buying car from tax free state

Posted on 2012-04-06
Medium Priority
Last Modified: 2012-04-10
is it a possibility or trend that people will go to a tax free state to get a new car..

for example.. Washington customers going to Oregon to buy a car.. or is the prices jacked up in those places , so the end prices will be the same?
Question by:25112
LVL 27

Assisted Solution

David-Howard earned 400 total points
ID: 37817836
I had a friend who did just exactly this. I beleive he went to Idaho. Either way, he saved almost $3000 on taxes alone for the same make and model as advertised in WA state.
(This was years ago though)
At this point WA has put a stop to this.
This explains it further and is from WA.
LVL 84

Expert Comment

by:Dave Baldwin
ID: 37817857
In California, you have to make sure that the car meets California Smog requirements which are different than other states.
LVL 81

Assisted Solution

arnold earned 400 total points
ID: 37817873
It depends on what they saved on.  At times, when you register the vehicle you pay the state sales tax on the price of car.  It is possible that the lack of taxes in one state may reduce the pre tax cost of the vehicle such that a car of make X model Y will cost in state a $12000 while the same one will cost in state B $9,000. taxes saved would be on the 3000 in price difference and the 3000 the user did not spend.
What is the cost of going to the other state and looking for a car or having the car transported from the other state to you?
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LVL 34

Assisted Solution

masnrock earned 400 total points
ID: 37818029
That's already a trend. People buy cars in a neighboring state with lower taxes and in some cases drag out for as long as possible registering the car in their home state. Happens here all the time (this state taxes hits residence with personal property taxes every year for their cars), so people will go to nearby states to buy cars. But the question is comes down to how much you value your time, etc.

Author Comment

ID: 37820442
here is the scenario.. let's say a new car is $20k.. tax is 10% so you pay $22k in all. your neighboring state is tax free - so if you buy it for 20k in your closeby state and then come to your home and register it, you saved $2000 for your trip down, right?
LVL 84

Assisted Solution

by:Dave Baldwin
Dave Baldwin earned 400 total points
ID: 37820480
Only if your state does not have laws preventing you from doing that.  Apparently some states will charge the sales tax when you register your car.  And if you buy a new car that does not meet California smog regulations, you can't register it at all.  Check your state laws first.  Almost all this stuff is online at the DMV for your state.
LVL 20

Accepted Solution

n2fc earned 400 total points
ID: 37821145
Sales tax on cars is collected differently in the US than other commodities!

On most other commodities sales tax is collected at the point of sale using the local rate...

On cars, however, the sales tax is collected when/where the car is registered/licensed/titled!

It really doesn't matter WHERE it is purchased... rather where it is ultimately registered!

Most people buy where they live, so car dealers do the registration and collect/submit the sales tax all at the same time... If purchasing out-of-state, the dealer will give the customer the paperwork to register the car back at his home state (where the tax will be paid) and charge a fee for "transport plates" to allow the vehicle to be transported back to the home state of the buyer.

Author Comment

ID: 37830810
got it-tnks

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