Buying Advice Out of State Sales Tax Confusion

[Industrial Toys]

 

[MHarryE]

States have many sales tax laws making it difficult to navigate. Minnesota does not tax ag purchases so I sign a document verified by my DL number and I don't have to pay. I buy a lot in Wisconsin and have filed paperwork with many dealers there. North Dakota has never questioned - if it looks ag, they don't even have me sign paperwork. Fleet Farm is a discount chain in Minnesota and Wisconsin that sells a little farm and a lot of lawn, garden, and toys. I have a tax exempt account at any store and it is always a surprise as to what they consider ag and what isn't. Vet wrap for horses and cattle was once ag exempt until athletes began using it instead of bandage from pharmacies so they tax it. The only tractor that was a no, can't exempt sales tax, was a Kubota GR2120. However, my tax man had me measure lawn vs equipment storage area and depreciated the percentage used to clear equipment storage. Of even more strange rules - I need to pay sales tax on road tax exempt diesel fuel. The sales tax makes the price higher than on road fuel so I buy on-highway fuel which includes road taxes, state and federal, but I believe no sales tax. One caveat - I file IRS form F for farming which may be a requirement for purchasing ag equipment without paying sales tax in the midwest states I frequent.

 

[arto98607]

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

Pick one of those up in Oregon - no state sales tax

PS. Make sure you pay cash and not give the dealer name & address. I wish you good luck with that!

 

[RickB]

You won't get warranty coverage without providing a name and address, the dealer can't register the machine with the manufacturer.

 

[cathy liebchen]

Alabama, no sales tax if you list out of state address even if you pick up in state. Alabama Kubota dealers are the lowest prices in the US

 

[Diggin It]

Alabama, no sales tax if you list out of state address even if you pick up in state.

That would be intentional tax fraud.

Consumers Use Tax - Alabama Department of Revenue​

Consumers Use Tax
The consumers use tax is imposed on tangible personal property brought into Alabama for storage, use, or consumption in the state when the seller did not collect seller's use tax on the sale of the property.

 

[cathy liebchen]

That would be intentional tax fraud.

Consumers Use Tax - Alabama Department of Revenue​

Consumers Use Tax
The consumers use tax is imposed on tangible personal property brought into Alabama for storage, use, or consumption in the state when the seller did not collect seller's use tax on the sale of the property.

Not if you are buying in Alabama and taking out of state. We are ag exempt so it’s not an issue for us

 

[Torvy]

Lots to digest here...avoiding unreasonable taxation is a founding principle of the US, can hardly find too much fault in that...

Spent a lot of my life making auto and small business loans...UCC filings are a thing, but not required. That is up to the bank and it's underwriters. The problem with UCC filings is often getting previous lenders to clear them up. Some banks are notorious for this. I will avoid used tractors for this reason...I no longer have access to the cool research tools...

In the US, most of this stuff is state law, crossing state lines makes it confusing. With auto, some dealerships that do a brisk business with out of state customers can get the ok to file title and registration in other states...lots of variables there.

You could argue that a state must honor the AG exemption of another state...same principle that makes marriages honored across state lines. The Court would just need a test case. Getting AG ok in Texas is not too hard...the county tax assessor is a harder nut to crack for property tax reduction.

 

[bdhsfz6]

I live in PA. but worked in NJ where I maintained a business address. When I bought my first Kubota in 1979, the dealer agreed to use the NJ address to avoid sales tax. The law at the time (and maybe still is) states the equipment must be DELIVERED out of state to avoid the sales tax. The dealer took a chance and let me pick up the machine locally. Those days are long gone.

 

[LS Tractor Owner]

These laws change frequently, varying state to state. When I bought my first tractor out of state in Colorado, there was no problem with 'no sales tax', even though I picked it up there.
When I bought my next tractor, again out of state, the dealer in Texas collected New Mexico sales tax, even though he was delivering it to me 'out of state'.
Apparently, NM and Texas have a collaborative policy to collect sales tax either direction. There is no agreement in place between NM and Colorado. I'm not sure of our other neighboring states.