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View Full Version : Buying car out of state in Indiana


day1yun
03-24-2009, 04:44 AM
I found a used car that I like at a dealer in Indiana but I live in MD. The dealer is saying I have to pay their 7% sales tax on the car even though I would have it transported to MD and have it registered and titled in MD. That doesn't sound right. Is Indiana different in regards to this?

carman26
03-24-2009, 07:10 AM
doesn't sound right to me either. I live in Michigan and bought my car in Virginia and had it shipped. Transaction was done with Michigan sales tax.

fredderf4444
03-24-2009, 11:26 AM
You should only pay tax in your state. I've been working with out of state dealers and basically I will have to pay my taxes at the DMV.

Only thing that sucks is that its not rolled into the total price.
You have to cough up the 2-4k depending on your tax rate.

F

flowbmw
03-24-2009, 11:48 AM
you only pay the tax in the state where the vehicle is registered. If you are financing the car, the dealer has to collect the tax and pay the DMV in that state for you.

Ed

JW_BMW
03-24-2009, 11:51 AM
Please do not provide OP with an answer that may not apply to him in his home state. Each state is different in the way taxes are collected for out of state purchases.

It's best to check with the county DMV and state board of equalization for answers to your questions.

flowbmw
03-24-2009, 12:08 PM
ok...always willing to learn new things, I called the Indiana DMV (317) 232-5977 and they confirmed you have to pay tax there. The flip side is that the state where you register the car usually gives you a credit for sales tax paid elsewhere.

6 of 1...half dozen of another

http://www.marylandmva.com/Resources/VR-005.pdf

Ed

day1yun
03-24-2009, 02:47 PM
Thanks for the research! Based off of that form, it says that the only way I can get credit for the tax is if I've been a resident of MD for less than 6 months or military. I quality for neither so that would mean I'd pay 13% tax (7% IN, 6% MD). Guess I'm never buying a car in Indiana.

pistolpuma
03-24-2009, 03:14 PM
It is rare that you see double taxation. You are smart to have checked this out before you bought.:thumbup:

schernov
03-24-2009, 06:47 PM
Call your local DMV and see if you have to pay local tax.

I am surprised at the IN rule.... which dealer is it?
I used to live in IN and now in Chicago and bought plenty of cars in both states and never had to pay double.
There IS however an option where IN and IL dealers will collect EACH OTHERs tax...
so if you are a resident of IL and buy a car in IN, Indiana dealer will collect IL tax rate...and the other way around.
I wonder if that is what the dealer is telling you.... but because it is not IN/IL the agreement does not apply...

kyfdx
03-25-2009, 06:23 AM
ok...always willing to learn new things, I called the Indiana DMV (317) 232-5977 and they confirmed you have to pay tax there. The flip side is that the state where you register the car usually gives you a credit for sales tax paid elsewhere.

6 of 1...half dozen of another

http://www.marylandmva.com/Resources/VR-005.pdf

Ed

It depends... Some states that generally tax out-of-state sales, may have reciprocal agreements with bordering states, wherein they do NOT tax sales made to residents of those states...

In this case, I know that Indiana does NOT collect tax from residents of Kentucky or Illinois... and, I'm guessing the other border states, as well... I'm just 25 miles from a number of Indiana dealerships, and if I buy there, I only pay tax in Kentucky...

But, if you are from Virginia or Maryland, that may not be the case...

regards,
kyfdx

kashrahman
03-25-2009, 09:59 AM
that is so weird!! I live in Indiana and am buying my car from Passport BMW in Maryland! As far as I know, I pay just Indiana sales tax, nothing to Maryland. You would think there wouldn't be double taxation . . . kash

rcglfr
11-16-2010, 11:22 AM
It depends... Some states that generally tax out-of-state sales, may have reciprocal agreements with bordering states, wherein they do NOT tax sales made to residents of those states...

In this case, I know that Indiana does NOT collect tax from residents of Kentucky or Illinois... and, I'm guessing the other border states, as well... I'm just 25 miles from a number of Indiana dealerships, and if I buy there, I only pay tax in Kentucky...

