# What States do not charge sales tax-New car purchase



## planada (Jul 25, 2009)

Just a thought...........looking for a new car and the sales tax adds plenty to the bottom line.  Are there states that do not utilize sales tax, possibly Nevada? I live in Arizona so if this is the case, it would be an easy purchase. Does anyone know or am I mislead?


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## ricoba (Jul 25, 2009)

Not sure how it works in AZ, but I believe that here in CA (the land of perpetual taxation.  ) that if I go to OR or MT where there isn't a sales tax, I would have to pay the sales tax here in CA once I register the vehicle in CA.  At least that is how I think it works.

I know that I bought a car in San Bernardino County(in Fontana) and had to pay the difference between the lower San Bernardino County rate and the higher Los Angeles County rate. I had to do this right at the dealership when buying the car.


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## T_R_Oglodyte (Jul 25, 2009)

planada said:


> Just a thought...........looking for a new car and the sales tax adds plenty to the bottom line.  Are there states that do not utilize sales tax, possibly Nevada? I live in Arizona so if this is the case, it would be an easy purchase. Does anyone know or am I mislead?



Be aware that when you register an out-of-state vehicle most states that have sales tax will hit you with an excise tax that is at least as much as what you would have paid in sales tax had you bought the vehicle in state. The objective, of course, is to eliminate the incentive to purchase a vehicle out-of-state.  

Or course you can decide to not register the vehicle in state. Should you be cited for failing to register the vehicle in state, you will pay the excise tax, you will pay penalties for failing to register, and you will pay the cost of the citation as well.  Rest assured that you will be money ahead had you simply paid the excise tax upfront.  Again, this is all devised to discourage you from trying to get a tax break by buying a vehicle out of state.


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## Jennie (Jul 25, 2009)

*Some consolation--it will probably be deductible on Federal tax return*

Special Tax Break Available for New Car Purchases This Year 

IR-2009-30, March 30, 2009

WASHINGTON — The Internal Revenue Service announced today that taxpayers who buy a new passenger vehicle this year may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns next year.

“For those thinking about buying a new car this year, this deduction may give them a little more drive to make their purchase this year,” said IRS Commissioner Doug Shulman. “This deduction enables taxpayers to buy now and get cash back later on their tax returns.”

The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle.

The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.

IRS also alerted taxpayers that the vehicle must be purchased after Feb. 16, 2009, and before Jan. 1, 2010, to qualify for the deduction.

The special deduction is available regardless of whether a taxpayer itemizes deductions on their return. The IRS reminded taxpayers the deduction may not be taken on 2008 tax returns.


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## laura1957 (Jul 25, 2009)

ricoba said:


> Not sure how it works in AZ, but I believe that here in CA (the land of perpetual taxation.  ) that if I go to OR or MT where there isn't a sales tax, I would have to pay the sales tax here in CA once I register the vehicle in CA.  At least that is how I think it works.
> 
> I know that I bought a car in San Bernardino County(in Fontana) and had to pay the difference between the lower San Bernardino County rate and the higher Los Angeles County rate. I had to do this right at the dealership when buying the car.




I thiink that is how it works no matter what state you live in - if a car purchased in Delaware is registered in Virginia or Maryland the sales tax still has to be paid.
  Same with any large trackable purchase.  My husband owns/operates a fence company, when he bought a pole barn in Delaware (a business expense) he needed to pay sales tax before claiming the expense.  Furniture bought in tax free Delaware is charged a sales tax IF they have to deliver to Virginia.


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## Icarus (Jul 25, 2009)

planada said:


> Just a thought...........looking for a new car and the sales tax adds plenty to the bottom line.  Are there states that do not utilize sales tax, possibly Nevada? I live in Arizona so if this is the case, it would be an easy purchase. Does anyone know or am I mislead?



Oregon, but it probably won't work out for you.

-David


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## djs (Jul 25, 2009)

You would still be required to pay tax in MA too.  For used cars, if it's a private sale where the parties think "hey, lets just do the bill of sale for $500" and the car has a "book value" of more MA will make you pay tax on the higher book value.  There is no tax on a vehicle sale between immediate family members though.


