Buying Advice Out of State Sales Tax Confusion

[Johnkn]

I'm ready to purchase another new tractor from a dealer in PA, I live 150 miles away in MD. We are relatively close on pricing, but I'm now told that if I pick the tractor up there (which I'm ready to do) , I have to pay PA sales tax (even through I'm a MD resident). They further state that If they deliver it to me (~$800) then I have to pay MD sales tax. Does that sound right? has something changed recently?

If I pick the tractor up in PA and pay their sales tax, I may also be liable for my own state's tax when reporting my 2020 Fed/state taxes and effectively pay 2x the sales tax.

I've purchased many vehicles, tractors, etc. out of state, and worst case on a 'registered/tagged' vehicle they collect MD sales tax and remit on my behalf to my state. Best case, on an item that is not 'registered', they collect zero tax.

??

thanks

 

[RSR]

Yes, you have to pay sales tax. It's the law.

Now, paying it twice, that doesn't sound right.

 

[RSR]

Sales and Use Tax Information

Scroll down to "Frequently asked questions about sales and use tax", then, "Out-of-state purchase FAQ's", then, "What if I pay sales tax to another state?

It reads:


What if I pay sales tax to another state?

Maryland grants a credit for sales tax paid to another state up to the amount of Maryland's six (6%) percent sales and use tax liability.

For example, if you paid a four (4%) percent sales tax to another state, you would be liable only for the difference, or two (2%) percent Maryland sales and use tax when you brought the property into Maryland. If you paid a six (6) or higher percent sales tax to another state, you would not be liable for Maryland sales and use tax when you brought the property into Maryland.

So, yes, you have to pay tax, no you don't have to pay double. If PA sales tax is over 6%, and you pay it, you don't owe Maryland anything. If you pay PA less than 6%, then you owe Maryland the difference between 6% and what you actually paid in tax to PA.

 

[Maxify55]

I've negated many a deal over out of state taxation.
It just burns me.
I get to pay for some other states' mismanagement of revenues and their wanton desire to take some of yours to prove to their constituents that they "STILL" don't have enough money.
Just say NO.
I buy lots of equipment from out of state for that very reason.
God Bless America!!

 

[Diggin It]

but I'm now told that if I pick the tractor up there (which I'm ready to do) , I have to pay PA sales tax (even through I'm a MD resident). They further state that If they deliver it to me (~$800) then I have to pay MD sales tax. Does that sound right?

Yes. In addition to Post #3, it's all about point of transfer. If you go to PA and take possession there, you pay PA tax (and maybe some MD tax). If they bring it to you and you take possession in MD, you only pay MD tax. Keep in mind that you may also have to pay tax on the $800 delivery charge if you do it that way. Many states now are applying sales taxes to services, such as delivery.

 

[Johnkn]

Thanks guys, question answered.

 

[newbury]

Do they offer to deliver it as part of a larger shipment?
Barlow used to do that and it would significantly lower the delivery cost.
So you may have to wait until others are ordered but save $$

 

[Johnkn]

Hi, shipping is not an issue, I can take a trailer and pick it up. thanks

 

[nate57]

Consider delivery in Delaware with 0% sales tax.

 

[lman]

There is no sales tax when using tractor for agriculture here.

 

[ultrarunner]

Oregon residents when buying in WA state without paying WA sales tax...

 

[Motorboatin]

When I bought my tractor I lived in Illinois and purchased it in WI. In Wisconsin you don’t pay any tax if you state it’s being used for farming

Illinois never asked and I never told. That state stole enough of my money over the years so I didn’t feel obliged to pony up more

 

[coldsteelva]

You really have to work out the math. Would the $800 fee be less than the PA tax? If you paid the delivery fee and they delivered it to you in MD, they would not collect tax. YOU would be responsible for telling the state of MD that you purchased this equipment and dutifully remitting the use tax to them. How many people do the honest thing? Because the borders of PA/MD/VA/WV are so close, it doesn't take much to purchase 'over the border' and have items delivered to you. Unless you tell them, how would MD even know this purchase was made?

If this was a business purchase, that's a different story.

 

[fruitcakesa]

When I bought my M used, in state, the dealer asked if I had a tax exemption. I said yes, he took my word for it and then delivered it for free.

 

[crazyal]

Just keep in mind that if you are thinking about not paying sales tax in your state is if you finance the tractor then there's a record of where it's located and who owns it. As more and more states are looking for money they certainly could have state workers pouring over the leans on things like tractors to see who didn't pay and if they are exempt.

 

[oosik]

I live in WA and have a state sales tax exemption card for my business. It allows me to by-pass state sales tax on anything purchased and directly used in my business. The idea being - I will charge state sales tax on anything I sell from my business. The state will get their $$$$ in this manner.

I seriously considered utilizing this feature when buying my Kubota and various implements. However, upon reflection - I didn't want to get sideways with the state tax dept and have a long running battle on this issue. I bit the bullet and paid state sales tax on everything.

Am I a weenie, woosh - perhaps on this matter. But consider this - the state has a whole lot more money to fight a potential suit, in court, than I ever will.

Besides - I'd rather go with the flow than have to paddle upstream in this area.

 

[PILOON]

In Canada a few years back it was popular to ship bricks out of province so that a merchant could prove 'out of state sales', registered post naturally, for the proof of 'out of state' delivery. Not having a place of business in the other province you could not collect. They created a uniform hospital tax to close that gap'

What many did not know was that selling USA made goods sold back to the USA from Canada was eligible for tax refund based on invoice value. Was valid for used goods. You quoted 'USA goods returned to country of origin'.
It was great for Gov't surplus electronics as it was all USA made and the used market was in the US.

 

[RSR]

Deleted

 

[JJZ 109]

I purchased a new tilt bed trailer in PA. I'm a NY resident and did not pay PA sales tax. Had I registered it in NY I would have paid sales tax then. But I put Maine plates on it and did not pay sales tax there either.
I also purchased a Kubota BX 2380 from Kentucky. No Kentucky sales tax for an out of state resident.

 

[JethroB]

I live in WA and have a state sales tax exemption card for my business. It allows me to by-pass state sales tax on anything purchased and directly used in my business. The idea being - I will charge state sales tax on anything I sell from my business. The state will get their $$$$ in this manner.

I seriously considered utilizing this feature when buying my Kubota and various implements. However, upon reflection - I didn't want to get sideways with the state tax dept and have a long running battle on this issue. I bit the bullet and paid state sales tax on everything.

Am I a weenie, woosh - perhaps on this matter. But consider this - the state has a whole lot more money to fight a potential suit, in court, than I ever will.

Besides - I'd rather go with the flow than have to paddle upstream in this area.

Likely a good decision on your part being a business owner. I have been directly involved with several sales and use tax audits in two states over the last 25 years. You do not want to get on their radar as they can make life miserable for you and your pocketbook. Tax regulations are a minefield. Auditors would camp out for 2-3 weeks.