a LOT of people do not pay these taxes. The state of NY actually sends agents with cameras to the malls just over the border in PA. They photograph the license plates of those visiting the PA malls, and send them notices that they should pay any taxes due.

<font color=blue>"This is a federal offense, meaning that, if charged, you would lose your right to own firearms for one, and could even do some time." </font color=blue>

However, being simply "charged" for such an offense would not result in anything. CONVICTION would be required before any penalty.

Also, the IRS has "threshold" amounts for criminal prosecution. I am not certain of the precise numbers (ask your CPA). But it is something like a total of $10,000 in taxes due and not paid for three consecutive years, before the IRS criminal division gets involved. Less than that amount, and it is considered a "mistake" or "taxpayer error."

Buyers need to be more aware (and "beware" of) this issue. It is YOUR responsibility, not the dealer. So, if you owe, and are not entitled to the "farm" exemptions, you probably ought to just pay up. It is likely that as tax revenues shrivel up, all states will become more aggressive in going after taxes like this.

What this will do to "quotes" for out of state purchases remains to be seen.