I’m so confused. Why don’t I have to pay state tax for an item I bought out of state? Am I supposed to pay my state tax when I get the item? Can I buy a car out of state and not pay state sales tax?
Every state has its own rules for sales tax.
As a general rule though you “should” be paying someone sales tax for everything you purchase for general use.
When you purchase something over the internet or in a catalog the company may not be required to charge you sales tax because they don’t have a location in your state. But, in most states you are suppose to file a form and pay the tax to your state. NC even has a line on the income tax return for people to report sales(use) tax at the end of the year. These rules have often been ignored, but the increase in internet sales has had the state governments looking for better ways to enforce them.
If you actually go out of state to purchase something sales tax is usually charged in the state of purchase. If there are any special rules for cars I am unaware of them. However, purchasing a car out of state won’t mean that you don’t have to register it and pay property tax in the state were it is kept.
The state only has authority to tax something if the sale takes place within the state. If you buy something mail order or on the Internet from a different state, then your end of the sale has taken place outside the state.
Some states require you to pay sales tax if you buy something from out of state, but unless it’s a big item it’s never enforced.
The answer to all of these is, it depends!
Here’s the case for Missouri, YMMV
Missouri sales taxes are not collected by merchants who have no business presence in the state. That means if you order from a catalog, or internet site not located in the state, they are not required to collect and remit the sales taxes. However, if the business has an office, store or other presence, such as a distribution hub in the state, thay are required to collect the taxes. In the last two or three years, Missouri has had a new form in the state income tax booklet. This form is for reporting, and paying state sales tax, on all out of state purchases totaling over $2000. These forms are religiously completed and files by all state taxpayers!
In the case of automobiles, sales taxes are collected when you obtain a title (registration) and obtain your licence plates.
Not a slaes tax, but Missouri has what is called a Personal Property Tax. This is a yearly tax based on the current value of your automobiles, boats, airplanes, farm equipment, etc.
http://www.nolo.com/encyclopedia/articles/ilaw/internet_tax.html
Here, this explains it better and in more general terms then I ever could.
Virginia has that for autos now, but they’re phasing it out. My 9-year-old car already is zeroed out for tax, and my other’s tax is about [sup]1[/sup]/[sub]4[/sub] of what it was 2 years ago.
I always thought it was unfair: if you have a crappy car that is probably dropping parts on the roadway and damaging it, you only pay a few dollars tax. But if you have a state-of-the-art new car with all its bolts in place and mega-safety features, you could pay a couple of thousand.
I thought that, until I had a $100 Blue Book valued car. Only $4.14 property tax that year. I had the pleasure of paying my tax (at the bank) all in pennies.
Virginia’s personal property tax on vehicles is a local tax, with different rates in each county. The phase-out is only for the first $20,000, if I’m not mistaken, and I believe the mechanism is a check from the state to the owner–local governments aren’t losing any revenue.
As to the OP, as Zumba The Cat notes, every state with a sales tax (AK, DE, MN, NH and OR do not have a sales tax) has a use tax (sometimes called the “compensating use tax”). Basically, if an item is taxable if purchased in your state, you buy it from any source without paying the tax (or pay at a lesser rate than your state’s rate), and you have possession of it in your state for use, you are legally liable for paying the tax (or the difference between the tax paid to another state and the tax you would owe if bought in your state).
Several states have a line on the income tax return for the use tax. Maine, and maybe others, force you under penalty of perjury to deny that you owe any use tax.
When I lived in Illinois and my Grandpa was getting rid of his car in Florida, he decided to give it to me. When I filled out the forms to get the title in my name, I had to pay slaes tax on the value of the car and not the purchase price.
In Mississippi, a person from the State Tax Commission comes around every so often to all businesses and goes thru the records to make sure all sales tax has been paid on items bought out of state. Each month, the business is supposed to file a form and pay the tax, but that only gets about 1/2 of the items. The tax is not on purchases of raw material, but on things like machine parts and other things used by the business.
If I remember correctly, it was just in the last year that the Supreme Court said that sales taxes don’t have to be collected on internet transactions.
The most recent Supreme Court case dealing with this issue is Quill v. North Dakota (Quill being the office supply company), from 1992. I don’t believe any similar issues have been before the Court since then.
