Sales tax on tractors

jcummins · Oct 15, 2013

When in Texas I was ag exempt...bought from dealer no sales tax.

Now it's different. The 36 acres I have is for enjoyment not work, and ag exempt isn't going to happen. BUT...is it not true since tractors are not titled/license/etc, if I bought a used tractor from a private owner, there would be no tax, but if bought from the dealer there would be?

murphy1244 · Oct 15, 2013

Depends on the State

jeff9366 · Oct 16, 2013

In principle you would be subject to USE TAX, which is the same tax rate as sales tax.

In practice I think you would get away without paying it.

GManBart · Oct 16, 2013

It depends on the state tax code. In some, purchasing a used item from a private party wouldn't be subject to a use tax (which typically mirrors state sales tax rates) and in others, it would. It seems most states now have a use tax for items purchased new, from a vendor in another state. It's likely that you wouldn't get caught, but it seems states are getting more aggressive about pursuing folks who skip paying use taxes on big ticket items. It's probably unlikely at this point, but I can envision scenarios where somebody makes an insurance claim for a stolen, or destroyed tractor (think fire, rolled, etc), and the next thing you know, the state revenue folks come calling....

Spindifferent · Oct 16, 2013

jcummins said:
When in Texas I was ag exempt...bought from dealer no sales tax.

Still true in Texas:

Sales Tax Exemption Requirement for Commercial Agriculture and Timber Operations - Get A Registration Number

tractchores · Oct 16, 2013

Many states want you to self report. For example if i buy a big item in nh (no sales tax) and live in ma (everthing is taxed) then i am suppossed to self report. I'm sure many do not.... If its titled or registered then they use that to enforce the tax. Of course many people are forgetful and don't self report...

jcummins · Oct 16, 2013

Pretty much as I was thinking. It IS a bit of change, and something to consider.

Piston · Oct 17, 2013

A lot of times you can buy out of state to avoid paying taxes. I know more than a few people who have done that.

GManBart · Oct 17, 2013

Piston said:
A lot of times you can buy out of state to avoid paying taxes. I know more than a few people who have done that.

Sure, lots of people have done it, but it's normally illegal....only a few states don't have sales tax, and/or the corresponding "use tax" for purchases made outside the state.

As states struggle with reduced tax revenue, they're looking for ways to replace it, and one of the obvious targets is to simply enforce what's already on the books, and go after taxes they should have been collecting all along. Just a month ago California passed a bill authorizing a new team of special tax prosecutors that focus on these exact type of situations. They're talking about data mining, and information sharing, so some of it could be automated, and just think of all the stuff we put out there on forums and social media sites! If they have any success it's not too hard to imagine that before long other states will follow...just depends on how much revenue they collect.