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## Glynda (Jul 25, 2009)

*SC*

We buy our cars from a dealer in NC but register them in SC where there is a $300.00 max sales tax.


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## dougp26364 (Jul 25, 2009)

The state's are going to get you one way or the other. KS will charge you their sales tax if you buy an out of state car in a tax free state. I believe municipalities will even charge you the difference in sales tax (assuming your municipalities sales tax is higher) if you buy a car in another county. 

When I did travel nursing, one 13 week assignment was in the state of Washington, which did not have an income tax. Kansas didn't have a problem with that. They charged me the KS state income tax instead. At the end of the year I did receive some credit for paying higher state income taxes for working in California but, it didn't relly seem to even out.


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## JoeMid (Jul 25, 2009)

Glynda said:


> We buy our cars from a dealer in NC but register them in SC where there is a $300.00 max sales tax.


One of the reasons the schools are so good in SC!


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## JoeMid (Jul 25, 2009)

I see signs to this effect in many dealerships in my neighborhood, I'd not heard about it otherwise.



Jennie said:


> Special Tax Break Available for New Car Purchases This Year
> 
> IR-2009-30, March 30, 2009
> 
> ...


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## nightnurse613 (Jul 25, 2009)

I heard the deduction is also available in states that do not have sales tax??!! Also, that you DO NOT have to itemize in order to be eligible (kind of like the Child Tax Credit??)   So, this is a TAX CREDIT not a income deduction?  I went to the IRS web site (which pretty much limits it self to the information above). Is there a draft IRS Form or instructions, yet?  From what I am reading, if you are otherwise income eligible; you can deduct ALL of your sales tax on a vehicle costing up to $49,500??!  My head is starting to hurt.  As far as the OP, I live in Arizona too and WHEN you register your car in Arizona that you purchased from out of state, expect to be hit with sales tax (or difference).  I think you are referring to the suggestion that you can go to Wickenburg (or other places within Arizona) and buy a car; register it there and transfer it to Maricopa County, get emissions and not have to pay the HIGHER sales tax.  I have heard this idea promoted before but don't know if or how it works.


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## dioxide45 (Jul 25, 2009)

nightnurse613 said:


> I heard the deduction is also available in states that do not have sales tax??!! Also, that you DO NOT have to itemize in order to be eligible (kind of like the Child Tax Credit??)   So, this is a TAX CREDIT not a income deduction?  I went to the IRS web site (which pretty much limits it self to the information above). Is there a draft IRS Form or instructions, yet?  From what I am reading, if you are otherwise income eligible; you can deduct ALL of your sales tax on a vehicle costing up to $45,000??!  My head is starting to hurt.



It is not a refundable credit. You can use the deduction even if you are not itemizing, but it is a reduction in your income, not a tax credit. So if I paid $1000 in sales tax and was in a 25% bracket I would pay $250 less in income tax. Either get a bigger refund or not pay as much in April.


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## John Cummings (Jul 25, 2009)

ricoba said:


> Not sure how it works in AZ, but I believe that here in CA (the land of perpetual taxation.  ) that if I go to OR or MT where there isn't a sales tax, I would have to pay the sales tax here in CA once I register the vehicle in CA.  At least that is how I think it works.
> 
> I know that I bought a car in San Bernardino County(in Fontana) and had to pay the difference between the lower San Bernardino County rate and the higher Los Angeles County rate. I had to do this right at the dealership when buying the car.



You are absolutely correct regarding California. You cannot escape the sales tax by buying in another state unless you register the car in that state and do not register it in California. Of course if you do that then you are breaking the law but others do it. I have a couple of neighbors that have lived here for 7 years and never register their vehicles here even though they purchased new one since moving here.

The difference in county sales tax works both ways. I purchased my new Honda Ridgeline in San Diego County 6 months ago. I live in Riverside county so I paid the lower sales tax for Riverside county.