Congress has, of course, enacted a moratorium on new sales taxes on Internet access, which I believe is due to expire in October. Several states with such taxes were grandfathered in, and the moratorium has no effect whatsoever on either current sales tax obligations of vendors or use tax obligations of consumers. Legislation of some sort will almost certainly be enacted this fall.
For those interested in the Internet angle (which is really just an extension of the long-standing catalog sales issue) and how this may be resolved, go to this site, which is the website of the Federation of Tax Administrators/National Conference of State Legislators effort at simplified sales tax systems.
**As to the OP, as Zumba The Cat notes, every state with a sales tax (AK, DE, MN, NH and OR do not have a sales tax) has a use tax (sometimes
called the “compensating use tax”). Basically, if an item is taxable if purchased in your state, you buy it from any source without paying the tax (or pay
at a lesser rate than your state’s rate), and you have possession of it in your state for use, you are legally liable for paying the tax (or the difference
between the tax paid to another state and the tax you would owe if bought in your state).
**
That would only be fair if you lived in the state with the tax at the time of purchase. For example, I bought a car when I lived in Oregon, with no sales tax, then moved to Massachusetts last year. In order to register my car, the bastards in MA made me pay 5% (900$!!!) of sales tax, even though I didnt even live in MA when I bought the car.
For a state founded in resistance to taxation without representation, this seems like a big screw. What value did MA provide to me to be able to charge a sales tax ?
http://www.joanhathaway.com/cPage/P4/NewcomerInformation12334.asp
I guess the six month rule is to keep someone from registering the car for only a few days in another state with the intent to avoid sales tax.
I had no idea that any state did that. But, I guess it makes sense. 5% can add up quickly and someone might be willing to deal with re-registering the car to save $1,000 on a $20,000 car.
Zumba Said:
**
Sales Tax on Automobiles:
If you move into Massachusetts within 6 months of purchasing a new or used car, you must pay either the full sales tax on the car or the
**
Ahh yes, it probably was within 6 months, now that I think of it. But I still have a problem seeing what MA did to deserve my $900. I recommend that nobody move to MA until this is resolved.
Thanks for looking it up…
Fair or not isn’t really the issue, now, is it? 
In many states the sales tax on cars (or motor vehicle excise tax, as it is in many states) is special fund revenue used for transportation purposes. In many if not most states, when you register a vehicle in a new state you have to pay regardless of how long ago you bought the car.
So in a state in which the revenue went into the Transportation Trust Fund or whatever they may call it, the answer to the question of “what did they provide you to be able to charge a tax” is the roads and maintenance thereof. Not that that’s a question governments feel compelled (or can be compelled, except at the ballot box) to answer.
Minnesota (MN) does have a sales tax. I think that you are thinking of Montana (MT).
You can find out just how big a morass this is if you live in an area which allows the application of local sales tax on top of the state tax. For instance, when I lived in Denver, I remember a lot of places like furniture stores being located in no sales tax municipalities so they could make that a point in their favor if you picked up the merchandise at the store. If you had it DELIVERED, you had to pay sales tax based on the delivery address - I was living in a suburb called Westminster at one point, and had some furniture delivered. The delivery guy said “Let’s see, this is Arvada, right?”. I said “No, Westminster.”. He winked and said “You just moved to Arvada.”, the point being that Westminster imposed a sizable local sales tax, whereas Arvada did not. Naughty, naughty.
The mess with online sales has actually existed for years with mail-order merchandise, of course. It just wasn’t enough volume for anybody to sort out who was to get what under what circumstances. With online volume picking up, something will eventually happen so that you can’t save sales tax by ordering online anymore, I’m sure of it.
Vehicles are large ticket items that would normally be easy to purchase out of state, and they have to be registered, so most states make special provisions to collect the tax. CA is next to no-sales-tax OR, and actually had a problem with people buying cars in OR, registering them in OR, and simply driving around in CA with the OR plates (illegal if you’re actually a CA resident). I’m not sure what features of the OR registration process made this feasible, and whether something changed to make it more difficult or CA just made dire enough threats to people that they generally stopped doing it.