One of the beauties of our constitution is that Congress originally delegated almost all taxing functions (outside of customs duties) to the states. In 1787, there were only 13 states, now there are 50, and of course, there are 50 different state tax laws.

Most states that impose a sales tax have some system to tax the value of a purchase or lease of an automobile purchased out of state. Generally, if you purchase a vehicle in a state where you are not a resident, you should not pay that state's sales tax. You should pay the tax in your resident state. Dealers in border area (i.e. NYC or Philadelphia) know this and are registered to pay tax in more than one state.

If you live in a state with a sales/use tax, trust me, you will have to pay the tax in order to get your tags. In addition, most states have a time based use rule. You could be a resident of a non-tax state, but if the car is found to be in a sales tax state for longer than a specified amount of time, say 30 days, the CAR is considered to be resident and the use tax is due. This catches the people who have a cabin in Oregon (no sales tax), register their car there, but really live in California.

In Florida, for example, purchases are taxed in full based on the sales price of the vehicle (not MSRP) less value of the trade-in, if trade is made with a registered dealer. Interest on purchase financing is exempt from sales tax.

Leases are taxed based on the monthly payment. Therefore, in Florida at least, there is an advantage to leasing. You never pay sales tax on the residual value of the car, unless you purchase it later.

Hope this helps
gatorcpa
'00 9-3 convertible

• sales tax, Ron, Thu, 19 Jul 2001 04:31:26
  • Not so fast, larry, Fri, 20 Jul 2001 10:02:56
    • my recent experience, Mike G in atl, Sat, 21 Jul 2001 21:21:08
  • Every state with a Sales Tax also has a "use" tax, Gerry , Thu, 19 Jul 2001 10:23:18
  • Re: sales tax, Mike, Thu, 19 Jul 2001 08:41:54
    • Re: Absolutly!!!!, EJ, Thu, 19 Jul 2001 08:51:17
      • Different States Tax Differently, gatorcpa, Thu, 19 Jul 2001 11:36:39 <-- Viewing This Message
        • Re: Different States Tax Differently, jimbobjoe, Fri, 20 Jul 2001 03:53:43
  • Re: sales tax, Bill D, Thu, 19 Jul 2001 08:37:39

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