Avoiding Tax on New Tractor??

Curtis861 · May 23, 2006

I live in Texas. If I buy a new tractor from another state will I not have to pay any sales tax on the tractor? I called a dealer in Louisianna and was told that if I had a driver's license from Texas that there would be no tax. But when I return to Texas is there any entity that will want to collect. Uncle Sam usually gets his fair share.
I don't qualify for ag exemption in my county.

Curt

Curtis861 · May 23, 2006

I live in Texas. If I buy a new tractor from another state will I not have to pay any sales tax on the tractor? I called a dealer in Louisianna and was told that if I had a driver's license from Texas that there would be no tax. But when I return to Texas is there any entity that will want to collect. Uncle Sam usually gets his fair share.
I don't qualify for ag exemption in my county.

Curt

KiotiJohn · May 23, 2006

If you finaced the tractor, there will be a record in your state until the tractor is paid off. It will list your address and the holder of the loan. This is one way some states track tax avoiders down.

The dealer may have told you that he won't charge you any tax, but if you pick it up in his state rather than having it shipped to the out-of-state address, he's supposed to collect the sales tax on the spot.

He will have to fake a shipping order to get away with it. If he doesn't collect it, they'll come after you if it's found out, probably more than the dealer, although he will be in jeopardy.

Some states have laws that state that you have to pay use taxes on anything new your bring in from another state, some say you have to pay your state's rate of sales tax on them.

We've had a few posters relate horror tales of having gotten caught. Will you? who knows? But do you want to have to pay the tax as well as the fines/time?

John

KiotiJohn · May 23, 2006

If you finaced the tractor, there will be a record in your state until the tractor is paid off. It will list your address and the holder of the loan. This is one way some states track tax avoiders down.

The dealer may have told you that he won't charge you any tax, but if you pick it up in his state rather than having it shipped to the out-of-state address, he's supposed to collect the sales tax on the spot.

He will have to fake a shipping order to get away with it. If he doesn't collect it, they'll come after you if it's found out, probably more than the dealer, although he will be in jeopardy.

Some states have laws that state that you have to pay use taxes on anything new your bring in from another state, some say you have to pay your state's rate of sales tax on them.

We've had a few posters relate horror tales of having gotten caught. Will you? who knows? But do you want to have to pay the tax as well as the fines/time?

John

beenthere · May 23, 2006

Call the State and ask. If you don't owe state of TX the tax, then don't pay it. If you do owe the tax, it's only fair to "pay up", seems like to me.

Maybe it seems right that with all the illegal aliens from across the border breaking the law, that it is just the thing to nowdays. I don't agree. /forums/images/graemlins/wink.gif

beenthere · May 23, 2006

Call the State and ask. If you don't owe state of TX the tax, then don't pay it. If you do owe the tax, it's only fair to "pay up", seems like to me.

Maybe it seems right that with all the illegal aliens from across the border breaking the law, that it is just the thing to nowdays. I don't agree. /forums/images/graemlins/wink.gif

CarlGlas · May 24, 2006

The dealer should be aware that some goods are exempt from sales tax if they are used exclusively on a commercial farm or ranch in the production of agricultural products.

All that you need to do is complete an exemption certificate to purchase these items tax-free.

For more information, visit: Tax Exemptions for Agriculture

If it worked for me in Galveston County, it should work for you in your county.

CarlGlas · May 24, 2006

The dealer should be aware that some goods are exempt from sales tax if they are used exclusively on a commercial farm or ranch in the production of agricultural products.

All that you need to do is complete an exemption certificate to purchase these items tax-free.

For more information, visit: Tax Exemptions for Agriculture

If it worked for me in Galveston County, it should work for you in your county.

kossetx · May 24, 2006

Carl, He indicated he is not eligible for ag exempt here in tx. Thanks for that ag tax link though. Very helpful.

kossetx · May 24, 2006

Carl, He indicated he is not eligible for ag exempt here in tx. Thanks for that ag tax link though. Very helpful.

CarlGlas · May 24, 2006

I understood what he said but couldn't help but wonder if perhaps he has some incorrect information....

Does he know this for a fact or is the information he has confused with agricultural property tax exemption?

There are certain requirements that have to be met in order to receive the agricultural tax exemption on real property, such as having a certain amount of acreage, etc., but as far as I know, there is no special requirement for obtaining sales tax exemption for farm equipment used in the production of agriculture.

There is a difference and many times the two are confused.

CarlGlas · May 24, 2006

I understood what he said but couldn't help but wonder if perhaps he has some incorrect information....

Does he know this for a fact or is the information he has confused with agricultural property tax exemption?

There are certain requirements that have to be met in order to receive the agricultural tax exemption on real property, such as having a certain amount of acreage, etc., but as far as I know, there is no special requirement for obtaining sales tax exemption for farm equipment used in the production of agriculture.

There is a difference and many times the two are confused.

