Taxation woes

Hoping someone can provide me with some moral advice for an issue that is causing me so much frustration. I’m 21 years old, go to college, only work 6 weeks out of the year in the Summer and don’t get paid very much. I have recently learned about certain tax laws and rules in my home state from previous years where I didn’t pay these specific taxes because I simply didn’t know about them, all the while paying all the taxes I believed I had to pay. Now that tax day is approaching I’m wondering if I am morally obliged to remedy these past mistakes.

The tax I’m referring to is called a use tax, basically, because I ordered stuff online or bought stuff in other states and use it in my home state, my home state insists on me paying the use tax for simply using these items in my home state. I think I only would owe this tax for the past 3 (possibly 5) years, which under normal circumstances would cost me a whopping $24 total… if only it were that simple, but my state also charges me penalty and interest for simply not knowing about this obscure tax that very few seem to pay. So as it stands if I were to be forthcoming in a spirit of honesty and full disclosure I stand to be penalized and charged interest, and they are going to demand nearly $60 (and this is a conservative estimate depending on what I realize I need to report) rather than the $24. This may not seem like much, but to me it is a big deal with only a few hundred dollars in my account, and it seems totally unfair to me for the government to penalize me for not knowing their tax code in specificity.

I want to do the right thing, and I’ve been told tax evasion is a sin and theft, but at the same time I feel completely taken advantage of as a both a citizen and young person, when the state seems to be using what I believe to be my legitimate and understandable ignorance of the law as a way to take more money out of my pocket, when I don’t have much in my pockets anyway.

So I’m hoping for some sensible moral advice here, and maybe some big picture advice as well. I know we are supposed to obey just laws, but this just seems unjust to me, when the penalties and interest charged to me, will add up to more than what the tax was to begin with, punishing me because as an 18 year old (now 21) I didn’t know I had to pay such a tax.

That is a question for a tax accountant, tax attorney, or your state department of revenue’s question and answer hotline.

In many cases the state will entertain a request that the penalty for late payment be removed if the taxpayer voluntarily pays the tax and if the late payment was in good faith.

If you are certain you owe the tax, pay the tax. But there’s nothing wrong with asking for mercy regarding penalty and interest.

Get in touch with your state’s tax board, find out what forms you need and then file and pay the tax. If you owe interest and penalties they will let you know and if it is a burden to pay at once, they will most likely let you make payments. Do it this year, you are right, the longer you wait the more you will owe.

I too believe in paying taxes as a matter of justice. But I would like to make two points:

  1. the tax code is over 71,000 pages long. And that’s just the federal tax code. each state then has its own. If the government truly wanted the people to understand taxes, it would make it a lot simpler. the government has made us dependent upon our employers and professionals to make sure we are paying what we owe. if you bought things online from a company that has a physical presence anywhere in your state, you were probably charged tax (i live in a state with a similar tax to what you describe). the complexity of the tax code puts an unfair burden upon the individual, especially someone who is self-employed. it’s not just a matter of calling the state and paying a fee; you have to refile your taxes. you may find yourself having to pay a professional, at further cost.

  2. many may disagree with me, but just because a tax is present, doesn’t make it right. In my state, technically we need to pay taxes on secondhand goods. So if I buy something at a garage sale or on craigslist, the state is supposed to receive a tax on that. To me, while taxes are good, they shouldn’t present an unfair burden on the individual. To keep track of online purchases all year long, to me, sounds excessive and burdensome.

You didn’t intentionally deceive the state. If your conscience bothers you, why not give $24 to a food bank? Think of it as saving the state $24 in welfare aid.

I am impressed that this question is on your conscience. I agree with the response posted Caroline723

I have been through a very similar situation with the state use tax. Only in my case, I knew about it but didn’t pay it for years. I thought it was “ridiculous.” Well, I had a conversion experience 21 months ago, and last year and this year both I paid it. When I paid it last year though, I didn’t realize that you had to include shipping and handling in the total taxable amount. So this year I just added the shipping and handling that I should have paid last year onto the total I paid this year. (My CPA suggested this rather than amend last year’s return for such a small amount.) As for the years prior to that…I plan to make restitution by estimating the amount I owe and giving it to a school(s) as soon as a cd that I have matures in 2014. In your case, YOU DIDN’T KNOW it was the law. I’d say you are accountable for only the time when you KNEW. When you graduate and get a good job, give a generous amount to a school or library if you like. Those are two places where a lot of the tax dollars go anyway.

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