I have a friend looking to buy an S2000 out of state. How do the sales taxes work? Do you not pay the sales tax in the state the car is purchased or do you get a refund for them when you register the car in your home state and pay your home state sales (use) tax.

Thanks

 

new car? If it's a new car and in a neighboring state, some dealers can register it for you in your state of residence. So then you would pay the taxes up front. If they don't register it for you then you pay for it at the time of registration at your local DMV.

used car from a dealer works the same way, a used car from a private seller you pay when you register at your DMV.

 

New car.

So, if you are having the car shipped from the east coast to the midwest you wouldn't have to pay the sales tax at the time of purchase in the foreign state and you would pay them when you register the car in your home state?

 

Exactly. When you go your DMV to register the vehicle they'll ask you to pay the taxes on the sale price of the vehicle. Make sure you call the DMV ahead of time so that you know exactly what to bring. Oh and bring checks.

 

You will not pay sales tax in the state of purchase unless their tax is more than yours, in which case you will pay the difference to the purchasing state. You pay the sales tax to your state when you register it. Make sure that the dealer gives the purchaser the MCO (manufacturer's certificate of origin, the car's birth certificate, of sorts) so that the purchaser can register the car him or herself.

Let me know if I can help any further, since I did this when I bought mine.

HTH!

 

The bottom line is that nobody can avoid paying sales tax, title or vehicle registration expense by simply buying a vehicle out-of-state. You probably should consider buying out-of-state only if the savings on the purchase price of the vehicle outweighs the risk and trouble of driving to pickup or shipping the car. Good luck.

 

He isn't trying to avoid paying the tax - he was told by the dealer on the east coast that he would have to pay the sales tax in that state - this didn't sound right to me so I thought I'd ask here because I know many have bought out of state.

Thanks for all the help!

 

I bought a car in FL and had it shipped here to IL and , as everyone has mentioned, I paid the full IL sales tax when I registered it here.
They have you fill out a RUT-50 form for taxes..... the check is payable to IL Dept. of Revenue. At least that's how it was in 1998.
Just as another tidbit of info..... if you (Illinois resident) buy a vehicle from CarMax in Kenosha, WI, they will collect the Illinois sales tax from you and do taxes & registration for you in IL.