sales tax question

[mattman]

I was wondering what the rules are as far as having to pay sales tax on a new tractor from out of state? In Arkansas you have to pay sells tax on a new tractor but not a used one. The two closest states are TX and LA does anyone from either state know your states sales tax rules?? I have paid alot of sales tax on fourwheelers and used vehicles to feel bad about trying not to pay AR sales tax on a tractor. If you have a farm you don't have to pay sales tax but I don't have a farm. Sales tax adds up to another $1500 or so. That makes the tractor cost some more.

Thanks Matt

 

[mike5.56]

Unless you have to register with the state with some type of license for the tractor, how would they know? Besides if you have enough land and engage in farming activities, you should get some type of exemption from the state. I just got my exemption fron the state of TN for registering my property as part of the Greenbelt. It reduces the property taxes and exempts you from sales taxes on things you by to farm or maintain the land.

 

[mrutkaus]

I have read here I think that if you get a bank loan for the tractor, the bank reports the sale for tax purposes.

 

[SnowRidge]

Unless you have to register with the state with some type of license for the tractor, how would they know? Besides if you have enough land and engage in farming activities, you should get some type of exemption from the state. I just got my exemption fron the state of TN for registering my property as part of the Greenbelt. It reduces the property taxes and exempts you from sales taxes on things you by to farm or maintain the land.

You got a farm sales tax exemption just by putting your property in the greenbelt program?

 

[thatguy]

I have read here I think that if you get a bank loan for the tractor, the bank reports the sale for tax purposes.

From my understanding - IF you finance it thru the mfg they will also file a lien with the State Corportation Commision (at least that is what they call it here in VA) that will also trigger a review to see if you pay the sales tax..

In VA a few yrs back the Dept of Taxation did a desk audit of all exempt forms completed for tractor sales through Virginia dealerships.. The letter stated 'prove this was for actual agricultural use or pay the tax as indicated within this letter'. They collected quite a bit of sales tax this way, it seems that anyone with a yard would be willing to sign the exempt form to get out of the sales tax.

Brian

 

[LBrown59]

Unless you have to register with the state with some type of license for the tractor, how would they know? Besides if you have enough land and engage in farming activities, you should get some type of exemption from the state. I just got my exemption fron the state of TN for registering my property as part of the Greenbelt. It reduces the property taxes and exempts you from sales taxes on things you by to farm or maintain the land.

Must B nice.

 

[RBachman]

Not sure if you want to travel this far, but South Carolina has a $300 cap on vehicle taxes. Doesn't matter if it's a $20k tractor or a $400,000 Bently, $300 is all you pay. Nice huh? Of course they get you on property taxes, but only on vehicles that must be registered/tagged. Tractors are exempt. However, if you have a farm number, there is no state tax.

 

[mattman]

Well in Arkansas we pay sales tax on the full amount there is not a cap on the amount you pay. We also pay sales tax on used vehicles atvs boats etc, until whatever it sells falls below 2500 dollars. So the state gets extra tax money on used vehicles that have already had sales tax paid when it was bought new. Bill Clinton is who we have to thank for this in the state of Arkansas. We also pay personal property taxes on just about everything. Farm use is about the only way to get out of paying sales tax. I need a farm, I would have alot of stuff wrote up as farm use.

 

[greggh]

In Texas if it is for farm use, there are no taxes.

 

[mike5.56]

Yes, it's one of the items required to qualify. The application in section 9 states that the applicant must meet at least one of the folowing to qualify. The choices are:

1. the owner or lessee of ag land from which at least $1000 or more were produced or sold.
2.The business of providing for hire custom ag services for plowing planting etc.
3.The owner of the land that qualifies for taxation under the provisions of the Ag Forest and Open Space Land Act of 1976
4.Have a Fed income tax return that contains a schedule F or form 4835
5. Otherwise establish to the satisfaction of the Commissioner of Revenue that the individual is actively engaged in the business of producing and harvesting ag commodities.

I qualify under two of the criteria, 1 and 3, but only one is required.

 

[peterc38]

When I have a tractor question, I ask on TBN.

When I have a tax question, I ask my accountant.

 

[DavesTractor]

I was wondering what the rules are as far as having to pay sales tax on a new tractor from out of state? In Arkansas you have to pay sells tax on a new tractor but not a used one. The two closest states are TX and LA does anyone from either state know your states sales tax rules?? I have paid alot of sales tax on fourwheelers and used vehicles to feel bad about trying not to pay AR sales tax on a tractor. If you have a farm you don't have to pay sales tax but I don't have a farm. Sales tax adds up to another $1500 or so. That makes the tractor cost some more.

