If you’ve purchased any high value, tangible, personal property overseas – items such as jewelry, antiques, furniture, artwork, and the like – and have had those items shipped back through Customs to be used in your U.S.-based home, you may have unwittingly subjected yourself to sales and use tax penalties.
As a result of an information-sharing agreement between U.S. states and Customs, many individuals who find themselves in this situation are now receiving state-issued assessment letters for back taxes owed…plus interest and penalties. States are now actively matching records relating to these sorts of transactions with Customs records and issuing tax assessments on these purchases, going back several years. In fact, though Untracht Early is aware of notices going back as far as 2013, there is no statute of limitations on how far back states are permitted to go when requesting back tax payments with respect to sales and use tax noncompliance.
In addition to the tax owed, the assessment letters also ask that interest on the original taxes not yet paid also be settled. For residents of Connecticut, tax deficiency interest amounts are set at 12% and, for New York, the rate is 14%.
Because state jurisdictions allow you to voluntarily disclosure purchases that may fall into this category, you should consider notifying your state taxation authorities to avoid further penalties for amounts that may already be considered delinquent in addition to at least partial mitigation of interest.
If you have questions about sales and use tax and how it pertains to you, please contact your Untracht Early advisor.