How to avoid high state sales tax

[LSU Jonno]

I just recently moved from Michigan to Washington. I was living in Michigan when the reservation was made but will be in Washington when I take delivery. Seeing that Washington sales tax is about 4% higher than Michigan I was thinking I would just take delivery from a dealer in Michigan or another state with even lower sales tax. The closer I looked it seems that regardless of where I take delivery I would still have to pay Washington's crazy 9.7% sales tax. Does anyone have any insight into how this can be avoided? Am I missing something here?

There is no way to avoid tax on a vehicle. Every state get's their money, they just get it in different ways.
In Louisiana you pay straight sales tax on vehicles which is 9-ish% (it's been a while since I lived there). However, that is really your only state expense on vehicles. You have to renew your plate each year which costs you about $20 and you have an inspection sticker that you have to renew every few years.
In Alabama you pay only 4-ish% sales tax on a vehicle purchase. What a DEAL right? Wrong. You pay an ad valorem tax each year when you renew your plate, which is a % of your vehicle's worth. On a $50k Bronco, I imagine I'll be paying $800 in taxes EACH FRICKING YEAR (well, it declines as the value of your vehicle declines, but not very fast, it will drop maybe $50/year the first few years)

Point is, every state gets their taxes. No reason to be jealous of us only paying 4% taxes up front. We're getting hit up in some other fashion.

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[MJJ]

Reminds me of the old joke...a husband asks his wife if she would sleep with Brad Pitt for a million dollars?

Wife responds and says “sure, who wouldn’t?”

Husband then says would you do it for a dollar? Wife responds “what kind of wife do you think I am?”

husband responds “ well we have already established that, we’re just haggling in price

moral of the story...you either a fraud or your not.

 

[Akwestender]

Shoulda moved to Oregon instead of Washington

Not with the income tax OR has....

 

[siggy]

That is correct.

This is inaccurate. Each jurisdiction is different. While this may be how many jurisdictions work, it doesn't apply to all. Often as most rules go. For example, I pay the highest sales tax between purchase location or residence. My residential tax rate is 9.6%. If I buy in a city with a 9.7% rate, I pay that. If I buy in a city with a 9.5% rate, I pay 9.6%.

Also, trade-in rules vary by jurisdiction. My state only allows sales tax allowances on trade-ins to a dealership. The next state over allows a sales tax allowance for private party sales for up to 6 months. These are very different treatments.

Those suggesting to get a PO box in FL and not actually reside in FL, I would refrain from this. It's illegal. If you get audited, the punishment will be severe.

 

[chrtra1]

I commute Southern Highlands up 15 daily, they've been 'repaving' all the way to 215 for the last year. Good thing the ol Excursion doesn't mind the beating.

Most of mine is on the 215. That 15N to 215W interchange is the worst designed thing ever.

 

[jaspercasidino]

There is no way to avoid tax on a vehicle. Every state get's there money, they just get it in different ways.
In Louisiana you pay straight sales tax on vehicles which is 9-ish% (it's been a while since I lived there). However, that is really your only state expense on vehicles. You have to renew your plate each year which costs you about $20 and you have an inspection sticker that you have to renew every few years.
In Alabama you pay only 4-ish% sales tax on a vehicle purchase. What a DEAL right? Wrong. You pay an ad valorem tax each year when you renew your plate, which is a % of your vehicle's worth. On a $50k Bronco, I imagine I'll be paying $800 in taxes EACH FRICKING YEAR (well, it declines as the value of your vehicle declines, but not very fast, it will drop maybe $50/year the first few years)

Point is, every state gets their taxes. No reason to be jealous of us only paying 4% taxes up front. We're getting hit up in some other fashion.

In certain counties we get the double whammy of ~10% sales tax then an RTA tax based on MSRP of the vehicle every year when the vehicle is registered. Starts at 1.1% and then declines as the vehicle gets older. I paid just under $800 to register my M3 and Panigale this year. The gift that keeps on giving!

 

[chrtra1]

I don't mind it in the M6 GC at about 100 (shhhhh)

Yeah, it's fine if it's empty. With 3 merges in like a quarter mile though, as soon as any amount of traffic occurs, everyone just comes to a complete stop. And now with the construction on the 215 at Decatur....ugh

 

[Karl_in_Chicago]

You're committing fraud the entire time, so I assumed if you were going to have a scheme to commit tax fraud, you didn't care about also committing insurance fraud.

The direct answer to your question is: You're already committing insurance fraud.

Note that I didn't say my scheme was LEGAL, just that it's a methodology to circumvent sales tax. Not a particularly easy or rewarding one, but it might work.

Would I do it? Heck no! Probably get caught.

OK, we're on the same page! I've read accounts of people registering their vehicle at an address not their own specifically to get lower insurance rates (live in Chicago, have relatives way out in Illinois boonies that will forward mail to them). It's all fun and games til they need to file a claim. In some cases they get turned over for fraud right off and in others they are given the option to drop the claim - but insurance keeps all those premiums that were paid (and immediately drops them). I like saving money as much as the next guy (more, maybe!) but not at the risk of doing anything illegal.

 

[tonyxit]

OK, we're on the same page! I've read accounts of people registering their vehicle at an address not their own specifically to get lower insurance rates (live in Chicago, have relatives way out in Illinois boonies that will forward mail to them). It's all fun and games til they need to file a claim. In some cases they get turned over for fraud right off and in others they are given the option to drop the claim - but insurance keeps all those premiums that were paid (and immediately drops them). I like saving money as much as the next guy (more, maybe!) but not at the risk of doing anything illegal.

NOT only illegal.....but just DUMB !!

 

[Karl_in_Chicago]

NOT only illegal.....but just DUMB !!

To me doing illegal things is dumb.

 

[tonyxit]

To me doing illegal things is dumb.

Agree.....cutting corners leads to hairpin curves

 

[Richtor]

Incorporate in Montana.

 

[Richtor]

You can trade in a vehicle with a lot of equity. You won't have to pay sales tax on the trade-in value as long as you apply it to the new vehicle purchase.

I've heard some states don't allow this so make sure you know the laws beforehand.

Won’t work in CA they like double triple taxing you here.

 

[vrtical]

Incorporate in Montana.

that LLC trick is almost the worse now.

 

[DarthTod]

I just recently moved from Michigan to Washington. I was living in Michigan when the reservation was made but will be in Washington when I take delivery. Seeing that Washington sales tax is about 4% higher than Michigan I was thinking I would just take delivery from a dealer in Michigan or another state with even lower sales tax. The closer I looked it seems that regardless of where I take delivery I would still have to pay Washington's crazy 9.7% sales tax. Does anyone have any insight into how this can be avoided? Am I missing something here?

But doesn’t Michigan have an income tax? Because Washington doesn’t. So you’re saving a ton on that already. The government is going to get their share one way or another.

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