Thanks Matt

This comes up often. I can only speak for California, but if you buy a tractor out of state from a business and bring it in to California, you owe California Use Tax. Can you get away with not paying it sometimes? Sure you can, but it is tax evasion, not tax avoidance.

I'm all for not paying taxes I don't owe, but if you owe it, just pay it. You can argue that our tax dollars are wasted, etc., and I will agree, but one wrong does not justify another.

The farm tax deal is great if you can qualify. If I didn't already have a small farm (orchard) I think I'd plant one, if nothing else for the legitimate tax benefits.

 

[RedRiver]

In Mississippi you must file a Schedule F on your income tax showing that you have profit and loss. If you do this it's 1% tax on tractors and 3% on farm implements. You must have some sort of crop or livestock in order to be elgible for a Schedule F. We have an affadavit that the customer has to sign making them responsible.

If you get caught and you do not use it for agricultural use you must pay the original 7% tax, a 50% fraud penalty and 1% interest on every month since you originally purchased it til you pay the original taxes.

As far as buying out of state, I believe in MS in order to not pay MS sales tax you must have the tractor delivered out of state and file an interstate commerce form which I believe causes you to end up paying sales tax in whatever state you are taking the tractor. Sometimes it's cheaper to just pay the sales tax in neighboring states because they have lower tax rates.

 

[WH401]

I bought my JD in VA, but I live in Maryland and I didn't pay any sales tax.

 

[RedRiver]

When I have a tractor question, I ask on TBN.

When I have a tax question, I ask my accountant.

Agreed! It varies from state to state so this is probably the best advice.

 

[randy41]

I think most states use the point of delivery to determine taxability. Stuff delivered out of state is usually not taxed unless the seller has a place of business in that state. But if you go and pick the stuff up in the other state you will pay the tax.
I am a CPA and I recommend that you consult your tax advisor.

 

[DavesTractor]

I think most states use the point of delivery to determine taxability. Stuff delivered out of state is usually not taxed unless the seller has a place of business in that state. But if you go and pick the stuff up in the other state you will pay the tax.
I am a CPA and I recommend that you consult your tax advisor.

Good advice, but remember that just because the selling state does not require the seller to collect tax, does not mean that your state of residence and actual use of the tractor won't require that you pay tax.

 

[2manyrocks]

The way it is supposed to work in theory is that if you buy a tractor out of state (say its California from a California only dealer) and it is shipped to you in Arkansas, Tennessee is not supposed to collect sales tax because it is a transaction in interstate commerce and states aren't supposed to tax transactions in interstate commerce under the Federal Constitution. Otherwise, if you bought a product in California and had to pay state sales tax for every state the product passed through on its way to you in Arkansas, there would be a burden on interstate commerce.

Once the tractor comes to rest in Arkansas, then Arkansas rules apply to determine if its taxable to you.

I have no clue what the actual Arkansas sales tax rules are. My guess, and it's just a guess, is that Arkansas has a "use tax" which says you pay a tax on your use of the tractor you just bought unless there is an exemption. There may be a farm use exemption if you use the tractor in farming and meet the requirements of the exemption. Many times, the exemptions are very specific and vary narrow so that the state doesn't lose a lot of sales tax revenue to folks who buy tractors, but who aren't really engaged in farming.

The Arkansas Dept. of Revenue probably has a website with their specific tax rules.

In our state, I'd like to know how many times the state has collected tax on the same car when it was sold new and then when it was resold used. It's a tax and it's designed to raise revenue for the politicians to spend.

 

[jsborn]

Well in January this will be a moot point because most of us 90% according to some will not have to pay any taxes since we make less than $250,000. We will also be getting our wealth redistribution checks sometime in February so we can afford to by more toys ...i mean tools

 

[randy41]

Good advice, but remember that just because the selling state does not require the seller to collect tax, does not mean that your state of residence and actual use of the tractor won't require that you pay tax.

This is true but for most states it is voluntary to report and pay the tax so not many people actually follow through and pay it. Here in VA you are supposed to report it on your state income tax return. It is different for items like cars that need to be registered with DMV but with things like tractors or stuff you buy online it is purely voluntary.
I guess if your income tax return gets audited by the state and you are writing things off on your business or farm schedule then when the invoices are examined they could assess the unpaid sales tax.