Theoretical tax question re: FSD

[rking0122]

I know this has been sort of discussed before, but I do not see anything recent, and I do not see anything definitive.

If a Tesla owner was to go to a service center in a state that does not charge sales tax (OR, NH, ...) and ask them to add FSD to the car (which they can apparently do), would sales tax apply to that purchase?

Tesla hasn't been consistent on taxation of software/FSD upgrades. I upgraded my S in 2019, no tax charged. In my app to upgrade my Y, sales tax applies. Both in Arizona.

CA has law specifically excluding software purchases from tax, but some report being taxed, some not.

And what prevents me from just giving Tesla a different address when making the purchase? It isn't difficult to register a credit card to a different billing address temporarily.

I'm honestly not convinced FSD is worth 8K with or without additional tax, but I am watching intently given the upcoming "quantum leap" Elon talked about. And I have work that I need to attend in CA and OR over the next month which might just make the jump more palatable IF sales tax isn't in the equation.

Just wondering what you all think...

 

[glide]

I think Tesla basis the tax on where your account and attached CC are registered.

There are no service centers in NH so you can’t just drop the vehicle off and have it added.

FWIW, I pad no sales tax on my FSD purchase.

 

[rking0122]

I think Tesla basis the tax on where your account and attached CC are registered.

There are no service centers in NH so you can’t just drop the vehicle off and have it added.

FWIW, I pad no sales tax on my FSD purchase.

Curious, where are you located?

 

[VaxAce]

bought in NJ live in NJ - no tax.

 

[Reborn]

bought in NJ live in NJ - no tax.

You must’ve bought it with the car. If you buy it after delivery, they add taxes from what I’ve heard.

 

[Marks321]

You must’ve bought it with the car. If you buy it after delivery, they add taxes from what I’ve heard.

Oh really ? I left it out to qualify for NJ $5000 rebate and will add it on several months down the line ... might take a couple months for the one time 8k purchase but that would be a shame to have to pay tax on top of that

 

[Reborn]

Oh really ? I left it out to qualify for NJ $5000 rebate and will add it on several months down the line ... might take a couple months for the one time 8k purchase but that would be a shame to have to pay tax on top of that

well you ended up saving $5000 only to pay about $500 on taxes. You’re still $4500 ahead, I won’t call that a shame. I’m doing the same.

 

[Scurrah]

Keep in mind, that legally, you may still be required to claim those taxes on your tax return. Some states require you to pay “Use Tax” when you live in a sales tax state, but make purchases in a sales tax free state. I’m guessing most people don’t actually do that, even though they’re required to. Small stuff probably wouldn’t show up in an audit but a big one might. Keep in mind, I’m NOT a tax professional, nor do I play one on TV.

 

[glide]

Keep in mind, that legally, you may still be required to claim those taxes on your tax return. Some states require you to pay “Use Tax” when you live in a sales tax state, but make purchases in a sales tax free state. I’m guessing most people don’t actually do that, even though they’re required to. Small stuff probably wouldn’t show up in an audit but a big one might. Keep in mind, I’m NOT a tax professional, nor do I play one on TV.

No one does this. No one.

And how would it even work for a software license for a vehicle that the owner could be driving through several states? In New England for example, do you need to pay tax if you cross into NY from CT but you own the car in NJ?

It’s ridiculous and unenforceable.

 

[Scurrah]

Use tax doesn’t apply to where you use it. It’s all based on where you live and where you bought it and if that retailer collected applicable sales tax or not. I agree most people don’t claim use tax. And in small amounts it would be very hard to enforce. It was a huge reason online retailers (ie amazon) because so popular. They would only collect tax from purchases of their own state. Most states have closed that loophole by forcing online retailers to collect sales tax based on the address of the purchaser.

As an example here’s how California defines it.
California Use Tax Information

 

[rxlawdude]

This issue has been discussed with the California Board of Equalization. Their position is software delivered over the Internet or over the air where no physical media is delivered is NOT subject to California sales tax. But in the case of Tesla, CBE considers OTA delivered FSD to be an extension of the hardware present in the car, and thus is taxable.

I believe this would make a great test case, as I disagree with CBE's interpretation of very clear black letter law.