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Mulling idea of factory car pickup (Feb 15)-does that affect Colorado sales tax, etc?

Discussion in 'Model S: Ordering, Production, Delivery' started by eco5280, Oct 11, 2014.

  1. eco5280

    eco5280 Member

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    #1 eco5280, Oct 11, 2014
    Last edited: Oct 13, 2014
    EDIT - issue resolved. See my last post.


    Ordered the S the morning after the AWD announcement as I'm in Colorado and it's been the stumbling block for me. Got the February 2015 delivery date, and we're mulling the idea of turning it into a little vacation and picking the car up at the factory and driving her home. (Stopping in Vegas of course)

    I know you don't save the destination fee. But is it still a Colorado sale, with Colorado sales tax and the Colorado electric car tax credit? Or is it a California sale, at California sales tax, without the tax credit?

    Thanks in advance - I would kindly ask that assumptions, guesses, etc be kept out of the thread, I'm looking for posts from those who know the answer truly, perhaps have done this themselves, or know ones who have.
     
  2. Barry

    Barry Member

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    You pay your taxes and register the car in the DMV office in the Colorado county in which you live. No way around that.
     
  3. bonaire

    bonaire Active Member

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    10% CA sales tax paid if you pick up at Fremont. Consider Colorado as a way to save such a tax. A state law.
     
  4. Craig-Y

    Craig-Y Member

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    eco5280... I am asking the same question as a Texas resident. Tesla cant sell cars here so its all done online and by mail. I am planning on picking up my Model X at the factory also. I have purchased my last two vehicles out of state, one in Maine and one in Wisconsin. In both of those cases, I completed the sale there minus the sales taxes and returned to Texas where I then paid taxes and registered the vehicle. As you can see by my avatar, I already have my license plates and the tax office is holding them until I have the VIN and bill of sale so they can determine how much in taxes I need to pay. I want to have the deal done before I ever even go to California. I will keep you posted if I figure it out.
     
  5. breser

    breser AutoPilot Nostradamus

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    You sure about that? I bought a new vehicle in KS and immediately took it to WA. Had to buy a drive away tag for the trip. You drive home and then you apply for a registration in your home state and pay whatever taxes are due there.

    California seems to have something similar with the One Trip Permit:
    California Vehicle Code - VEH Section 4003.

    As I understand it that's $15 and you do not have to pay use tax (otherwise known as sales tax).

    I'd assume that Tesla delivery at the factory should be familiar with this process since I'm sure many people pickup from Fremont and drive home.
     
  6. Bighorn

    Bighorn Member

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    Like Craig Y learned in his thread, CA will collect sales tax if you pick it up at the factory regardless of your plans.
     
  7. Craig-Y

    Craig-Y Member

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    Yes, Bighorn and a few others have clued me in that it is California that is the issue. I have purchased and picked up my last two vehicles in Wisconsin and Maine and did not have to pay the local tax. I paid Texas taxes when I got home and registered the vehicle. It seems that my plans to pick up my Model X at the factory may need to change in order to avoid California sales tax of 10%. Texas is only 6.25% on new vehicles. Still holding out hope that I can find a solution. If I do, rest assured I will share it with the group.
     
  8. GlennAlanBerry

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    You will have to pay your county sales tax, plus RTD fees when you get your plates. In Douglas County, that was over $7K on my lowly P85...
     
  9. rogbmw

    rogbmw Member

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    I am not sure about California, but most states have an agreement that if a car is purchased in that state and taxes paid at the time of sale, and it is ultimately registered in another state as a new car, then the taxes paid originally are credited, and the difference refunded. I am not sure about California, but in the Military that is how we did it. But, come to think of it, when stationed in San Diego, and purchased a new car which was to be registered in my home state at the time (Missouri), the salesman and I drove over the border into another state, and conducted the sale at a rest stop, then drove back into California so I did not have to pay the California tax. I would suggest REALLY CHECKING CLOSELY with the California DMV, and get copies of the state law there with answers before considering picking up at the factory and then ultimately registering in another state. A friend of mine purchased a car in California which he then immediately took to South Carolina, and he fought with the California DMV for several years on the sales tax and title.
     
  10. eco5280

    eco5280 Member

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    To put this issue to bed, I've read through the California tax code and spoken with Tesla.

    If you pick up at the factory, California will screw you over and collect sales tax. IN ADDITION to all the taxes you'll normally pay in your home state, county, city, etc. It's a terrible deal and not worth it. You can go to the factory and get the free tour without picking up your vehicle there.
     
