Factory Delivery / CA State sales tax

[onlinespending]

In a nutshell, Tesla is going to need to quote something from a BOE publication. If it were that easy to skirt the law, it would have been easy to find examples before now.

From my reading of the BOE regulations though, Tesla is actually the one responsible for collecting the sales tax, so if they're willing to eat that cost then that's different. I'd doubt they're going to eat the cost though, it'd be huge.

Exactly. Tesla is the one responsible for collecting and reporting the sales tax to the state. If they're convinced we can pickup the car in CA but avoid sales tax then they simply won't collect it. They'd know better than any of us.

 

[ckessel]

Here are some really good links. Mods, if this is too far off topic, is there a "Avoiding CA Sales Tax?" or some such topic or maybe in the Factory Delivery thread?

An FAQ on Use Tax responsibility: Your Use Tax Responsibility - Board of Equalization

A publication related to vehicles and taxes (vehicles/boats/planes get special treatment): Regulation 1620

A particular relevant quote follows from the Regulation 1620 document about buying a car for use in another state, which is what we're all talking about here. Clause (A) makes it pretty clear if you take delivery in CA you pay sales tax. They get down right snippy about it
You only avoid the tax with clause (B) which specifically says it has to be shipped out of state.

(A) To Other States—When Sales Tax Applies. Except as otherwise provided in (B) below, sales tax applies when the property is delivered to the purchaser or the purchaser's representative in this state, whether or not the disclosed or undisclosed intention of the purchaser is to transport the property to a point outside this state, and whether or not the property is actually so transported. It is immaterial that the contract of sale may have called for the shipment by the retailer of the property to a point outside this state, or that the property was made to specifications for out-of-state jobs, that prices were quoted including transportation charges to out-of-state points, or that the goods are delivered to the purchaser in this state via a route a portion of which is outside this state. Regardless of the documentary evidence held by the retailer (see (3)(D) below) to show delivery of the property was made to a carrier for shipment to a point outside the state, tax will apply if the property is diverted in transit to the purchaser or his representative in this state, or for any other reason it is not delivered outside this state.

B) Shipments Outside the State—When Sales Tax Does Not Apply. Sales tax does not apply when the property pursuant to the contract of sale, is required to be shipped and is shipped to a point outside this state by the retailer, by means of:

1. Facilities operated by the retailer, or

2. Delivery by the retailer to a carrier, customs broker or forwarding agent, whether hired by the purchaser or not, for shipment to such out-of-state point. As used herein the term "carrier" means a person or firm regularly engaged in the business of transporting for compensation tangible personal property owned by other persons, and includes both common and contract carriers. The term "forwarding agent" means a person or firm regularly engaged in the business of preparing property for shipment or arranging for its shipment. An individual or firm not otherwise so engaged does not become a "carrier" or "forwarding agent" within the meaning of this regulation simply by being designated by a purchaser to receive and ship goods to a point outside this state. (This subsection is effective on and after September 19, 1970, with respect to deliveries in California to carriers, etc., hired by the purchasers for shipment to points outside this state that are not in another state or foreign country, e.g., to points in the Pacific Ocean.)

 

[VolkerP]

Good research, but only relevant to a certain subset of TMC forum members. There is a thread dedicated to Factory Delivery. Can we please continue to discuss the information that Tesla exchanges with the first signature holders on the "now is the time" event?

 

[bonnie]

Good research, but only relevant to a certain subset of TMC forum members. There is a thread dedicated to Factory Delivery. Can we please continue to discuss the information that Tesla exchanges with the first signature holders on the "now is the time" event?

And here you are, Volker. Thanks for pointing it out. -b.

 

[Blurry_Eyed]

I posted this also in the Factory Delivery thread, but I found this thread that referenced the tax issue as well, so I'll re-post Tesla's response to our concerns around the tax issues as well as some additional details about the availability of the Factory Experience:

We have an update for all of our out-of-state customers who are interested in taking delivery at the Tesla Factory in Fremont, California. It is now clear per the California Board of Equalization Publication 34 & Regulation 1620 that all customers taking delivery in California must pay California sales tax. Non California residents who opt for delivery at the Fremont Factory must pay the local county sales tax (currently 8.75% in Alameda County). These taxes will be collected at the point of sale in California. The point of sale, by definition, will be at the time the customer (purchaser) takes possession of the vehicle. Customers travelling from states that have higher sales tax than the Alameda County tax may be required to pay the difference to their local government. We suggest customers contact county and local governments to verify their tax rates.

While these tax regulations will impact customers who plan to drive their new Model S back to their home state, we encourage customers to visit us and participate in the Tesla Factory Experience in Fremont. This program is designed for those who want to see the Model S production facility, tour the production floor, learn about the beginnings of Tesla.

Regardless of where you choose to take delivery of your Model S, we plan to provide a Tesla Personal Delivery. At your delivery location, we will provide an in depth vehicle overview and help you customize your Model S vehicle settings and personal preferences (Touchscreen, Homelink, Bluetooth devices, download music, etc). The cost of the Tesla Personal Delivery will be identical for those who opt to pick up their Model S at the Factory or have it delivered across country.

 

[HHHH]

I was in LA this past weekend to sign my paperwork, and I got a phone call from Wells Fargo stating that if I signed for the car in CA, that I would have to pay CA sales tax even though I am having the car shipped to me in Las Vegas.

Wells Fargo coordinated with my delivery specialist and informed me that the only way I wouldn't pay CA sales tax is if I sign my paperwork in Portland, OR, so now me and the wife are flying to Portland this weekend to sign our paperwork. I went to LA specifically to sign the paperwork last weekend, and one hour before my appointment the WF rep calls and says if I sign in CA, I pay CA tax. My wife is in Med School so her hours are extremely limited, plus the flight and hotel together is gonna cost me another $1,500 that was unplanned.

 

[markb1]

I was in LA this past weekend to sign my paperwork, and I got a phone call from Wells Fargo stating that if I signed for the car in CA, that I would have to pay CA sales tax even though I am having the car shipped to me in Las Vegas.

Wells Fargo coordinated with my delivery specialist and informed me that the only way I wouldn't pay CA sales tax is if I sign my paperwork in Portland, OR, so now me and the wife are flying to Portland this weekend to sign our paperwork. I went to LA specifically to sign the paperwork last weekend, and one hour before my appointment the WF rep calls and says if I sign in CA, I pay CA tax. My wife is in Med School so her hours are extremely limited, plus the flight and hotel together is gonna cost me another $1,500 that was unplanned.

I'm trying to figure out why you were signing in LA in the first place. Why can't you just do everything from Nevada? Or are you trying to avoid Nevada tax, too?

 

[HHHH]

I'm trying to figure out why you were signing in LA in the first place. Why can't you just do everything from Nevada? Or are you trying to avoid Nevada tax, too?

I was in LA because my Delivery Specialist said I need to go to a Tesla store in person, with my wife, and sign in person. I'm not trying to avoid NV sales tax at all. LA is only 3-4 hours from Vegas so that's why I chose the closest location.

 

[markb1]

I was in LA because my Delivery Specialist said I need to go to a Tesla store in person, with my wife, and sign in person. I'm not trying to avoid NV sales tax at all. LA is only 3-4 hours from Vegas so that's why I chose the closest location.

That's really strange. Does Tesla say the same thing, or is it just Wells Fargo? Maybe check with other Nevada owners to see what they went through.

 

[Lloyd]

Why can't you sign online? Then the location is moot.

 

[markb1]

Also, I think if you did buy the car in California, and paid California sales tax, you'd only have to pay the difference when you bring it to Nevada. (See the bottom of this page: Nevada Vehicle Registration Fees), so it seems like it would make little difference, if any.

I suspect Wells Fargo just doesn't know what they're talking about.

 

[HHHH]

Why can't you sign online? Then the location is moot.

I signed online already for Tesla, but Wells Fargo needs me to sign contracts in person.

- - - Updated - - -

Also, I think if you did buy the car in California, and paid California sales tax, you'd only have to pay the difference when you bring it to Nevada. (See the bottom of this page: Nevada Vehicle Registration Fees), so it seems like it would make little difference, if any.

I suspect Wells Fargo just doesn't know what they're talking about.

If I paid CA sales tax the tax rate is 9.0%, plus other regulatory fees, whereas the NV sales tax rate is 8.1%, that's a difference of over $1k on my car with an MSRP of $115k. It's going to cost me about the same to travel to Portland, OR and stay in a hotel, but at least in the process I get a few airline miles, we get to see Portland (haven't been before), and it's done.

 

[markb1]

If I paid CA sales tax the tax rate is 9.0%, plus other regulatory fees, whereas the NV sales tax rate is 8.1%, that's a difference of over $1k on my car with an MSRP of $115k. It's going to cost me about the same to travel to Portland, OR and stay in a hotel, but at least in the process I get a few airline miles, we get to see Portland (haven't been before), and it's done.

That's regional. It's 8% here in San Diego. In some parts of the state, it's 7.5%.

 

[HHHH]

That' regional. It's 8% here in San Diego. In some parts of the state, it's 7.5%.

How do they determine what tax rate to use if I don't live there?

- - - Updated - - -

That's regional. It's 8% here in San Diego. In some parts of the state, it's 7.5%.

Also, something else perhaps worth mentioning is that the tax I pay in CA, I have to pay cash for which is not a problem, but I can charge it on my credit card in NV and get 11,500 more airline miles (We travel a lot).

 

[markb1]

As a California resident, if I buy a car anywhere in California, I will pay the local sales tax where it is registered. For out of state residents, I'm not sure if they charge the base sales tax rate of 7.5%, or the local rate were the purchase was made. Anyway, I suspect Wells Fargo is mistaken, and it really only matters where the car is delivered, and that it is only ever registered outside of California.

 

[HHHH]

As a California resident, if I buy a car anywhere in California, I will pay the local sales tax where it is registered. For out of state residents, I'm not sure if they charge the base sales tax rate of 7.5%, or the local rate were the purchase was made. Anyway, I suspect Wells Fargo is mistaken, and it really only matters where the car is delivered, and that it is only ever registered outside of California.

I agree with you, and after contesting the same, I was directed to visit the Portland store. In the grand scheme of things, spending an extra $1,000-$1,500 is not a big deal, plus we get to travel, see a new city, and have a mini-vacation. I just want to get the car as fast as possible and I don't want anything to delay that process.

 

[flankspeed8]

sales tax bill dead for exemption for factory pick-up. Maybe next year.

Tesla tourism bill pulled for Santa Clara development

Don't quite understand why both could not happen. Stupid California, no way I would pick-up in Fremont now, nor spend my tourism dollars. Maybe they can start delivering out of Reno?