Friday, December 30, 2005

Question: Do I owe tax on my foreign-purchased car?

I purchased a car from someone in another country. Do I owe tax on the car in my state?

The answer is generally yes. You didn't pay your state's sales tax when you made the purchase, so you owe use tax because you're using it in your state. States will usually give you a credit for the taxes you paid in another state, but usually NOT for taxes paid in other countries (some border states DO give credit, but they're unusual).

The use tax usually gets taken care of when you title or register the vehicle. You can't get your plates until you show that you've either paid the tax to the dealer or pay the state directly.

STG

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1 comment:

Surya said...

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I am an auditor and am interesting in these things as it might help.