  11. Craig-Y

    Craig-Y Member

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    OK, I did a little tax law research on California as it relates to non-residents of California buying a car there and then driving it home. California puts the burden of collecting the sales tax on the business rather than on the purchaser. So when you buy something in California, even though your receipt says that you paid sales tax you are actually just reimbursing the business for the tax they are required to pay even if they chose not to collect it from you at the time of sale (yes, that is a legal option they have). So, like you, I wanted to complete the purchase in my state of residence NOT in California. The law states that the business is still required to pay the tax even if the documentation shows that the vehicle was to be delivered to another state and was subsequently diverted or not shipped and then picked up in Claifornia. Another user suggested that I have the car delivered to Nevada and then drive it back to factory for the tour. I am checking Nevada laws now. Here is the link to the California's Sales Tax FAQ page:

    http://www.boe.ca.gov/lawguides/business/current/btlg/vol1/sutr/1620.html

    Regulation 1620. Interstate
    and Foreign Commerce.

    Reference: Sections 6006, 6008, 6009.1,
    6051, 6201, 6247, 6248, 6352, 6366.2, 6368.5, 6387, 6396 and 6405, Revenue and
    Taxation Code.

    (a) SALES TAX.

    (1) IN GENERAL. When a sale occurs in this state, the sales tax,
    if otherwise applicable, is not rendered inapplicable solely because the sale
    follows a movement of the property into this state from a point beyond its
    borders, or precedes a movement of the property from within this state to a
    point outside its borders. Such movements prevent application of the tax only
    when conditions exist under which the taxing of the sale, or the gross receipts
    derived therefrom, is prohibited by the United States Constitution or there
    exists a statutory exemption. If title to the property sold passes to the
    purchaser at a point outside this state, or if for any other reason the sale
    occurs outside this state, the sales tax does not apply, regardless of the
    extent of the retailer's participation in California in relation to the
    transaction. The retailer has the burden of proving facts establishing his right
    to exemption.

    (2) SALES FOLLOWING MOVEMENT OF PROPERTY INTO STATE FROM POINT
    OUTSIDE STATE.

    (A) From Other States—When Sales Tax
    Applies. Sales tax applies when the order for the property is sent by the
    purchaser to, or delivery of the property is made by, any local branch, office,
    outlet or other place of business of the retailer in this state, or agent or
    representative operating out of or having any connection with, such local
    branch, office, outlet or other place of business and the sale occurs in this
    state. The term "other place of business" as used herein includes the homes of
    district managers, service representatives, and other resident employees, who
    perform substantial services in relation to the retailer's functions in the
    state. It is immaterial that the contract of sale requires or contemplates that
    the goods will be shipped to the purchaser from a point outside the state.
    Participation in the transaction in any way by the local office, branch, outlet
    or other place of business is sufficient to sustain the tax.

    (B) From Other
    States—When Sales Tax Does Not Apply. Sales tax does not apply when the
    order is sent by the purchaser directly to the retailer at a point outside this
    state, or to an agent of the retailer in this state, and the property is shipped
    to the purchaser, pursuant to the contract of sale, from a point outside this
    state directly to the purchaser in this state, or to the retailer's agent in
    this state for delivery to the purchaser in this state, provided there is no
    participation whatever in the transaction by any local branch, office, outlet or
    other place of business of the retailer or by any agent of the retailer having
    any connection with such branch, office, outlet, or place of business.

    (C) Imports. Sales tax applies to sales of property imported
    into this state from another country when the sale occurs after the process of
    importation has ceased, regardless of whether the property is in its original
    package, if the transaction is otherwise subject to sales tax under subdivision
    (a)(2)(A) of this regulation.

    (3) SALES PRECEDING MOVEMENT OF GOODS FROM WITHIN STATE TO
    POINTS OUTSIDE 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.)
     
  12. tga

    tga Active Member

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    States' sales tax policies on car sales to non-residents of that state fall into 2 categories. I have personal experience buying cars in MA and VT as a non-resident, and have researched CA enough to know how they do it (no personal experience, though). For the sake of argument, I'm assuming "state of registration" in this explanation is your home state; I'm not considering non-resident registrations (ie, NH allows non-resident property owners to title and register vehicles at their NH address "for exclusive garaging in NH")

    • Category A (MA and CA, and others) - The sales/use tax is considered more of a "sales" tax. It is due on any vehicle sale where the buyer takes delivery within the state, and is collected at time of sale. It does not matter what state the buyer is a resident of or where the buyer plans to register the car. The only way to avoid paying sales tax to the "delivery state" is to not take delivery in that state.
    • Category B (VT and others) - The sales/use tax is considered more of a "use" tax and is due at the time of registration (which may be done by the selling dealer at the time of sale, so it appears to be rolled up in one transaction). If a non-resident buys a car from a dealer in one of these states, but registers it in another state, they owe nothing to the dealer's home state, regardless of where delivery takes place.
    When sales/use tax is due in your state of registration, many (most?) states will give you a dollar-for-dollar credit on sales tax already paid to the purchasing jurisdiction (ie, to a "Category A" state).