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## John Cummings (Jul 25, 2009)

nightnurse613 said:


> I heard the deduction is also available in states that do not have sales tax??!! Also, that you DO NOT have to itemize in order to be eligible (kind of like the Child Tax Credit??)   So, this is a TAX CREDIT not a income deduction?  I went to the IRS web site (which pretty much limits it self to the information above). Is there a draft IRS Form or instructions, yet?  From what I am reading, if you are otherwise income eligible; you can deduct ALL of your sales tax on a vehicle costing up to $49,500??!  My head is starting to hurt.  As far as the OP, I live in Arizona too and WHEN you register your car in Arizona that you purchased from out of state, expect to be hit with sales tax (or difference).  I think you are referring to the suggestion that you can go to Wickenburg (or other places within Arizona) and buy a car; register it there and transfer it to Maricopa County, get emissions and not have to pay the HIGHER sales tax.  I have heard this idea promoted before but don't know if or how it works.



It is not a tax credit but a deduction from your taxable income. A tax credit means that you would get a full credit for the sales tax. So if you paid $2000 sales tax, that amount would be a credit toward your income tax. The $2000 sales tax is a deduction so you would receive the % of your marginal tax rate X the $2000.

The sales tax deduction for large purchases like a car have already been in effect prior to this year if you itemized your deductions and elected to take the sales tax deduction instead of the state income deduction. The deduction for large purchases was added to the standard sales tax deduction from the IRS table. I bought a new Honda Ridgeline last December and was able to claim the $2016 sales tax as an additional deduction. My taxes are done by a tax professional.


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## John Cummings (Jul 25, 2009)

planada said:


> Just a thought...........looking for a new car and the sales tax adds plenty to the bottom line.  Are there states that do not utilize sales tax, possibly Nevada? I live in Arizona so if this is the case, it would be an easy purchase. Does anyone know or am I mislead?



In Arizona you only pay sales tax on the difference between the new car price and your trade-in. At least it was that way when I lived in Arizona. In California, you pay sales tax on the full price regardless of any trade-in.

In California you want to negotiate a lower price on the new vehicle rather than more for your trade-in.


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## dioxide45 (Jul 25, 2009)

John Cummings said:


> In Arizona you only pay sales tax on the difference between the new car price and your trade-in. At least it was that way when I lived in Arizona. In California, you pay sales tax on the full price regardless of any trade-in.
> 
> In California you want to negotiate a lower price on the new vehicle rather than more for your trade-in.



It is the same here in Ohio. They take the new car selling price and subtract the trade in value and then charge the sales tax. This is different than a used car where they charge the amount based on the used car price.


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## John Cummings (Jul 25, 2009)

dioxide45 said:


> It is the same here in Ohio. They take the new car selling price and subtract the trade in value and then charge the sales tax. This is different than a used car where they charge the amount based on the used car price.



In Arizona, used cars were handled the same as new ones. One time I traded in a car on a used car where the difference in price was only $100 and that is what I paid sales tax on.


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## philemer (Jul 25, 2009)

John Cummings said:


> It is not a tax credit but a deduction from your taxable income. A tax credit means that you would get a full credit for the sales tax. So if you paid $2000 sales tax, that amount would be a credit toward your income tax. The $2000 sales tax is a deduction so you would receive the % of your marginal tax rate X the $2000.
> 
> The sales tax deduction for large purchases like a car have already been in effect prior to this year if you itemized your deductions and elected to take the sales tax deduction instead of the state income deduction. The deduction for large purchases was added to the standard sales tax deduction from the IRS table. I bought a new Honda Ridgeline last December and was able to claim the $2016 sales tax as an additional deduction. My taxes are done by a tax professional.




Right. But it won't save you/anyone much money. Let's say your state has a 6% sales tax rate. You then buy a $30,000 car. Your state sales tax is $1800 ($30,000 x .06). If you're in a 15% fed. tax bracket you'll only save $270 ($1800 x .15). I say "only" but $270 is an OK gift from Uncle Obama, I guess.  If you're in a 25%, or more, bracket the savings are a little sweeter. Now, if only my "clunker" would qualify for the $3500 "cash for clunkers" discount.


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## Passepartout (Jul 25, 2009)

philemer said:


> Now, if only my "clunker" would qualify for the $3500 "cash for clunkers" discount.



I feel the same. I really wanted to go into retirement debt free and with a new- or darn near new pickup. I still think that now is about as good a time to buy a new vehicle as we're likely to see for a good long time. My current ride qualifies, but it'd bring about $4500 in trade, the same as the 'clunker' bonus. Problem is, it only has 65k miles and I'd hate for it to go to the crusher which it where all the 'clunkers' have to go.

