Sales Tax?? Out of State Purchase.

[Threepoint]

Most states, though not all, have a use tax equal to the in-state sales tax. Someone earlier supplied the link to PA's use tax info for the OP. Big ticket items like tractors and other expensive heavy equipment and machinery shipped in from out of state are very high on the radar for state revenuers who's job it is to be on the lookout for tax evasion. Just think about how much revenue it can mean over the course of a year on a state-wide basis. Small stuff delivered by Fed Ex, UPS or USPS is very difficult to track, but not heavy equipment and machinery. Interstate trucking companies cooperate with the authorities by providing copies of shipping invoices, manifests or summary schedules with the relevant information as to items delivered and declared value. Many established equipment vendors in neighboring jurisdictions who deliver the equipment themselves rather that ship via interstate carrier likewise provide copies of sales invoices or summary schedules on request, and it is often routinely requested. Regardless of whether you think it's fair or not to have to pay use tax, if a tractor is delivered to you "tax free" from out of state, especially if it is bought from an established dealer, and if you're not eligible for an ag or other exemption, I'd say there is a high probability that your state revenuers will eventually come knocking for the tax plus penalties and interest. That can add up to pain over a couple of years. HEC's experience is uncommon only in that his penalties were waived. With state budgets so strapped these days, best not to count on that! So, we can debate all day whether it's fair or not to have to pay use/sales tax, but if you owe it and decide not to, and the purchase is a high value one delivered by an interstate trucking company or by a dealer in a neighboring state that regularly delivers to your state, you are running a very big risk. :2cents:

 

[GManBart]

And if you're being all "I pay my taxes". Have you ever sold a used car and paid the tax on that "gain"? I didn't think so.

Who makes money selling a used car? They generally depreciate, so you lose money. Besides, sellers don't pay tax, buyers do.

 

[cford36]

What's not fair is paying sales tax on a used tractor that already was paid when new.

If it works the same as cars you might not. I traded my truck in and was given the tax credit for the trade in value they gave me. Like the dealership said you already paid tax on that amount. Obviously won't work with private sales, at least not that I am aware of. But again I have never looked into it.

 

[bigcut]

It would appear, that the only way to possibly sidestep the tax, is to pick the unit up on a private basis, like using your own trailer.

Unless there is some how a paper trail, thru the dealer that would eventually lead the revenuers to your doorstep.

 

[sixdogs]

HEC Really? I always wondered if they ever track down big ticket items.

I am one of the three :laughing: Mainers who pays out of state sales tax as estimated on the Maine revenue tax return.

tcreeley does your town tax personal property? They don't here. I've never paid property tax on my tractor, just the normal sales tax when I bought it in state.

Dave--About 20 years ago, Maine used to have State Troopers watch the New Hampshire liquor stores to catch Mainers buying cheap and state tax free liquor. Then they would tail them as they came over the border and catch them as they drove into their yard. There was a huge public outcry and I think the program got canned.

 

[davesl708]

I live in Kansas. Bought a boat titled in Missouri and was going to use it in a lake that is both in Missouri and Arkansas. The tax to title the boat was $500. If I register the boat in Kansas it is $5 per year. Since the boat will be based in Arkansas the registration is $5 per year.
No brainer to register in AR or KS as to MO. Why the previous owner titled the boat in MO when he kept it in AR I do not know. He could have saved a lot of tax money.

KS has a use tax as well. Don't know of anyone who files the returns for it.

It is getting a little ridiculous that the gov has to make money on everything you do.

 

[blackdog2086]

Who makes money selling a used car? They generally depreciate, so you lose money. Besides, sellers don't pay tax, buyers do.

Who makes money selling a used car? The state does, that's who. Say you buy a car for $50,000 and pay your 6% tax. Then a year later you sell it for $35,000 and the new buyer pays 6% on that. A year later he sells it for $25,000, and the new owner pay 6% on that. Theoretically, the state collects taxes on $110,000. What a load of crap.

An item should only be taxed on the original purchase, but that would kill all the extra cash the state makes, as well as deter people from buying new instead of used. I'm from Michigan too, and they sure aren't spending that money to fix the roads.

And your statement about just filling out a form to avoid taxes when you purchase equipment for Ag use isn't completely correct. If you don't have a tax I.D. # to back that up, you might be getting a bill from the state at some point.

 

[bdog]

Thinking about purchasing a tractor from one of two out of state dealers. Both dealers claim that there is no sales tax if they deliver out of state. I live in Pennsylvania. How "should" this purchase be handled?

What are you using the tractor for? In most states you can get an ag exemption and not pay taxes on the tractor regardless of where you purchased it. This assumes of course it is for ag use.

If you buy anything (non ag exempt) out of state you are supposed to report it to your home state and pay taxes on it. In most cases the purchase doesn't get reported anywhere so you are on your own to report it.

Some people get all high and mighty when it comes to paying out of state taxes on a big ticket item like a tractor or ATV but I bet these same people order smaller things from the internet out of state and don't pay taxes on them.

I hate sales taxes especially taxes on used items as I think it is wrong but I pay them. In fact I paid more in sales taxes in 2014 than I earned in any year prior to 2005. Still makes me mad when I think about it.

 

[GManBart]

Who makes money selling a used car? The state does, that's who.


And your statement about just filling out a form to avoid taxes when you purchase equipment for Ag use isn't completely correct. If you don't have a tax I.D. # to back that up, you might be getting a bill from the state at some point.

My comment was whether someone selling their used car makes money...had nothing to do with what the government does. The overwhelming majority of the time you lose money when you sell a used vehicle, so there is no "gain" as the previous commenter suggested.

Michigan clearly states there is no such thing as an "agricultural tax exempt number/ID" but many people are confused about that. The only thing required, and even possible, when purchasing equipment is to file the tax exempt form with the dealer. MSU has a good summary page with links to state forms, etc.

Michigan sales tax and farm exemption | MSU Extension

 

[DB Pilot]

1733 Molasses Act
1764 Sugar Act
1765 Stamp Act
1767 Townshend Act
1773 Tea Tax
1776 Revolutionary War

All of these taxes were just a few pence and they fought a war for Independence over it. I wonder why? :confused3: I am sure that there were many Tories who told them they were wrong and should do the right thing. Every tax is enacted with good intentions, which is the path to :devil:.
As a patriot I am still recommending you buy the tractor, listen to your dealer and you will be fine. :thumbsup: And through the years as you pay the fuel, parts, repairs, and implement protection money (I mean taxes) you and the state should be even. :stirthepot: