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Tax when buying a car

tax when buying a car

Which state's sales tax do I pay if I buy a car out of state?

Can a car be bought in a state other than the one in which we live (Wisconsin) to avoid the sales tax? Will local dealers have to service an auto bought from an out-of-state dealer?

You can't escape the long arm of the taxman just by driving across the state line. If you buy a vehicle in another state, technically you will not have to pay Wisconsin's 5 percent sales tax. However, you will have to pay a 5 percent use tax when you register your vehicle in Wisconsin, so the net result is the same.

Wisconsin does not collect sales tax on vehicles purchased out of state, but it imposes the use tax so residents can't do an end run by buying a vehicle elsewhere.

If you do buy a vehicle outside Wisconsin, you should

check with the revenue department of that state to find out whether you have to pay sales tax there. The Wisconsin Department of Revenue says that if you pay sales tax in the state where you purchase a vehicle, you will receive credit for that amount in Wisconsin and won't have to pay the full 5 percent use tax.

In addition to the use tax, Wisconsin residents may also have to pay a county and/or stadium tax, depending on where the vehicle is registered.

As far as whether dealers have to service vehicles purchased elsewhere, the answer is yes for warranty claims. Dealers are reimbursed by the manufacturer for warranty work, so they should welcome your business. In addition, they want you to come back for maintenance and additional service, so they should readily adopt you as a customer.

Answered by Rick Popely on March 16, 2013 in I'm Just Wondering | Permalink

Category: Taxes

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