When I was in law school, I took a class in state and local taxation from Professor Richard Pomp. Although I don’t spend much of my professional life thinking about state taxes, I clearly remember one of the stories he told us.

A fur store in Manhattan, he told us, would ship empty boxes (or boxes filled with rocks or magazines) to an empty lot in New Jersey for customers. Why? Because nonresident purchasers didn’t have to pay New York sales tax if the purchase was shipped out of state.[fn1]

The New York Times provides more detail on the scheme: the furrier in question, Ben Thylan Furs Corporation, would allow customers to take the furs home without paying sales tax (and, with an average fur price of $8,700, the evasion of an 8.25% sales tax saved customers an average of $717.75 per fur). It would then ship a box filled with something else (or with nothing) to create a false record to back the out-of-state purchase. And, in 1985, Ben Thylan was indicted.  Continue reading “Every Old Scam is New Again” →