New Indiana Statute Effective July 1st Allows Non-Residents To Pay Home State’s Lower Sales Tax Rate On Vehicle Purchases

by Faegre Baker Daniels
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Starting July 1st, a non-resident can purchase an Indiana vehicle and pay its home state's sales tax rate

Starting July 1st, a non-resident can purchase an Indiana vehicle and pay its (typically lower) home state’s sales tax rate.

Indiana has a 7% sales tax rate.  Earlier this year, the Indiana General Assembly passed a new statute, Indiana Code 6-2.5-2-3, which allows non-residents to purchase vehicles from Indiana dealers and pay the (typically lower) sales tax rate applicable in the non-resident’s jurisdiction.  To pay the lower rate, the purchaser must sign an affidavit stating that he or she intends to transport the vehicle outside of Indiana within 30 days and will title or register the vehicle for use in another state or country.

The Department of Revenue has issued the following guidance for the new legislation.

Beginning with the July 2014 tax period, motor vehicle dealers should no longer use the current ST-103 return. A new Indiana sales tax return, ST-103CAR, has been developed specifically for motor vehicle retailers. You should begin using this return, either through INtax or another approved filing method, beginning with the July 2014 tax period. To update your return template to the ST-103CAR form, contact us via the INtax message center, mail, or fax to (317) 232-1021. Instructions for this return will be available on the department website in July.

For each of these transactions, you must complete and retain Form ST-108NR. You also must provide a copy to the buyer as evidence of the amount of sales tax collected. We are enclosing a copy of this new form and its instructions for your reference.

This new statute takes effect July 1, 2014. Beginning on that date, dealers must collect the applicable tax rate on all sales. The various state tax rates are listed in the below table.

  State  Sales Tax Rate
Alabama 4%
Alaska 0% (no sales tax currently imposed)
Arizona 5.6%
Arkansas 6.5%
California 6.5%
Colorado 2.9%
Connecticut 6.35%
Delaware 0% (no sales tax currently imposed)
Florida 6%
Georgia 4%
Hawai’i 4%
Idaho 6%
Illinois 6.25%
Indiana 7%
Iowa 6%
Kansas 6.15%
Kentucky 6%
Louisiana 4%
Maine 5.5%
Maryland 6%
Massachusetts 6.25%
Michigan 6%
Minnesota 6.875%
Mississippi 7%
Missouri 4.225%
Montana 0% (no sales tax currently imposed)
Nebraska 5.5%
Nevada 6.85%
New Hampshire 0% (no sales tax currently imposed)
New Jersey 7%
New Mexico 5.125%
New York 4%
North Carolina 4.75%
North Dakota 5%
Ohio 5.75%
Oklahoma 4.5%
Oregon 0% (no sales tax currently imposed)
Pennsylvania 6%
Rhode Island 6%
South Carolina 6%
South Dakota 4%
Tennessee 7%
Texas 6.25%
Utah 4.7%
Vermont 6%
Virginia 4.3%
Washington 6.5%
West Virginia 6%
Wisconsin 5%
Wyoming 4%
District of Columbia 5.75%

 

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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