Sales Tax?? Out of State Purchase.

[kantuckid]

I bought a Kawasawki Mule when I still had a tobacco base, before they went out form the federal buyout program. I filed a legal tax exemption on the day of purchase from the dealer. UtV's are eligible in KY if they are a farm based use. Couple years later KY tax people sent me a bill for the taxes plus interest as they had audited that dealers files. I suspect people had been claiming ATV's which are not eligible for ag tax break. I had to pay as when I called the sate they read me the riot act, as in get a lawyer or pay.

 

[Threepoint]

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.

Kantuckid, no offense intended toward the dealer. I said "if he's just winking at the distinction of where delivery occurs..." He may or may not be. Arkansas is a "destination-based" state (as distinguished from "origin-based") when determining an obligation to collect state and local sales taxes. So, if the dealer were to deliver or ship a tractor to your address in KY, the point of delivery would be in KY, and he wouldn't collect AR sales tax. Nor would he be under any duty to collect KY sales (or "use") tax unless he has a tax nexus in KY.

If Arkansas were instead an "origin-based" state he may have to collect AR sales tax even when shipping to you out of state. No flexibility there.

So, perhaps when the dealer spoke with you, he had in mind some way to deliver the tractor to a destination out of state. Or maybe he was assuming that your intended use qualified for Arkansas' logging exemption. But if you were to walk into his dealership, stroke a check for a tractor, load it on your trailer in his lot and head home with it, it's pretty clear that the point of delivery and destination would be in Arkansas, regardless of how the transaction were papered.

 

[4570Man]

I bought a tractor ( Wisconsin ) and a trailer ( Kentucky ) out of state for the specific reason of no sales tax. I'm pretty sure we still have to pay sales tax on out of state vehicles.

 

[kantuckid]

Thanks for the expanded explanation Threepoint. I assume your "shot" is as good as your tax knowledge? HA! I priced a tractor in OH yesterday and felt the dealer there was "winking" at sales tax when he told me it was my concern on KY tax. I tried for another answer on the web and ended up with none, other than my already knowing that I can also "wink" or not. I've made many out of state purchases of wrecked motor vehicles and the tax on them is always collected when and if I were to either seek a title towards act of a license for road use or no tax paid as a title only action. farm tractors are just different animals.

 

[Rock Crawler]

I talked to a dealer in Ohio (Mayers Farm Equipment) a couple days ago and asked about out of state sales tax and he said that he would charge me HIS 7.25% sales tax rate... even though I live in Beaver County Pennsyltucky and have a 6% sales tax rate.

Then you have that YouTube dealer that sells free shipping and no tax to all 48 states.... That is a $1200 price savings assuming that PA does not catch me and charge me with fines and interest.