Oh well, maybe in a few years there will be another stimulus. Hahahaha

Jim Ricks


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## ricoba (Jul 25, 2009)

philemer said:


> Let's say your state has a 6% sales tax rate.



Oh, I only wish!


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## John Cummings (Jul 25, 2009)

Passepartout said:


> I feel the same. I really wanted to go into retirement debt free and with a new- or darn near new pickup. I still think that now is about as good a time to buy a new vehicle as we're likely to see for a good long time. My current ride qualifies, but it'd bring about $4500 in trade, the same as the 'clunker' bonus. Problem is, it only has 65k miles and I'd hate for it to go to the crusher which it where all the 'clunkers' have to go.
> 
> Oh well, maybe in a few years there will be another stimulus. Hahahaha
> 
> Jim Ricks



I have a 1993 Ford Ranger XLT Super Cab, V6, auto. We bought it new in 1993 and it has only 52,000 miles on it. We had to replace the transmission 6 months ago which was standard for Ford A/T. We were able to get a rebuilt one in Tijuana which cost $480.00 installed. We just use the vehicle for driving to Tijuana and occasional use. Just for kicks I ran it through the "Clunker" calculator and discovered that it does not qualify for the clunker bonus. I am not interested in getting a new vehicle as we bought a new Honda Ridgeline RTL just 6 months ago and we want the old one for Tijuana.


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## NWL (Jul 25, 2009)

Montana is another state that does not charge sales tax on car purchases.  I don't know if people from other states buy cars here, but I do know Montana does a brisk business in motor home sales to folks from other states.  They set up a LLC in Montana, then buy an expensive motor home and license it in Montana.  Seems like a good idea, and worth the price and effort, for an expensive motor home, but not so much just to purchase a car.

Cheers!


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## Passepartout (Jul 25, 2009)

NWL said:


> .....They set up a LLC in Montana, then buy an expensive motor home and license it in Montana.  Seems like a good idea, and worth the price and effort, for an expensive motor home, but not so much just to purchase a car.



I see a lot of expensive motor homes around here with Oregon tags. There are a lot of high end coach (read World Famous Hillbilly-mobiles and bus conversions) dealers in W. Oregon. I'd heard there were ways to license them there hence avoiding their state sales tax, I just never knew the intricacies of it. Guess these folks are of the 'what's mine is mine, and if you don't watch out what's yours will be mine too persuasion'. 

Jim Ricks


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## BSQ (Jul 25, 2009)

planada said:


> Just a thought...........looking for a new car and the sales tax adds plenty to the bottom line.  Are there states that do not utilize sales tax, possibly Nevada? I live in Arizona so if this is the case, it would be an easy purchase. Does anyone know or am I mislead?



mislead.

you'd do well to check your state DMV site to see what charges you'd incur for bringing in an out of state car.

as other have mentioned ... you'll be hit with a tax at that point.  

I bought a car out of state when I lived in TN (not for tax purposes but because the nearest dealer was in Atlanta) There were two or three documents the dealer provided that I had to take with me to the motor vehicles office so they could register in my home state.  One document was the odometer reading at delivery, another was the price of the sale ... the tax was based off of that.

There was also some confusion at the dealer if the GA temp tag would be valid in TN ... I had gotten a ticket before I got my regular plate and wasn't cited for that, so I guess it was.   

I've had to pay a tax on that lil car in 3 states now.


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## DaveNV (Jul 25, 2009)

I believe if you want to buy a car in Oregon without paying sales tax you must have a home address _IN _Oregon.  I live in Washington, and my parents lived in Oregon for over thirty years.  I was never able to take advantage of the no-sales-tax deal because I didn't live there.  To make matters worse, Washington would have slapped me with the above-mentioned excise tax when I tried to register the car in this state.

When I was in the Navy, at one point I had purchased a vehicle in Virginia.  At the time they imposed a 2 percent sales tax on new cars.  When I got out and brought it home to Washington state and tried to register it here, they wanted me to pay the difference in sales tax between the 2 percent I'd paid in Virgina, and the 6 percent Washington was charging at the time.  I had a heck of a time proviing to Washington DMV that the only reason I bought the car in Virginia was because I was stationed there.  It was a real hassle.

