Taxes and visiting tailors

[josepidal]

Quick questions from a friend. He wants to catch Ambrosi the next time he passes through New York and he understands that the price is a flat $1,000 plus sales tax.

1) Is the Ambrosi price a flat $1,000 per pair of trousers? Is that also the price in Naples?

2) My friend is assuming the $1,000 includes VAT in Italy. If so, isn't it right that he not pay any New York sales tax as he assumes it is correct for him to pay sales tax or VAT in only one country?

 

[pebblegrain]

Originally Posted by josepidal

Quick questions from a friend. He wants to catch Ambrosi the next time he passes through New York and he understands that the price is a flat $1,000 plus sales tax.

1) Is the Ambrosi price a flat $1,000 per pair of trousers? Is that also the price in Naples?

2) My friend is assuming the $1,000 includes VAT in Italy. If so, isn't it right that he not pay any New York sales tax as he assumes it is correct for him to pay sales tax or VAT in only one country?

Great to hear from you again, pidal!

1: Ambrosi, believe it or not, does not use US currency in Italy. The nerve.

2: $1000 per pant *leg* (so $3k for me!). You really shouldn't be spending that much if you have to quibble over legalities.

 

[Jay Gatsby]

Good thing there's no children starving in Africa or anything like that...

 

[Sam Hober]

What an interesting question.

I am not involved with the world of taxation on a daily basis but someone else who is may add more up to date information - meanwhile:


Typically if someone in the USA sells with a physical presence then nexus is established and sales tax is owed. So yes, sales tax is owed in New York in your example.

I do not shop in Naples so I do not know what the price is there - you should ask the seller directly.

I have looked at a number of UK websites and they tend to state prices with VAT and then note that VAT will be subtracted if shipped outside the taxing area. I buy silk from silk mills in England and they do not charge VAT but I pay VAT and customs duty here in Thailand.

Most likely VAT is not included in the $1,000 and the New York tax on top of the $1,000 sales price is correct. Again check with the seller to confirm and a New York state tax accountant.

If I sell to New York I do not charge sales tax as I am not located there although typically states will have a users tax exactly equal to sales tax which the buyer is supposed to pay voluntarily. State revenue departments will go after those who evade sales tax on big ticket items like planes aggressively.

If I did have a physical presence in New York I would charge sales tax regardless of the VAT that I paid in Thailand, as there no connection between the two.

 

[josepidal]

Thanks David. I had similar thoughts, but from my basic understanding of US tax law, I thought there might be a problem if the items are also priced at $1,000 (or less) in Italy or in the EU. From my limited knowledge based on Edward Green sales, they state prices inclusive of VAT (so Edward Green lowers the price for US buyers then charges shipping). So, I thought my friend might be charged for both Italy VAT and US sales tax, whether or not VAT is actually paid in Italy.

 

[Sam Hober]

Originally Posted by josepidal

Thanks David. I had similar thoughts, but from my basic understanding of US tax law, I thought there might be a problem if the items are also priced at $1,000 (or less) in Italy or in the EU. From my limited knowledge based on Edward Green sales, they state prices inclusive of VAT (so Edward Green lowers the price for US buyers then charges shipping). So, I thought my friend might be charged for both Italy VAT and US sales tax, whether or not VAT is actually paid in Italy.

No problem with US sales tax which actually is typically not a US sales tax but a state tax with slightly different rules for each state or city or county tax. I do not live in New York, but I seem to recall someone posting about a possible exemption from sales tax in New York for clothing - but I am not sure - hopefully a New Yorker with recent experience will post.

SALT (State & Local) practices are becoming more interesting and important.

If your friend is charged for Italian VAT and it was not paid - we start to drift from a sales tax question to shall we diplomatically say an operations issue....

 

[alliswell]

There's no sales tax exemption for clothes in NYC anymore.

For a face to face transaction like this, a tailor is charging you what he wants. If you want to bargain with him, good luck. Arguing his cost structure will have limited success.

 

[medtech_expat]

Originally Posted by alliswell

For a face to face transaction like this, a tailor is charging you what he wants. If you want to bargain with him, good luck. Arguing his cost structure will have limited success.

+1

I suspect that the sales tax goes directly back to Naples...

 

[Sam Hober]

Originally Posted by alliswell

There's no sales tax exemption for clothes in NYC anymore.....
Thank you for the update. I have also heard (a long time ago) that in Ireland artists and writers do not pay income tax - I wonder if artisanal tailors would get the exemption and pass it along to their clients.

 

[josepidal]

Originally Posted by Sam Hober

If your friend is charged for Italian VAT and it was not paid - we start to drift from a sales tax question to shall we diplomatically say an operations issue....
I think this is in fact the issue and not an intellectual discussion of use taxes in a mobile age.

Just to close this off, does anyone know how much Ambrosi charges? Couldn't find it anywhere on the forum.