Sales Tax?? Out of State Purchase.

[Katahdin]

NH dealers are protected from collecting MA sales tax. Smells fishy to me.

http://www.newburyportnews.com/news...cle_9735f36d-6071-584e-9020-280a8837e5c6.html

 

[kantuckid]

Out of state tractor purchase sales tax question:
I am considering the purchase of a used farm tractor which was repossessed by the financial lender. The tractor is now in storage in Arkansas while I live in Kentucky. I am not eligible for an agricultural sales tax exemption in Kentucky. I called the tractor dealer where the tractor is in storage (over a year now) and talked with the dealership principal owner, he's long on experience too. He said that "if" the tractor was his (i.e., dealership owned) and "if" he sold it to me there would be no sales tax collected given that the tractor is used and headed out of state.
FWIW, and going a step further, I found that in Arkansas a tractor that's used off road for harvesting timber (my actual end use for it) the first $50,000 of cost is exempt from sales tax.
The financial company says they must charge me 6.5% + .5% + 2.5% in AR sales taxes plus city & county taxes= 9.5% taxes based on the tractor sitting where it now sits. Big chunk of money, ~$1,400, for this tightwad to swallow!
Currently I'm waiting on a final tax answer from the owner/seller.
Your thoughts...

 

[LS Tractor Owner]

Out of state tractor purchase sales tax question:
I am considering the purchase of a used farm tractor which was repossessed by the financial lender. The tractor is now in storage in Arkansas while I live in Kentucky. I am not eligible for an agricultural sales tax exemption in Kentucky. I called the tractor dealer where the tractor is in storage (over a year now) and talked with the dealership principal owner, he's long on experience too. He said that "if" the tractor was his (i.e., dealership owned) and "if" he sold it to me there would be no sales tax collected given that the tractor is used and headed out of state.
FWIW, and going a step further, I found that in Arkansas a tractor that's used off road for harvesting timber (my actual end use for it) the first $50,000 of cost is exempt from sales tax.
The financial company says they must charge me 6.5% + .5% + 2.5% in AR sales taxes plus city & county taxes= 9.5% taxes based on the tractor sitting where it now sits. Big chunk of money, ~$1,400, for this tightwad to swallow!
Currently I'm waiting on a final tax answer from the owner/seller.
Your thoughts...

I purchased a new tractor this year out of state. I did not pay any sales tax because the dealer did not do any business in my state. Not sure if it was because it was a new tractor or not. My son bought a car out of state and he had to pay 1/2 sales tax when he got it titled and registered here. Being that tractors are not titled, I don't think it applies.

 

[John Fitzgerald]

Out of state tractor purchase sales tax question:
I am considering the purchase of a used farm tractor which was repossessed by the financial lender. The tractor is now in storage in Arkansas while I live in Kentucky. I am not eligible for an agricultural sales tax exemption in Kentucky. I called the tractor dealer where the tractor is in storage (over a year now) and talked with the dealership principal owner, he's long on experience too. He said that "if" the tractor was his (i.e., dealership owned) and "if" he sold it to me there would be no sales tax collected given that the tractor is used and headed out of state.
FWIW, and going a step further, I found that in Arkansas a tractor that's used off road for harvesting timber (my actual end use for it) the first $50,000 of cost is exempt from sales tax.
The financial company says they must charge me 6.5% + .5% + 2.5% in AR sales taxes plus city & county taxes= 9.5% taxes based on the tractor sitting where it now sits. Big chunk of money, ~$1,400, for this tightwad to swallow!
Currently I'm waiting on a final tax answer from the owner/seller.
Your thoughts...

The financial company is not in the business of selling tractors. So, they are like an individual selling a used tractor. Individuals selling used farm equipment do not need to collect sales taxes here.