    Specific examples:
    • I bought a car in MA as a CT resident. I brought CT plates to the MA dealer, took delivery in MA, and drove the car home. I paid 5% sales tax to MA, and then an additional 3% to CT when I registered it (at the time, MA tax was 5% and CT tax was 8%, I got a credit for the 5% already paid).
    • I bought a car in VT as a NH resident. Again, I picked up NH plates, took delivery in VT, and drove the car home. No sales tax due. VT is a "category B" state, and NH has no sales tax.
    • I looked into buying a Volt from one of the high volume LA dealers that offer big discounts. If they loaded the car onto a truck and shipped it to me, no tax was due to CA. If I flew out to LA, picked it up in person, and drove it off the lot, CA sales tax was due (I believe it is 7.5% for non-residents, see "Out of state": County and City Sales Tax Rates). While MA will give me a credit for CA sales tax paid, the MA rate is 6.25%, so I kiss the additional 1.25% goodbye.
    If you pick up the car in CA, you are required to pay CA sales tax, period. The only way to get out of this is to not take delivery in CA.

    - - - Updated - - -

    MA will not issue a refund for the overpayment. I can't speak to other states.
     
  13. bonaire

    bonaire Active Member

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    Would be nice if the factory was in some other place, like Delaware. CA sales tax laws take all the fun out of a factory delivery and "driving it home" if you live out of state.
     
  14. Craig-Y

    Craig-Y Member

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    Bonaire, I couldn't agree more. It's really sad especially when I live in a state that makes it illegal to buy a Tesla locally.
     
  15. Craig-Y

    Craig-Y Member

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    eco5280...! Although I agree that it totally sucks that you cant pick up at factory without paying California taxes, I spoke with Tesla and have tentatively made plans to pick up my Model X outside of California and then drive to the factory for the tour. I am a Texas resident and our tax rate on new vehicles is 6.25% compared to California that has a 10% tax rate. My question to Tesla "Where can I pick up my Model X proximal to California without getting screwed on taxes?" After some good conversation on where I wanted to travel after I get my vehicle, we decided that Scottsdale, AZ is where I will have my vehicle shipped. I could have selected Nevada but I wanted to see friends in San Diego and my dad in Wyoming before heading back to Texas. So, once again excited about getting my vehicle and see the Tesla factory early next year.
     
  16. vgrinshpun

    vgrinshpun Active Member

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    #16 vgrinshpun, Oct 21, 2014
    Last edited: Oct 21, 2014
    A lot of states, including my home state (PA) and Colorado have rules that allow crediting the sales or use tax paid to other states by the residents bringing and registering the car to the home state. I did a quick google search to find the following passage in the Colorado's "Title, Registration, And Sales Tax Administrative Manual".

    https://www.colorado.gov/pacific/sites/default/files/Tax%20Administrative%20Manual.pdf

    So you will NOT pay both CA and CO sales tax, rather CA sales tax, which then will be credited toward the sales tax in Colorado during the registration. I am not sure whether the CA sales tax is higher than in CO, but if it is, you end up paying more if you pick up in Fremont. For example in paying 10% sales tax picking in Fremont, while CO sales tax is 7% (as an example, I do not know what the actual number is), you would end up pying 10% instead of 7%, but not both taxes, i.e. 17%.
     
  17. eco5280

    eco5280 Member

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    THANK YOU for your time on this. What you found does seem to show that you don't pay double tax. That makes logical sense to me which is why I'm fearful it's not true, lol. I've had so many problems with the Colorado DMV over the last 20 years I don't trust them to uphold this and we're not talking about peanuts.

    Plus I had the thought about driving a car cross country before I get the clear bra on it might not be the smartest move.
     
  18. vgrinshpun

    vgrinshpun Active Member

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    #18 vgrinshpun, Oct 22, 2014
    Last edited: Oct 22, 2014
    Yea, I had similar situation last year with my Model S. Was planning to pick it up at the factory and drive it back home, until I discovered the CA sales tax issue. Did not realized until much later as a member here pointed out, that a lot of states, including PA credit sales tax paid to another state.

    Now I am planning to do the same with my future Model X, hopefully next fall.

    BTW, you can arrange installing the wrap in San Francisco area right after the pick-up, while spending couple of waiting days sight-seeing there - that is my current plan for Model X pickup at the factory.
     

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