Sales Tax On New Car | FerrariChat

Sales Tax On New Car

Discussion in '458 Italia/488/F8' started by Rossocorsa1, May 19, 2017.

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  1. Rossocorsa1

    Rossocorsa1 F1 Veteran

    May 14, 2017
    6,200
    At the risk of sounding very ignorant, I would appreciate some knowledge here. If you buy a brand new car from an out of state dealer but you are registering the car in another state, do you still need to pay state sales tax in the state where the car is purchased? Thank you.
     
  2. IPO1

    IPO1 F1 Rookie

    Dec 23, 2015
    3,575
    #2 IPO1, May 19, 2017
    Last edited: May 19, 2017
    No.

    You will pay taxes in the state where it's registered/titled at that states rate.

    And you better register it in the time frame required (in Texas within 30 days or you'll pay a 5% penalty on top of 6.25% tax).

    The fact you don't know this is kinda scary (or ignorant to use YOUR words).
     
    IloveGT likes this.
  3. tomc

    tomc Two Time F1 World Champ

    Apr 13, 2014
    25,865
    DFW, Texas
    Full Name:
    Tom C
    I paid Texas state sales tax for my car that I purchased in Connecticut.
    T
     
  4. Hoagers

    Hoagers Karting

    Dec 4, 2016
    166
    It depends on which state. I just purchased a car in Michigan had to pay their sales tax then the difference once i got back to California. When i bought one in Arkansas i paid only a few bucks for a temp tag to drive it back here then full tax upon returning home. You can goggle this question for whatever state you're getting it from
     
  5. frefan

    frefan F1 Veteran

    Apr 21, 2004
    7,370
    If you drive it off the lot you owe taxes in that state. If they deliver it to you then you pay taxes in your state. When you title/register it your DMV calculates what you owe based on your local tax minus what you already paid to another state (if any). So net net you'll always owe whatever state you register the vehicle, either some or all tax will be paid in your state, or split between 2 states or entirely in another state. At least that's how it works in kali.
     
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  6. 2006m5

    2006m5 Formula Junior

    Dec 19, 2008
    912
    huntingdon valley PA
    Yes to above .
     
  7. RayJohns

    RayJohns F1 Veteran
    Silver Subscribed

    May 21, 2006
    7,398
    West Coast
    Full Name:
    Ray
    Yeah Ferfan has the right idea. I bought my car in Texas, but had to pay taxes here in CA when I registered it. A lot of people register their cars in other states to try to beat the sales tax and there are plenty of law firms out there which make a business of doing that, but the states have gotten wise to that and that they're losing a lot of money, and so there are very harsh penalties involved if you are caught. And from what I understand they do audit the dealers to see what cars are being shipped where etc.

    When I bought my car in Texas and had it shipped out, I asked the dealer if I pay them sales tax or California and they explained that you could sort of pay it in either location but then California would charge you the difference because Texas taxes are lower or something to that effect. But I think the bottom line was because the car was transported and I was out of state they didn't normally charge me sales tax, but then like I say when I went to register the car I had to pay it here in California. I think there was a section where California asked me if I had already paid any taxes to another state when I went through the forms to register the car.

    Another thing when you buy out of state, at least here in California, you have to take the car down to the DMV and have them do an inspection to make sure it's 50 state smog legal. However that is only really just them looking to see if it has the sticker and nothing else, but you still have to take the car down there and wait in line for them to inspect it.

    You also have to get a smog certificate, but on the 458 I was surprised that it only involved connecting the OBDII connector and nothing else - so it literally only took five or 10 minutes to get the car smog checked.

    Anyway hope that helps a little bit.

    Ray
     
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  8. Rossocorsa1

    Rossocorsa1 F1 Veteran

    May 14, 2017
    6,200
    Thank you all for the feedback. Much appreciated.
     
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  9. tobewiser

    tobewiser Formula Junior

    Dec 23, 2015
    347
    Acworth, GA, USA
    I used to live in Sacramento, CA. CA emission certification, recurring annual registration and taxes, higher than average gas prices, etc. make it probably the worst. If my memory serves me correctly, I believe the dealer collects sales tax upon delivery, regardless of the intended state of final registration. I bought one of the last air-cooled 911's in late 1995 from a CA dealer in Sacramento and had to take delivery in Reno, NV just to avoid paying taxes twice when I registered the car in AZ where it had very similar laws as those in CA. AL and most of the midwestern States have very friendly laws.
     
