I think it makes perfect sense that people from the same city or hold where you stole the item would be aware such item is stolen (at least unique and valuable stuff), even if no one saw you stealing it. I mean, if I had something valuable stolen from me I would immediately notify authorities. But I don't think merchants from other holds would know that, and that would justify getting rid of the 'stolen item' tags...

[blockquote][b][url=/profile/sarahlannister]Sarah Lannister[/url] said:[/b]

I think it makes perfect sense that people from the same city or hold where you stole the item would be aware such item is stolen (at least unique and valuable stuff), even if no one saw you stealing it. I mean, if I had something valuable stolen from me I would immediately notify authorities. But I don't think merchants from other holds would know that, and that would justify getting rid of the 'stolen item' tags...

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Especially given that there's a quest in Skyrim that explicitly says that authorities in each Hold have little to no contact with each other. Definitely seems reasonable to me.