What’s the deal with paying sales taxes if you live in a different state?
I seem to remember buying some expensive jewelry several years ago and having it shipped to my mother in my home town. Since she lived in a different state, I didn’t have pay sales tax… or something like that. I can’t remember for sure if that’s why I saved money.
The reason I’m asking… if this is true, I’m thinking of purchasing a car soon. If I purchase it in a different state, can I save on those taxes?
Almost certainly not. First as you’d be taking physical delivery of the car in the other state, you’d have to pay their sales tax. The exemption only applies for items shipped out of state and only if the company has no presence in the state they’re shipping to. Second, in no state I’ve lived in would you be allowed to register a new car that you’d just brought into the state without paying the state’s use tax which is at the same rate as the sales tax. You generally can bring in a car you’ve owned for some time without paying a tax.
Hmmm, Well now that you put it like that. 
That makes sense. Which is why you don’t hear of people doing that I suppose.
So much for me trying to get a 7% discount on a car.
It depends. Are you close to the state line? You may buy a sales taxable item, even a car, from a state that charges sales tax, as long as you take delivery in your home state. I live in Oregon (no sales tax) near the Washington (sales tax state) state line.
I have bought cars from dealerships in Washington and ‘taken delivery’ in Oregon. Register the car in Oregon where I live and all is good. When shopping across the Washington border most stores will ask if you are an Oregon resident and all you have to do is show valid OR. ID and you don’t have to pay sales tax. Show ID, no tax. It is part of a commerce agreement.
Food and gas and some other things are exempt. But for all other shopping I do in Wash. I do not have to pay the state sales tax.
http://dor.wa.gov/content/QuestionsAndAnswers/article.aspx?id=10015
OldGuy is right, as far as his post goes. But he assumes that all states have a sales tax, some still don’t.
If your home state and the state you buy the car in both charge sales tax, well, you are going to need to pay one of them tax.
I live in Oregon, one of the few states left that have no sales tax. The link posted above from the Wash state gov explains more.
It probably varies by state, but I looked into buying a car across state lines and wouldn’t have to pay a sales tax in the dealer’s state, but my home state would charge me an excise tax equivalent to the sales tax.
In Virginia, if you buy something out of state, even if you’re ordering a book on Amazon, you are expected to declare it and pay Virginia sales tax when you file your income tax return. Guess how many people actually do.
In New York, you’re supposed to pay sales tax to New York on items purchased out-of-state. New Jersey has long been a favorite place for New Yorkers to shop for clothes, as NJ does not charge sales tax on those items. The taxes on gasoline are also much lower on the western side of the Hudson.
About a decade or so ago, I recall some NY State government guy made noise in the papers about more aggressively investigating such violations by NY citizens. We New Yorkers raised our collective middle finger to this, and as far as I know, people who are scrupulous about this stupid law are few and far between.
Here in NH there’s a battle going on between NH businesses on the NH/MA border and the state of Massachusetts - MA has been trying to force our tire businesses to collect sales tax for them with plans to extend that to other high ticket items at other stores. cite
Websites are suppose to collect sales tax in states where they have a physical presence in. For example, if Apple has an Apple store in your state, you will pay sales tax if you buy something from the Apple website. If your state doesn’t have an Apple store (or a warehouse or office), you don’t have to pay sales tax.
Things have gotten interesting with Amazon and the State of New York. Amazon claims they have no official New York presence, and therefore don’t need to charge sales tax for New York. New York claims that their network of third party dealers are an Amazon presence, and thus Amazon needs to collect sales tax for New York sales.
Amazon claims that the third party dealers are independent agents and therefore, Amazon itself doesn’t have a New York presence. Both Amazon and the State agree that if you buy something from a third party vendor who has a presence in New York state, sales tax needs to be collected, and Amazon will charge sales tax. What Amazon doesn’t want to to is charge a sales tax when someone buys a book directly from Amazon itself.
Despite whether or not you are charged a sales tax, you are always suppose to pay use tax on products you buy out of state. Use tax is the sales tax rate in your state minus the sales tax you may have paid.
Most of the time, states don’t bother collecting use tax on small purchases. However, New York’s sales tax rate is 8% and they charge sales tax on clothing. In New Jersey Enterprise Zones, the sales tax is only 3 1/2% and New Jersey doesn’t charge sales tax on clothing. The Garden State Mall and Ikea are in one of these zones, and New York has threatened to start taking the license plate numbers of cars with New York license plates in order to collect the use tax. So far, that hasn’t happened yet.
holy crap. No sales tax? How does the state govt make money? Between no sales tax and you not being allowed to pump gas that seems like one crazy mixed up state.
I did! Once, when I’d bought $1500 worth of computer equipment via the internet. I figured the amount was big enough to be noticeable. It amused me to imagine the people in the tax office scratching their heads: “Someone paid use tax? We’re going to have to open a use tax account!”
Sales tax on a car is generally paid when you register it. In California, you can go to a lower sales tax county and buy your car. But you’re going to pay the respective county’s sales tax when you register it at an address in that county.
I admit that I didn’t always pay the use tax on mail-order purchases, but I’ve been doing so since they added a question about such purchases to the state income tax return form. At that point, I think that saying no even though I know I’ve bought stuff from Amazon.com amounts to perjury, since I have to sign my tax return.
Starting with the 2003 tax year they added a line on the NY State income tax forms where you’re supposed to indicate how much you owe in use taxes, then pay them with your income tax. They allow you to put a default amount, based on your taxable income. I would be curious to see statistics on how many people actually put an amount there other than 0 (or leaving it blank).
Yes, but if you notice your state income tax forms, they charge you for out-of-state taxes on Internet Purchases. You can either keep track of everything you bought online during the year, or pay the minimum amount. IIRC, you cannot legally claim no tax unless you can prove you made no Internet purchases.
Income tax!
Now the sweet deal is to live in Washington (no income tax) and shop in Oregon (no sales tax). I know people that live in Vancouver, WA for that specific reason.
With a car it usually works like this if you are buying it in a state with a lower sales tax:
You buy the car in one state and pay sales tax to that state. The DMV issues a transit permit. When you register the car in the state of your residence they collect the rest of the tax. You can’t avoid the tax of the state of your residence on an item like a car that has to be titled and licensed. The states have figured out that it is better to divvy up the spoils. Other stuff you can get away with although it is technically illegal.
Say you buy some expensive furniture from a store in one state and they are willing to deliver it to your house in another state. The store does not have to collect any sales tax if they can prove they delivered it out of state.
Technically most states (washington included) have use taxes which are supposed to be paid on merchandise imported from out of state. It’s not really a sweet deal, it’s a tax cheating deal. But I can deal with that.
In Chicago there is a law that requires “large purchase items” purchased by city residents outside of the city but brought back into the city for use, to pay the difference between Chicago and other sales tax.
For instance, if you bought a washer and it’s 10% tax in Chicago, if you went to the suburbs and got it for 5% tax, the consumer is supposed to voluntarily kick in and send the city the difference.
Of course no one does and every now and then Mayor Daley looks at ways to try to enforce that law. Like making the delivery people responsible for it? But there is no real way to enforce such things.
How on Earth do you prove that? Do you have to provide the state all your credit card and paypal records or something? MA has a minimum safe harbor amount as well, which IIRC assumes you spend something like 2-3% of your gross income on out of state purchases, which seems absurdly high.