How to Avoid Sales Tax on Jewelry in USA

Anil Gupta  4 May, 18      0  Finance

Avoid Sales tax on Jewelry by purchasing from out of state gold shop and then ship. Use tax is due in your state but no tracking is done for small and medium purchases. Can pay in cash to avoid tracking, is any. Buy gold bars, engagement ring, diamonds from New Jersey and ship it your home address outside NJ/NY.


Avoid sales tax on Jewelry by ordering online from a shop that does not have presence in your own state in USA.

Sales tax on Jewelry is a big addition to the overall cost if you are buying Gold for Marriage from a hub like New Jersey or New York (NY).

Avoid sales tax on Jewelry

You can avoid paying the 6%+ sales tax if you are okay with getting the ornaments shipped to you out of state at your home or business address.

The law says that the Jewelry shop is NOT required to collect sales tax on the out of state purchases, if they do not have a registered business in your package’s destination state.

Hence, you can use this trick to completely avoid paying the sales tax.

For example
You avoid sales tax on diamonds by buying it from New Jersey and shipping it to Massachusetts residence or business address.
You don’t pay sales tax either to New Jersey or Massachusetts in this case.

Related: How Jewelers make Money by selling Gold Ornaments at market rate in India?

Many of the jewelry stores sell online and charge no sales tax on Amazon.com too.

Avoid Sales Tax gold buying in USA
Avoid Sales Tax gold buying in USA

Buy Engagement Ring from a Zero Sales tax State

There are 7 states in USA that do not charge SALES TAX. Isn’t it un-believable? Yes, it is.

Delaware, Montana, Oregon and New Hampshire have a policy of not adding burden of sales tax on consumers.

If you are living in these states, you are already lucky. If you are shopping in these states, you can expect to pay no sales tax on your engagement ring.

Note: These days, state governments are trying to make it mandatory for online retailers to charge sales tax on out-of-state sales too. We will update once it happens.

Use tax – for out of state purchases

Even though your residential state may not know if you paid sales tax on a purchase you made out of state, most of them have concept of ‘Use Tax‘ that makes you liable to pay it.

The Use Tax rate is mostly same as sales tax rate in your State.

Although, it is required to paid with your state tax return filing at the end of year in good faith, there really is no tracking done that we know of.

Also, if you paid in cash for your outside-the-state purchase, there is no tracking possible whatsoever.

Example:
From our earlier example, you don’t pay sales tax but you still have to pay the MA use tax.

The use tax applies because the diamonds were not subject to a sales tax in the other state and because it’s for use in Massachusetts. Unlike for the sales tax, the buyer generally pays the use tax directly to Massachusetts.