Sales tax question

[letthegoodpinesroll]

Might be a dumb question but my local dealer here in Idaho doesn't really have the Yanmar model that I am looking at so I have a quote from an out of state dealer (OK) and they are telling me I don't need to pay sales tax when I buy through them. Do I owe sales tax to the State of Idaho after I purchase this or is it really a $3,500 cost savings as the OK dealer claims?

 

[Diggin It]

You decide:

Use Tax

ISTC informs taxpayers about their obligations so everyone can pay their fair share of taxes, & enforces Idaho’s laws to ensure the fairness of the tax system.

tax.idaho.gov

 

[Midniteoyl]

Unless you have to register and transfer title on the tractor like you do cars, yes, you save on sale tax at the time of sale. Most states require that you report the purchase and pay the tax at tax time (Use Tax), like you are suppose to also do for *all* your out of state and online purchases, but nobody follows this..

 

[Str8 6]

Yes, you owe the tax. It's your responsibility to report your purchase and pay the appropriate sales tax in your home state. You may want to see if your state offers any tax programs for farm equipment that you may qualify for. This could reduce the tax rate drastically if so.

 

[arto98607]

Might be a dumb question but my local dealer here in Idaho doesn't really have the Yanmar model that I am looking at so I have a quote from an out of state dealer (OK) and they are telling me I don't need to pay sales tax when I buy through them. Do I owe sales tax to the State of Idaho after I purchase this or is it really a $3,500 cost savings as the OK dealer claims?

I bought a used tractor in 1996 and a used chipper two years later from the same dealership - paid cash for both, but had to show ID in order for them to be able to accept full payments in cash.

Here is a letter I received in 2005 from the same dealer.

I have no idea why they had to go through "mandatory audit" by a neighboring state but in any case, I went in and paid the use tax to my state and there were no questions asked.


Your mileage may differ....?

 

[plowhog]

they are telling me I don't need to pay sales tax when I buy through them.

More correctly, they are not required to COLLECT sales tax from you for an out of state sale. It is an important distinction. When they say "you don't need to pay sales tax," it really means "we don't have to collect it from you." It doesn't mean the tax obligation entirely vanishes.

If the dealer makes a sale within their home state, they are required to report it and collect sales tax from the buyer. If a dealer makes a sale outside their home state, they are (usually) no longer required to collect the sales tax on that.

But, it's not a free lunch. The out of state aspect merely transfers to tax reporting and payment obligation off the seller's shoulders and onto yours. Enter the new term "Use Tax." Your home state probably has a regulation requiring you to report an out of state purchase and pay Use Tax, which is usually almost identical to sales tax. Maybe so, maybe not. It varies by state.

It's true many buyers purchase out of state but never report the use tax they owe. So you have a choice-- comply with the law(s), or ignore that, be a tax cheat, and hope to save some money if it works out?

Finally, you really need to inspect the laws of each state, which is pretty simple to do. Many times, the responsibility for tax payment can get shifted not only by the location of the buyer and seller, but also where the unit is "picked up" or "delivered" to. Once you know the applicable tax laws, you can have the purchase contract defined as you want when it comes to delivery or any other issue that could affect what tax is owed, by who.

Earlier good advice was also to see if there is an ag exemption for your purchase. Good luck and my suggestion is to do good research first .... since individual state laws can vary.

 

[Midniteoyl]

I bought a used tractor in 1996 and a used chipper two years later from the same dealership - paid cash for both, but had to show ID in order for them to be able to accept full payments in cash.

Here is a letter I received in 2005 from the same dealer.

I have no idea why they had to go through "mandatory audit" by a neighboring state but in any case, I went in and paid the use tax to my state and there were no questions asked.


Your mileage may differ....?

Many adjoining states have rules and procedures in place for reporting big ticket sales to each other. In this case it seems that Washington was suing Oregon (or at least its dealerships and stores) for not following this. It's what happens when one state has a much higher tax than the other.

 

[Bill Guenthner]

Might be a dumb question but my local dealer here in Idaho doesn't really have the Yanmar model that I am looking at so I have a quote from an out of state dealer (OK) and they are telling me I don't need to pay sales tax when I buy through them. Do I owe sales tax to the State of Idaho after I purchase this or is it really a $3,500 cost savings as the OK dealer claims?

If someone owed you $3500 would you let it go or would you want to get paid. Now imagine the resources available to the state. I’d pay it.

 

[cathy liebchen]

If you can avoid or delay paying sales tax without detection it makes sense to do so. If the State inquires you can pay it then. In our case we are AG exempt so we never pay sales taxes

 

[arto98607]

Many adjoining states have rules and procedures in place for reporting big ticket sales to each other. In this case it seems that Washington was suing Oregon (or at least its dealerships and stores) for not following this. It's what happens when one state has a much higher tax than the other.

Yes that appears to be the case here.


WA: No state income tax, but has sales tax.
OR: No sales tax, but has income tax.