  10. MME

    MME Formula Junior

    Jan 17, 2015
    272
    Dallas, TX
    Full Name:
    Marty
    My car was delivered to Dallas from Chicago in January. The sales order date was 12/29 and when I went to register it, it was more than 30 days from the sales date. Believe it or not, I showed them my iPhone picture dated 1/14 of the car coming off the truck and they reversed the penalty.
     
  11. IPO1

    IPO1 F1 Rookie

    Dec 23, 2015
    3,575
    You are correct, it is from the car entering Texas (you have 30 days).
     
  12. Hoagers

    Hoagers Karting

    Dec 4, 2016
    166
    You have several different scenarios - cars bought then shipped, cars bought then driven back to your state, each had its own protocol you should go to the DMV, revenue office, etc of whichever state you're purchasing the car from you see what their procedure requires (I called and spoke with each one to determine what they required when I got each car out of state). Btw - the $$$ I saved was rather substantial AND that more than paid for the wonderful roundtrip I took. Some wonder why of do such a thing others look at it with bewilderment but each time I saved many thousands
     
  13. Texas Forever

    Texas Forever Seven Time F1 World Champ
    Rossa Subscribed

    Apr 28, 2003
    75,395
    Texas!
    In Texas, as in most states, you will owe sales tax if you can't show you paid sales tax in another state. Unlike California, Texas doesn't require you to pay any difference.
     
  14. Petto

    Petto Rookie

    May 17, 2019
    7
    6530 Trask Terrace Alexandria, VA 22315
    Full Name:
    Petto


    Yes, interesting information
     
  15. DonJohnson

    DonJohnson Rookie

    Oct 30, 2020
    19
    Full Name:
    Don Johnson
    I live in Cali and register all my vehicles in Oregon, no sales tax and registration is $200 for 2 years. To pull this off I register the car in mine, and my fathers name, he is a permanent resident of Oregon. If you have family you trust living in low (or no) sales tax states this can be a good work around. Just register the vehicle as an or not an and to make selling the car easier down the road.

    Montana LLC is also a good way to avoid costly sales and property (luxury) taxes
     
  16. mkraft3003

    mkraft3003 Formula 3
    Silver Subscribed

    Aug 20, 2016
    1,679
    Tampa, Fl
    Also very illegal. I would caution against this as Rayjohns pointed out. If you are in a wreck or Need to make a claim the insurance company will investigate the loss. If they determine that you have a vehicle registered in Montana and it is has never been in Montana not only have you committed insurance fraud but they will turn you over for tax fraud. It is very easy to see where the vehicle has been driven, where it has been serviced and where it is stored. Not worth the risk to try and save a few dollars in my opinion.
     
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  17. Chizz

    Chizz Formula Junior
    Owner Rossa Subscribed

    May 21, 2017
    995
    Atlanta
    Absolutely true. I know that Georgia has really stepped up the monitoring of this. If you get caught the penalties are so severe you will wish that you hadn’t tried this. At the end of the day it is fraud. I hate paying taxes as much as anyone but the state does have to pay for the fabrication and maintenance of the roads that allow you to enjoy your car.
     
  18. DonJohnson

    DonJohnson Rookie

    Oct 30, 2020
    19
    Full Name:
    Don Johnson
    #18 DonJohnson, Apr 16, 2021
    Last edited: Apr 16, 2021

    I work directly with my Insurance broker on these policies and insure the vehicle in both states. Trust me I have this covered and had a total loss on a big dollar vehicle, no problem.

    I also have documentation that shows the vehicle was delivered to the state I register it in.
     
  19. DonJohnson

    DonJohnson Rookie

    Oct 30, 2020
    19
    Full Name:
    Don Johnson
    and....Its more then a few dollars..... I pay plenty in Cali state income tax, property tax and corp taxes, they get more then enough from me. I just cannot stomach sending $50k in sales, registration and luxury tax to the state every year when I buy a frickin toy.
     