 

[kantuckid]

The taxes are road vehicles is a complete other subject, aside from the source, which is our pocket, as we all know. Many states have reciprocity with other states, kind of like speeding tickets, etc., and you may or may not pay out of state, then may or may not pay the difference in rates when you register. Too encourage/discourage across the border sales the dealers lobbies for various products work to keep business inside their state and protect profits.
Tractors are a different tax situation. As for this financial company not being in the business? They do have a website that has more tractors & equipment, ag & construction than is listed by most "dealers", so without actually knowing their business structures I see little way to really know an answer such as John Fitzgerald suggests. I was told their practice is to collect the taxes based on location of the equipment based on the paperwork. Honestly I'm not buying that as they do move these items around the country to promote the sale via various agents who sell out of storage lots & warehouses.
The no money down, zero interest "deals" that tractor manufacture's use for promotion lead to lots of deadbeat buyers. My local dealers said he's seen some situations that had a machine for a year or so and never made a payment. The pissy part is we all pay for that expense...
I'll know more later today but my plan is to hold out for the Arkansas dealers posture of no sales tax on a used tractor going out of state.
Another thing is the Arkansas agricultural production sales tax exemption form is written to cover instate agricultural producers, not someone who lives elsewhere! The financial company sent me a pdf of that form which I asked them why they felt it covered me as a KY buyer.
I just come out and say it- lawyers created this mess.

 

[Bremse]

Not sure about Kentucky but most states require you to pay sales tax on out of state purchases when you file your state tax return. Whether you report your purchases is another story. You might also be able to get a refund from the selling state if tax was collected 9.5% is probably more than what KY charges).
In most states dealers can sell without charging tax if you are out of state and pick up the machine (or arrange transportation independent of the dealer).

 

[kantuckid]

The out of state sales tax payment is an issue of our time. Sellers like ebay, Amazon and all the rest have made it tough on the states to collect as folks have moved away from box store buying. I have always done my own taxes since I was a young kid. Lets say I'm like most people on the sales tax thing...perhaps another story fits? HAA!
Yes, I can assure you Kentucky has a form to pay sales taxes (6%, except zero on food) on your purchases.
My situation (if I buy the repo tractor) is such that I'm tied to what the seller will do.
My 2nd choice tractor is an out of state private owner/seller and I'll pay zero tax to them.

 

[Threepoint]

Kantuckid, based on your comments, sounds like the finance company is, indeed, probably in the business of selling equipment. So they are simply using the "point of delivery" rule for determining whether to collect Arkansas sales tax. That's logical, since I gather you intend to pick the tractor up yourself in AR. The dealer that you mention should technically be using the same rule on all equipment delivered at his dealership (either to the buyer or the buyer's agent), even if bound for use out-of-state. He's taking a big risk with the AR revenuers if he's just winking at the distinction of where delivery occurs.

If, instead, the finance company (or that dealer, for that matter) were to ship the tractor to you in KY, they could legally avoid collecting either AR or KY tax. That assumes, of course, that they don't have a "tax nexus" in KY. If they do, they'd still have to collect KY sales tax, absent an ag exemption (which you say you don't qualify for).

But even if the finance company agreed to ship to KY, the markup in price to cover that expense might eat up most or all of the 3.5% tax-rate differential that you'd save. That's assuming you would self-declare and pay the 6% KY use tax when you file your state tax return. If you've waded through the old posts in this thread, you know that some do and some don't. And the risks vary with the circumstances and the jurisdictions. In this case, it is a big-ticket item and fairly easy to trace. The finance company and an established interstate carrier would not risk their businesses by not cooperating with the revenuers if they were to ask for sales and shipping records.

 

[kantuckid]

What information/law, etc., tells you the AR dealer is "winking" at the tax laws? The explanation he gave me was said to have been based on many years in the business. My thinking is how is the finance company different than the AR dealer? If they are basing the notion of me paying tax on a tractor in AR from their business office in another state, I fail to see the purpose of them collecting AR taxes from me.
Conversation: In today's Lexington, KY newspaper our political climber of an attorney general has won a $600,000 suit against a Versaille's KY car dealer who collected taxes from 2011-2016 yet failed to give the state their share. Of course the state had already told the car buyers they owed money and interest while this theft was going on for 5+ years. Go figure...

 

[MessickFarmEqu]

For what its worth. We are a PA only business, and are getting tax licenses in neighboring states. We also had an audit from CT. These sales tax games get more dangerous all the time for buyers and sellers. The potential costs are simply too high.