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.

 

[MilersoPisa]

It's possible to avoid sales tax anyway, but there's a need to know all the states in a deal, laws, etc. That's so exhausting..and seems not right. Our government gonna tax almost every human activity because they like to control everything. It's a disaster for honest citizens who work, work and work to make this place better. I'm currently owning an online store, and I feel a lot of pressure from the tax agents and our "caring" government. But I'm still trying to evolve. For example, I've recently implemented deal tracking software to track my deals and necessary data. And my sales numbers have increased thanks to this software. Private developers have done more good for me than the government even could.

 

[Torvy]

It's possible to avoid sales tax anyway, but there's a need to know all the states in a deal, laws, etc. That's so exhausting..and seems not right.

It is not always 'not right'. Legislators put policies in place to encourage or discourage certain behaviors or practices. In Texas, agriculture is encouraged, so there is an available Ag exemption from sales tax. There are steps to take, but it is all above board. On the other hand, if you buy non-exempt items online from out of state and they don't collect sales tax, you still owe the state the 'use' tax.

I never quite understood the legal theory behind a state charging taxes across state lines. If I drive to OK and buy something at Wal-Mart (or wherever), I pay sales taxes to OK at checkout. If I bring those items back to Texas to use them, I don't have to pay again. If I buy online from Wal-Mart and (hypothetically) they didn't charge me sales tax, now I owe the state.

 

[paulfun9]

People trying to cheat the system is why honest people have to pay more.

No! Poor politicians and people who let the politicians waste our money is why honest folks have to pay more!

 

[bdhsfz6]

In some states, including mine, sales tax on major purchases is tax deductible and does not require itemizing deductions on your tax return.
Not as good as avoiding the tax altogether but it does help.

 

[Torvy]

In some states, including mine, sales tax on major purchases is tax deductible and does not require itemizing deductions on your tax return.
Not as good as avoiding the tax altogether but it does help.

I'll do you one better. My state and a handful of others doesn't tax your income along with the sales. So, in effect, compared to PA, 100% of my tax is deductible. PA sales tax is about 2% points less than TX, but TX income tax is 100% less than PA. This is on top of the fact that TX does not tax tractors for AG use.

 

[bdhsfz6]

I'll do you one better. My state and a handful of others doesn't tax your income along with the sales. So, in effect, compared to PA, 100% of my tax is deductible. PA sales tax is about 2% points less than TX, but TX income tax is 100% less than PA. This is on top of the fact that TX does not tax tractors for AG use.

In my next life, I'll reside in Texas!

 

[hornett22]

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.

This is how it was when I bought my motorcycle out of state.

 

[hornett22]

In my next life, I'll reside in Texas!

Most states don't tax them for ag use if you have ag exemption

 

[IndyJay]

No! Poor politicians and people who let the politicians waste our money is why honest folks have to pay more!

Muh... but what about "fair share"?

 

[finn1]

I'll do you one better. My state and a handful of others doesn't tax your income along with the sales. So, in effect, compared to PA, 100% of my tax is deductible. PA sales tax is about 2% points less than TX, but TX income tax is 100% less than PA. This is on top of the fact that TX does not tax tractors for AG use.

My FIL had a place in Texas. His message was that, when you look at all the taxes and use fees, it’s about a wash between Texas and his other home in Michigan.

When comparing, you can cherry pick to make one look better or worse, but all in, it takes money to support roadies, fire departments, police, water and sewer systems, and school systems.

States with low income taxes, for example, may have lousy public schools, meaning you have to pay for private schools.

It’s largely a wash.

Just saying...