But, if you are from Virginia or Maryland, that may not be the case...

regards,
kyfdx


This information is FALSE. I am a registered Indiana dealer and since 2006 we have been required to collect INDIANA sales tax on all auto purchases including out of state buyers. Many states, including Kentucky and Illinois, have reciprocal agreements with Indiana and will give a credit for sales taxes paid in Indiana. So if the sales tax in your state is the same as Indiana (7%) you would not pay any additional sales tax when you register the vehicle with your state. If your tax is higher, say 8%, then they will usually charge you the extra 1% tax in your state. Some states do not have reciprocal agreements, in which case you would be required to pay taxes in both states. Its is wise to contact your state DMV before buying a vehicle out of state to find out your particular tax situation.

ard
11-16-2010, 07:25 PM
This information is FALSE. I am a registered Indiana dealer and since 2006 we have been required to collect INDIANA sales tax on all auto purchases including out of state buyers. Many states, including Kentucky and Illinois, have reciprocal agreements with Indiana and will give a credit for sales taxes paid in Indiana. So if the sales tax in your state is the same as Indiana (7%) you would not pay any additional sales tax when you register the vehicle with your state. If your tax is higher, say 8%, then they will usually charge you the extra 1% tax in your state. Some states do not have reciprocal agreements, in which case you would be required to pay taxes in both states. Its is wise to contact your state DMV before buying a vehicle out of state to find out your particular tax situation.

Even if the car is shipped out of state such that the purchaser never takes possession nor enters Indiana?

And is it Sales tax or "Use" tax?

Hint: the transaction 'occurs' when the buyer takes possession. So is the buyer in legal possession **in** Indiana?

Whole different answer when an out of state buyer enters the state and takes possession in the state.

(Yes, I know it was an old thread...)

Read this: http://www.revenue.state.il.us/TaxForms/Sales/ST-556-1.pdf section F; Other; reasons for tax exemption.

missmyE36
11-26-2012, 09:42 AM
Old thread but I had to reply...I just bought a vehicle from an Indiana dealer and drove it back to Maryland (home state) to register it. Tomkinson assured me that MD reciprocated with Indiana, so that all sales tax would be taken care of in the single transaction.

They were extremely nice to work with and gave me a great price so of course I didn't verify their claim with Maryland MVA. Upon registering here (in MD), I was slapped with an additional 6% tax. Dealer won't reply to calls/emails. Thinking about contacting an attorney, prob not worth the time/$ costs. :)

ard
11-26-2012, 05:50 PM
^^sorry they screwed you.

Funny that dealers and their fans will say "leave it to the experts who do this for a living"..so you do that and they screw you.

Same people will then tell you that YOU should have verified it yourself.

It might be worth rattling their cage with a letter from an attorney threatening them...couple of hundred to lay it out, who witnessed their statements, and what you want from them...

Maybe a helpful IN dealer will chime in...

MMME30W
11-26-2012, 06:02 PM
Old thread but I had to reply...I just bought a vehicle from an Indiana dealer and drove it back to Maryland (home state) to register it. Tomkinson assured me that MD reciprocated with Indiana, so that all sales tax would be taken care of in the single transaction.

They were extremely nice to work with and gave me a great price so of course I didn't verify their claim with Maryland MVA. Upon registering here (in MD), I was slapped with an additional 6% tax. Dealer won't reply to calls/emails. Thinking about contacting an attorney, prob not worth the time/$ costs. :)

Yup.

You are snookered.

Dealers in Indiana collect tax, period.

Depends on the state as to what reciprocity you have.

ard
11-28-2012, 10:54 PM
Yup.

You are snookered.

Dealers in Indiana collect tax, period.

Depends on the state as to what reciprocity you have.

I have a question.... Could the buyer have paid Maryland sales tax concurrnet with the transaction AND claimed this payment on ST-108e?

Seems IN would have given them 'credit' for the Maryland payment....

https://forms.in.gov/Download.aspx?id=7261

Might not be precisely how it is done, but if it is all done as part of the single transction it might work.

Thoughts?

jimvideopro
12-07-2012, 05:51 PM
Are you sure you got good information from MD? What if,instead of buying a new car, you lived in IN, moved to MD then reregistered your car? My experience has been that the new state gives you credit for tax paid in the old state. Does MD charge sales tax on every vehicle coming into the state from elsewhere? I've brought cars across state lines in moving, and bought cars in IN and OH (living in KY) and never double paid tax.