Bite the bullet, and pay your home state sales taxes.  Or move to a state that doesn't have them (and be prepared to pay other kinds of taxes there that take the place of them.)

Dave


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## Icarus (Jul 26, 2009)

BMWguynw said:


> I believe if you want to buy a car in Oregon without paying sales tax you must have a home address _IN _Oregon.



Slight difference. You can buy it in Oregon and since Oregon does not charge sales tax you will not pay sales tax at the time of purchase.

But, when you go to register it in AZ, CA, WA, HI, etc, they will collect use tax or whatever they happen to call it in your state, that's usually equivalent to the sales tax for your county/state.

-David


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## planada (Jul 26, 2009)

Thanks for all the input guys, it was a pipedream for awhile. OK, I will suck it up and pay the damn sales tax (this year of course)!


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## T_R_Oglodyte (Jul 26, 2009)

Icarus said:


> Slight difference. You can buy it in Oregon and since Oregon does not charge sales tax you will not pay sales tax at the time of purchase.
> 
> But, when you go to register it in AZ, CA, WA, HI, etc, they will collect use tax or whatever they happen to call it in your state, that's usually equivalent to the sales tax for your county/state.
> 
> -David



David - you missed what I think Dave is saying.  If I'm understanding Dave correctly, he's saying that if out-of-state resident buys a car from an Oregon car dealer, the Oregon car dealer will charge sales tax on the transaction.  I think there is some kind of reciprocal relationship between the governments of Oregon and Washington regarding tax collections; in many places in Washington if you can show that you are an Oregon resident the merchant does not add WA sales tax.


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## Glynda (Jul 26, 2009)

*Good one...*



JoeMid said:


> One of the reasons the schools are so good in SC!



Good one.  One of the reasons our granddaughter is in private school in SC!


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## Icarus (Jul 26, 2009)

T_R_Oglodyte said:


> David - you missed what I think Dave is saying.  If I'm understanding Dave correctly, he's saying that if out-of-state resident buys a car from an Oregon car dealer, the Oregon car dealer will charge sales tax on the transaction.  I think there is some kind of reciprocal relationship between the governments of Oregon and Washington regarding tax collections; in many places in Washington if you can show that you are an Oregon resident the merchant does not add WA sales tax.



It won't be the first or last time, Steve.

If they register the car for you in Washington, you will of course have to pay the tax to the dealer, because the state will collect it at time of registration, from the dealer, no matter what state the dealer is in.

If they don't, then you will pay the tax when you register it.

I don't think people that cross the border to buy clothes, gas, etc, pay Washington sales tax because the are residents of Washington. Does amazon.com collect Washington state sales tax when they ship you goods from their Oregon warehouse? I don't think so. No difference for a vehicle.

You are right about Oregonians not having to pay sales tax to buy a vehicle in Washington also. I could buy one in Washington also, have it sent to the docks and register it here and not pay sales tax in Washington. As long as it isn't registered in Washington, and they buyer proves they are not from Washington or has the vehicle delivered out of state, there is no WA sales tax.

http://dor.wa.gov/content/doingbusiness/businesstypes/industry/auto/Auto_ExmptVehSales.aspx

-David


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## Passepartout (Jul 26, 2009)

I may be mistaken here, but I believe the only way an out-of-state dealer can collect another state's sales tax is if the buyer intends to finance the sales tax along with the sale (smart, no?). Then the dealer cuts a check to the registering state's DMV- or taxing agency- and sends it (the check) along with the buyer to register the vehicle.

Jim Ricks


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## DaveNV (Jul 26, 2009)

David, what Steve said was what I meant.  If you don't live in Oregon, they'll either refuse you the sale, or charge you Washington state sales tax, or put a "to be registered in Washington" kind of limited temporary registration on the vehicle.  If you live in Washington and bring a car in from Oregon to register it, they'll charge you Washington-equivalent fees on the purchase, as if you had bought it in Washington.



