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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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I would like to purchase a historical art painting from an

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I would like to purchase a historical art painting from an art gallery in Canada and have it shipped to my home in Arizona. I understand that that Arizona monitors declared values on UPS and Fedex shipments and will charge the recipient a use tax, sales tax, priviledge tax or whatever they want to call it at the time. The tax is meant to be the equivalent of a sales tax if purchased in AZ. Can you advise the tax rate? Is art not considered to be used? This one has had several owners, I am sure. If this tax is indeed real, what do they do if one does not pay it? Can they assess penalties, confiscate, etc? What if I just bring it to AZ in my luggage? Seems like a very draconian tax law?
Thanks.

LEV :

Hi and welcome to Just Answer!


I understand that that Arizona monitors declared values on UPS and FedEx shipments and will charge the recipient a use tax, sales tax, privilege tax or whatever they want to call it at the time.


The Arizona transaction privilege tax is commonly referred to as a sales tax; however, the tax is on the privilege of doing business in Arizona and is not a true sales tax. Although the transaction privilege tax is usually passed on to the consumer, it is actually a tax on the vendor.
You are correct that all states are short of revenue and nowadays are more aggressive in their collection efforts.


The tax is meant to be the equivalent of a sales tax if purchased in AZ.


The state use tax rate is equal to the state transaction privilege tax rate. Any person who uses, stores or consumes any tangible personal property upon which tax has not been collected by a retailer shall pay use tax. An Arizona purchaser is liable for use tax on goods purchased from an out-of-state vendor that did not collect the use tax


Can you advise the tax rate?


TPT rates are based on your actual location. Please find current rates here - http://www.azdor.gov/Portals/0/TPTRates/201106.pdf


You may also use this online too – select your county or city - http://www.azdor.gov/Business/TransactionPrivilegeTax/TPTRates.aspx


Is art not considered to be used?


The art is a tangible property that you are going to use, store or consume in AZ. If you purchase it for resale – not for use – there will be different rules.


This one has had several owners, I am sure. If this tax is indeed real, what do they do if one does not pay it?


Two options – either AZ DOR would never learn that the TPT was not paid and it will remain uncollected or AZ DOR will send as a collection letter.


Can they assess penalties, confiscate, etc?


Yes – there will be penalties and interest for unpaid TPT. Yes – potentially AZ DOR may garnish your bank account, wages or other income, any property you own (even jointly) to satisfy the tax debt.


What if I just bring it to AZ in my luggage?


That will be a violation or the law. I may not say if the AZ DOR will find out about the violation or not – but there will not be statute of limitation for them to collect.


Seems like a very draconian tax law?


The tax law has never been fair. However TPT money is a large part of state and local budgets.
Sorry if you do not like the answer.
Let me know if you need any help or clarification.

Customer:

Then if my grandmother sends me a 100 year old quilt and puts an insurance value on the waybill, the AZ gov will come a knocking?

LEV :

I may not know how AZ DOR tracks unpaid taxes. You definitely may purchase and bring it to AZ in your luggage - that is not a violation. However - under the current law - you are required to report that purchase and pay the use tax. If you do not do that - that will be a violation of the tax law.
Many people do that and tax liability was never assessed. However some are gelling collection letters in years after the purchase.

Customer:

Wow! Thanks LEV, I accept your answer. No use shooting the messenger.

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