CNNMoney.com
Companies Economy International Corrections Pre-market Trading After-hours Trading Winners/Losers/Actives Bonds Currencies Commodities World Markets Money Magazine Real Estate Taxes Jobs Ask the Expert Money 101 Autos Mutual Funds The Help Desk Loan Center Best Places to Live Ask the Expert Ultimate Guide to Retirement Retirement Calculators Best Funds Best Places to Retire Fortune Brainstorm Tech Apple 2.0 Blog Big Tech Blog Sectors and Stocks Tech Talk Resource Guide Small Business Makeovers Questions & Answers Small Business Video 100 Best Places to Launch FSB 100 Fortune Small Business Fortune 500 Brainstorm Tech Investing Management C-Suite Rankings Main Create Portfolio Edit Portfolio Create Alerts Edit Alerts
U.S. CUSTOMS AS TAX INFORMER
By - Antony J. Michels

(FORTUNE Magazine) – Remember that $2,000 custom-made suit you brought back from your last trip to London? You filled out the declaration card on the plane and upon arrival paid the 7 1/2% duty to the U.S. Customs Service. But did you pay your home state the ''use tax'' due on the duds, the sales tax on items purchased out of state? Several states with sales taxes -- California, Connecticut, Illinois, and New York among them -- are working with the Customs authorities to improve their access to the department's declaration information. That way they can hunt down individuals and businesses that aren't paying the use tax. Says Verenda Smith of the Federation of Tax Administrators, a group of state tax agencies that is working with Customs: ''Now that states are in such desperate need for funds to provide vital services, the revenue agencies are really becoming creative in looking for unpaid taxes.'' New York State's tax department is one of the most aggressive in pursuing tax evaders. Agents used Customs records from John F. Kennedy Airport to find a woman who hadn't paid the 8 1/4% sales tax on $23,000 worth of clothing. She then volunteered that she'd also spent more than $5 million abroad on various artworks. Altogether, she had to pay $501,000 in taxes and interest. That single catch represented more than 50% of the $910,893 New York has collected in the year since it began using Customs data.