Icarus said:


> I don't think people that cross the border to buy clothes, gas, etc, pay Washington sales tax because the are residents of Washington. Does amazon.com collect Washington state sales tax when they ship you goods from their Oregon warehouse? I don't think so. No difference for a vehicle.
> 
> David



People from Washington routinely cross the border to buy in Oregon.  For low-ticket items it's not a problem.  Big-ticket items are where it gets messy.

Recently Amazon started charging sales tax based on the state address of the purchaser, regardless of where the order ships from, if the state requires it.  Since Amazon is a Washington state company, they charge WA sales tax on all purchases ordered from a Washington address.  It sucks, because they use a Seattle-area tax rate, even though sales tax in my town is slightly lower.

Dave


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## Icarus (Jul 26, 2009)

BMWguynw said:


> Recently Amazon started charging sales tax based on the state address of the purchaser, regardless of where the order ships from, if the state requires it.  Since Amazon is a Washington state company, they charge WA sales tax on all purchases ordered from a Washington address.  It sucks, because they use a Seattle-area tax rate, even though sales tax in my town is slightly lower.
> 
> Dave



I thought that was just NY. I also thought Amazon was based in Oregon because of the sales tax thing. I guess I was wrong about amazon.

Anyway, they don't charge me any tax. Though they did end their affiliate program for Hawaii residents (and one or two other states) because of a law the state legislature enacted making it all taxable. The governor vetoed it, but I don't know if amazon re-instated Hawaii residents into the affiliate program.

I don't think we're disagreeing about somebody from WA buying a vehicle in OR. At the end of the day, that person will pay the WA sales tax, one way or the other. The part about them refusing to sell you a vehicle? Hmmm.

-David


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## DaveNV (Jul 26, 2009)

Icarus said:


> I don't think we're disagreeing about somebody from WA buying a vehicle in OR. At the end of the day, that person will pay the WA sales tax, one way or the other.



Yes, we're not disagreeing.  



Icarus said:


> The part about them refusing to sell you a vehicle? Hmmm.



Sorry, I said that badly.  I meant they would refuse to sell you a car without requiring an appropriate home state tax thing.  If you wanted to buy a car in Oregon and not pay any sort of sales tax, as if you were an Oregon resident, they won't sell to you.  They'll get their pound of flesh one way or another.  

As in so many things, there is no free ride.

Dave


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## philemer (Jul 26, 2009)

BMWguynw said:


> Yes, we're not disagreeing.
> 
> 
> 
> ...



Since there is no sales tax in OR why would they care where you live or where you will register the car? If I buy a car in OR I'll pay sales tax when I register it in ID. OR dealers have nothing to gain or lose.


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## DaveNV (Jul 26, 2009)

I haven't tried to buy a car in Oregon in a long time. I was told then that the dealer has to have an appropriate address for you to put on the paperwork.  And based on where that address is, the paperwork changed.   

Any Oregon people here who know the current story?

Dave


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## Icarus (Jul 27, 2009)

philemer said:


> Since there is no sales tax in OR why would they care where you live or where you will register the car? If I buy a car in OR I'll pay sales tax when I register it in ID. OR dealers have nothing to gain or lose.



I didn't think so either, but I'll take Dave's word for it. I don't see how the state of Washington has any authority over car dealers in the state of Oregon. But again, if the OR dealer takes care of registering it for you in Washington, I'm sure they will collect the Washington tax at the time of the sale.

At one point I was considering buying a Prius from a dealer in Portland, OR and having them drive it to Seattle or Tacoma (I forget which port it was at the time) and ship it to Maui. No sales tax would have been due on the sale. I would have paid the Hawaii GET here, when I registered it. But that's not Washington. I probably could have done it that way with any dealer in any state, since it was being shipped out of state and not registered in that state.

-David


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## John Cummings (Jul 27, 2009)

BMWguynw said:


> ...Recently Amazon started charging sales tax based on the state address of the purchaser, regardless of where the order ships from, if the state requires it.  Since Amazon is a Washington state company, they charge WA sales tax on all purchases ordered from a Washington address.  It sucks, because they use a Seattle-area tax rate, even though sales tax in my town is slightly lower.Dave



Amazon does not charge sales tax to residents of California even though California requires that sales tax be paid on all Internet purchases.


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