Highbeam · May 24, 2006

I could have driven south a few hours across the state line and saved 9% on a 15000$ purchase. I needed financing so I didn't do it. I do not want to get introuble trying to evade a tax.

If I was paying cash though, well, it would have been easier to get away with. I still make the run to Oregon to purchase big items like TVs. I have relatives that live in my state to avoid Oregon's income tax but cross the state line to buy everything sales tax free.

Imaging those folks buying 300,000$ motorhomes. /forums/images/graemlins/blush.gif

Highbeam · May 24, 2006

I could have driven south a few hours across the state line and saved 9% on a 15000$ purchase. I needed financing so I didn't do it. I do not want to get introuble trying to evade a tax.

If I was paying cash though, well, it would have been easier to get away with. I still make the run to Oregon to purchase big items like TVs. I have relatives that live in my state to avoid Oregon's income tax but cross the state line to buy everything sales tax free.

Imaging those folks buying 300,000$ motorhomes. /forums/images/graemlins/blush.gif

CarlGlas · May 24, 2006

There is a difference between evading taxes and avoiding taxes.

Al Capone went to prison for evading taxes.

Avoiding paying sales tax isn't against the law because if it were every business who operates over the Internet would be in trouble for not collecting sales tax.

CarlGlas · May 24, 2006

There is a difference between evading taxes and avoiding taxes.

Al Capone went to prison for evading taxes.

Avoiding paying sales tax isn't against the law because if it were every business who operates over the Internet would be in trouble for not collecting sales tax.

Bob_Skurka · May 24, 2006

( I do not want to get introuble trying to evade a tax. )

Joe, you said the magic word . . . evade. Anyone trying to avoid taxes should consult their accountant. Anyone trying to evade taxes should consult a good lawyer.

Be careful about buying across state lines in hopes of saving sales tax. You would still be liable for the sales tax in your home state. Many dealers will tell you that you can buy TAX FREE if they ship the tractor into your state. That is a 1/2 truth, you don't have to pay THEIR state tax, but you still owe YOUR state tax. If you finance the tractor it is very likely that you'd be getting an unexpected tax bill about a year or two after you take delivery of your tractor. If you don't finance, then you might get lucky. But in any case you'd be breaking the law.

Some states do not have sales tax, those states are not an issue! Some states have agricultural exclusions, if the tactor and user meet the criteria, then the tax is waved. But anyone crossing lines for the sole purpose of not paying the tax is very likely in violation of their state 'use' tax law, subject to payment, penalty and prosecution.

DISCLAIMER: I am not an accountant, financial planner or tax planner, however am regularly called as an expert witness in the midwest states to tesitfy on excise taxes, cross border tax evasion and similar topics. I've testified in several states on behalf of various organizations, and at the request of legistators. I've also been deposed as an expert witness in federal court trials for multinational corporations on related topics.

Bob_Skurka · May 24, 2006

( I do not want to get introuble trying to evade a tax. )

Joe, you said the magic word . . . evade. Anyone trying to avoid taxes should consult their accountant. Anyone trying to evade taxes should consult a good lawyer.

Be careful about buying across state lines in hopes of saving sales tax. You would still be liable for the sales tax in your home state. Many dealers will tell you that you can buy TAX FREE if they ship the tractor into your state. That is a 1/2 truth, you don't have to pay THEIR state tax, but you still owe YOUR state tax. If you finance the tractor it is very likely that you'd be getting an unexpected tax bill about a year or two after you take delivery of your tractor. If you don't finance, then you might get lucky. But in any case you'd be breaking the law.

Some states do not have sales tax, those states are not an issue! Some states have agricultural exclusions, if the tactor and user meet the criteria, then the tax is waved. But anyone crossing lines for the sole purpose of not paying the tax is very likely in violation of their state 'use' tax law, subject to payment, penalty and prosecution.

DISCLAIMER: I am not an accountant, financial planner or tax planner, however am regularly called as an expert witness in the midwest states to tesitfy on excise taxes, cross border tax evasion and similar topics. I've testified in several states on behalf of various organizations, and at the request of legistators. I've also been deposed as an expert witness in federal court trials for multinational corporations on related topics.

Bob_Skurka · May 24, 2006

Avoiding paying sales tax isn't against the law because if it were every business who operates over the Internet would be in trouble for not collecting sales tax. 

Actually Carl the burden does not fall on the out of state seller, it falls on the buyer. So with some rare exceptions, and with some exclusions for excise taxes, the seller is not the one who is going to get into trouble for this activity.

As for the difference between Avoidance and Evasion, it is often RAZOR thin.

Bob_Skurka · May 24, 2006

Avoiding paying sales tax isn't against the law because if it were every business who operates over the Internet would be in trouble for not collecting sales tax. 

Actually Carl the burden does not fall on the out of state seller, it falls on the buyer. So with some rare exceptions, and with some exclusions for excise taxes, the seller is not the one who is going to get into trouble for this activity.

As for the difference between Avoidance and Evasion, it is often RAZOR thin.