Receiving Good in Delaware (no sales tax)

[Philster]

I live in Delaware and all the goods I buy via phone/internet are free of taxes. They are shipped to my home address and I pay up front, usually on-line. A typical transaction for all of us; I’m sure. For me, no matter what I buy, it’s 0% sales tax.

I am having some **significant **engine work done on my boat, and the work is being done in NJ, home of 7% sales tax. I want the boat delivered to my door in Delaware when it is done.

I gave the tentative ‘ok’ for the work, but haven’t given the final order. When I do, I intend to ask them to remove the sales tax, given that I am receiving the product in Delaware, c/o their delivery service.

What says the SDMB? Am I correct? Should I not be paying sales tax?

[ExcitedIdiot]

In Massachusetts you are supposed to be paying tax on all of those transactions. There is a line on your income tax return for out of state purchases.

I have no idea what the deal is in Delaware, but I’d imagine it’s the same.

[Gary_T]

I would think that New Jersey law applies here.

[Dewey_Finn]

@ExcitedIdiot

In Massachusetts you are supposed to be paying tax on all of those transactions. There is a line on your income tax return for out of state purchases.

I have no idea what the deal is in Delaware, but I’d imagine it’s the same.

Delaware has no sales tax for individuals, so no, it’s not the same.

[Philster]

Delaware has no sales tax.

When I order something on-line that is made in North Carolina, such as furniture, I pay 0% sales tax when it is delivered.

When I lived in NJ, and I bought furniture in tax-free DE by standing in the DE showroom, they collected sales tax as soon as I indicated delivery to NJ.

If I receive the boat in DE, despite the efforts by the seller in NJ, I view like anything else: No sales tax. I need to convince the engine builder of this (if I am right).

.

[UltraVires]

Seems to me like it is a service that you are paying for. A service which is performed in NJ and taxable at 7%.

[Philster]

How is that different than having some other good built in another state and delivered to Delaware?

I can order up a custom door from a company in NJ, where they build and stain it and deliver it to DE. I would pay 0% in sales tax.

[Dallas_Jones]

I live in Oregon which has no sales tax. When I shop across the river in Washington where there is a sales tax I show my drivers license and the clerk records the number and I am not charged sales tax.

I bought my current car in Washington and signed a document saying that I took delivery in Oregon, and paid no tax. Technically they were supposed to have driven it across the river into Oregon for me but we didn’t bother.

Your laws in Delaware may be similar or not.

To quote the Washington Law:

The tax levied by RCW 82.08.020 does not apply to sales to nonresidents of this state of tangible personal property, digital goods, and digital codes, when such property is for use outside this state, and the purchaser (a) is a bona fide resident of a state…snip… that does not impose a retail sales tax…

[Dallas_Jones]

The answers you seek may be here, there are a long list of FAQs:

http://www.salestaxinstitute.com/resources/faq

When making a sale, do you collect tax for the state that you are located in or the state where the customer is located?

You collect the tax for the state where the property is delivered to your customer. If the item is shipped to the customer, then tax applies for the delivery state. You should collect the tax only if you are registered to collect tax in that state. If the customer picks up the item at your location, tax should be collected for your state

[needscoffee]

Nobody lives in Delaware. It’s just a dummy address for banks and credit card companies.

[UltraVires]

@Philster

How is that different than having some other good built in another state and delivered to Delaware?

I can order up a custom door from a company in NJ, where they build and stain it and deliver it to DE. I would pay 0% in sales tax.

Because the primary item you are buying is the door, which is a good. Here, the primary thing you are contracting for is service on your engine, which is (hence the name) a service.

The distinction doesn’t usually matter because most states tax both goods and services. Some, like Florida, has no sales tax on services, but they do on goods so I became astute at what is and what was a service.

I’m certainly not a NJ Sales Tax lawyer, but I can’t imagine them saying that work performed on your boat engine in NJ is really just a contract for a good (an upgraded engine) that can be shipped to DE. If you take the definition that far then EVERYTHING is a good and nothing is a service.

Hell, I could say that a haircut is a good because I am paying for a well-groomed head instead of my previous shaggy looking head.

[Philster]

Ok, I am having an engine built and delivered to my home. It will be in my boat when delivered, but the good I am buying – an engine – is being delivered to DE. I would say the cost to remove and replace is a service that is taxable, but the good is not.

The engine is over 90% of the cost. I don’t think it is wrong to pay tax only to remove and replace engines.

[UltraVires]

@Philster

Ok, I am having an engine built and delivered to my home. It will be in my boat when delivered, but the good I am buying – an engine – is being delivered to DE. I would say the cost to remove and replace is a service that is taxable, but the good is not.

The engine is over 90% of the cost. I don’t think it is wrong to pay tax only to remove and replace engines.

But if I understand your OP correctly, you are not “having an engine built.” You are having your existing engine repaired/upgraded. That is a service. And the service will be performed in NJ at the mechanic’s.

I hope that you are right. I would like to screw the tax man as much as anyone else, but I just don’t see this one working out the right way for you.