Buying Advice Out of State Sales Tax Confusion

   / Out of State Sales Tax Confusion #1  

Johnkn

Platinum Member
Joined
Nov 2, 2014
Messages
589
Location
Laplata, MD
Tractor
Kubota LX3310
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
 
Last edited:
   / Out of State Sales Tax Confusion #2  
Yes, you have to pay sales tax. It's the law.

Now, paying it twice, that doesn't sound right.
 
   / Out of State Sales Tax Confusion #3  
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.
 
   / Out of State Sales Tax Confusion #4  
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!!
 
   / Out of State Sales Tax Confusion #5  
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.
 
   / Out of State Sales Tax Confusion
  • Thread Starter
#6  
Thanks guys, question answered.
 
   / Out of State Sales Tax Confusion #7  
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 $$
 
   / Out of State Sales Tax Confusion
  • Thread Starter
#8  
Hi, shipping is not an issue, I can take a trailer and pick it up. thanks
 
   / Out of State Sales Tax Confusion #9  
Consider delivery in Delaware with 0% sales tax.
 
   / Out of State Sales Tax Confusion #10  
There is no sales tax when using tractor for agriculture here.
 
 
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