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  20. Boots

    Boots Formula 3

    Jan 17, 2020
    1,663
    Canada
    Full Name:
    Jake
    Question for you Americans, as I’m Canadian and the way that registrations here work seem a bit different. In order for you to register a car in another State, do you need to have a drivers license that matches the State? IE, if you register a car in Montana do you need a Montana license? Or just proof that you have a company in said State?

    In Canada the way it works (which is ridiculous) is that the province you register the car to, you must have a valid drivers license in. For example, let’s say I operate my business and live in the province of Ontario (thus I have an Ontario drivers license), but I own a vacation home in British Columbia where I intend on using said car I am purchasing. In Canada, I can ONLY register a car in a province in which my drivers license is from. This means if I was in British Columbia, purchasing a car to use where my vacation property is, I would need to purchase the vehicle, ship or drive it across the country to Ontario where it can then be registered to my Ontario license, then ship or drive it all the way back to British Columbia. Ridiculous. I know. By the sounds of it, you guys in the States can register a car in any State as long as you own a “business” in said State? Is that correct? If so, I envy you guys!
     
  21. axlesofevil

    axlesofevil Formula 3
    Silver Subscribed

    Jan 14, 2012
    1,669
    San Diego, CA
    This is why the phrase "eat the rich" is a thing. You pay less in taxes and registration on your $200,000 Ferrari than someone with a $30,000 Camry because you have the means to do it.

    I say if you can afford the car you can afford to pay the state that builds and maintains the roads you drive on. That's just my $0.02 ¯\_(ツ)_/¯
     
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  22. axlesofevil

    axlesofevil Formula 3
    Silver Subscribed

    Jan 14, 2012
    1,669
    San Diego, CA
    California even has a website where citizens can report cars they think might be committing fraud. Every time I see a Ferrari with a MT license plate I get half an urge to report it. But I never will because I'm no narc. :p
     
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  23. James R

    James R Karting
    Owner Rossa Subscribed

    Jun 6, 2020
    102
    Missouri
    Full Name:
    James Richards
    Ok, I've got five minutes to burn and chime in on this...

    Our state (Missouri) had a loophole recently where if you bought a vehicle (new or used) from out of state, the state was not "legally" allowed to collect ANY sales tax on the car. So the state senate quickly resolved that problem and re-wrote the law to accommodate for this legal loophole that a Missouri judge exposed... Let's just say the dealers in the surrounding states loved this because Missouri residents were going across state borders to buy cars and literally save thousands of dollars on every car purchase (Toyota to Ferraris). The Missouri car dealers were UP IN ARMS over this and really lobbied hard to get this fixed fast (which as I mentioned they did).

    Anywho... I can only share my experience and your mileage may vary. I have purchased two supercars recently and paid my fair share of sales tax (ouch). Both cars were purchased from Dallas, TX dealers (Boardwalk Ferrari and McLaren Dallas). Boardwalk did what normally happens and did not charge me sales tax because I was out of state and Missouri REQUIRES you to pay sales tax in the state you are domiciled. There goes $15,000 for roads that I drive on with this car maybe 2,500 miles a year... Now to the McLaren - I purchased a 720s a couple months ago from Avondale in Dallas and THEY collected MISSOURI sales tax in the amount of $22,000 with my purchase, but then they sent that tax money to our state DMV for me and I then had to go pick up my plates. I guess this was a dealer concierge service or something.

    All this to say, every state may be a little different. I have heard of some states collecting their tax and then when you register your car, your state will then seek sales tax from the selling state and any difference from you. That's weird....

    Well, I spent more than five minutes on this reply and it's Friday afternoon. Out.
     
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  24. axlesofevil

    axlesofevil Formula 3
    Silver Subscribed

    Jan 14, 2012
    1,669
    San Diego, CA

    Yeah, some states have agreements with each other. I bought my car in Ohio and they collected sales tax at the time of sale. Then they sent that money to CA which showed as paid when I went to register.

    YMMV
     
  25. DonJohnson

    DonJohnson Rookie

    Oct 30, 2020
    19
    Full Name:
    Don Johnson
    Meanwhile that person with the $30k Camry pays virtually no state income tax meanwhile i pay over $300k a year in state income tax. Seams fair....

    Yea, seems fair to pay $50k in sales tax on a car that spends a max of 3-5k miles on the road over the 2 years I may own it vs a Camry that will see 200k miles on those same roads....
     

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