Sales Taxes

Hello All,

As I prepare to embark on building an RV, I notice Van's is collecting sales tax for seven states so far, with more to come next month.

My state of Alabama will be added to the list next month. Alabama generally has a flat rate of 8% for internet sales. This is an advantage for those in incorporated areas where the sales tax rate totals 10-11%, and a disadvantage for those in unincorporated areas where the rate totals 5% usually.

It is beginning to look to me like if I buy and build a kit I will likely pay 8% sales tax. However, if I buy one already built the sales tax rate would be only 2.375% (2% for the state, .375% for the county).

So if we were to use an $80,000 figure, the "penalty" for building yourself would be $4500 ($6400 at 8% vs $1900 at 2.375%).

Am I figuring this wrong somehow?

Thanks for your thoughts!

Michael

tax

The tax thing seems to be a mess on your side for out of state on line orders.
I do a lot online and usually have shipped to michigan and bring them across into Canada and do my own customs at 13% tax. Always worked well on everything.
Now many places online have started charging sales tax. Got 4 big avionics quotes ... 2 charged tax to ship to michigan, 2 didnt. If i found an address in Ohio, then no tax from the ACS. How odd?
Paying 6% michigan tax on a big order, that i then have to pay 13% tax on, ontop of the 35% exchange rate... that really hurts. Ouch.

How some firms like Spruce are saying its the law...and the other half are not charging or collecting...i dont get.

brewtoo said:

Hello All,

As I prepare to embark on building an RV, I notice Van's is collecting sales tax for seven states so far, with more to come next month.

My state of Alabama will be added to the list next month. Alabama generally has a flat rate of 8% for internet sales. This is an advantage for those in incorporated areas where the sales tax rate totals 10-11%, and a disadvantage for those in unincorporated areas where the rate totals 5% usually.

It is beginning to look to me like if I buy and build a kit I will likely pay 8% sales tax. However, if I buy one already built the sales tax rate would be only 2.375% (2% for the state, .375% for the county).

So if we were to use an $80,000 figure, the "penalty" for building yourself would be $4500 ($6400 at 8% vs $1900 at 2.375%).

Am I figuring this wrong somehow?

Thanks for your thoughts!

Michael

Click to expand...

Unfortunately, each state is different. I'm not familiar with Alabama taxation.

Here in Ohio, if you purchase an aircraft through a broker, you pay the standard tax rate, just like if you buying a new car. However, if you purchase through a private individual, there is no sales tax.

In Ohio they are also very smart in tracking down completed EAB kits. Usually triggered by when you registered your N number. I received a letter from the state saying you owe us $xxxxx.

I was fortunate in that I declared the sales tax owed on my annual state tax return to spread the pain out over the build. I did have to supply documentation to the state that stated I don't owe $xxxxx. I really owe $yyyyy. I had to include invoices to substantiate my tax estimate.

I think that when Van's starts charging sales tax in Ohio, it will make things easier from a tax perspective. You just need to budget that expenditure at purchase as oppose to tax filing time.

Is rate correct?

You estimated rate is probably not correct, State sales tax is only 4%. It is the rate, I would think that Amazon charges and does not count city and county taxes. Where did you find your rate estimate of 8%?

To make you guys feel better, Australia charges 10% Goods & Services Tax on pretty much everything.

Worse - they charge it not just on the price of the kit/part, but on the freight cost as well. So a new QB -9A ($36,645 USD) becomes approximately $61,000 Australian dollars after exchange and GST are added.

Of course, it works the other way too, when I put my -9A on the market in a month or two, it will work out to around only $72,000USD.

BenNabors said:

You estimated rate is probably not correct, State sales tax is only 4%. It is the rate, I would think that Amazon charges and does not count city and county taxes. Where did you find your rate estimate of 8%?

Click to expand...

8% is what Amazon collects throughout Alabama. Seems the state legislature came up with a ?simplified? system to make it easier for the online retailers. Flat rate of 8%. Perhaps Van?s will not participate in that program.

brewtoo said:

8% is what Amazon collects throughout Alabama. Seems the state legislature came up with a ?simplified? system to make it easier for the online retailers. Flat rate of 8%. Perhaps Van?s will not participate in that program.

Click to expand...

Snail mail an order form. Use tax is 2%, if Vans doesn't collect.

BTW, the 2% "automotive" category means...

810-6-1-.12. Automotive Vehicles.
(1) The term "automotive vehicles" as used in the Sales and Use Tax Laws shall mean and include, but shall not be limited to automobiles, trucks, buses, tractors (crawler and pneumatic tired types), motorcycles, motorscooters, automotive industrial trucks, Ross Carriers, lift trucks, locomotive cranes, airplanes, tugs, motorboats with built-in motors,
boats with outboard type motors attached thereto by attachments intended to be permanent rather than readily removable and which motors are controlled with remote controls built on or into the hull of said boat.

https://revenue.alabama.gov/wp-content/uploads/2017/10/Sales_Use_Rulebook.pdf

DanH said:

Snail mail an order form. Use tax is 2%, if Vans doesn't collect.

BTW, the 2% "automotive" category means...

810-6-1-.12. Automotive Vehicles.
(1) The term "automotive vehicles" as used in the Sales and Use Tax Laws shall mean and include, but shall not be limited to automobiles, trucks, buses, tractors (crawler and pneumatic tired types), motorcycles, motorscooters, automotive industrial trucks, Ross Carriers, lift trucks, locomotive cranes, airplanes, tugs, motorboats with built-in motors,
boats with outboard type motors attached thereto by attachments intended to be permanent rather than readily removable and which motors are controlled with remote controls built on or into the hull of said boat.

https://revenue.alabama.gov/wp-content/uploads/2017/10/Sales_Use_Rulebook.pdf

Click to expand...

But if you're paying as you go then you aren't really purchasing an airplane, you're purchasing airplane parts, so what then I wonder?

Looks like for Michigan it's 6% either way:
"Use tax of 6% must be paid to the State of Michigan on the total price (including shipping and handling charges) of all taxable items brought into Michigan or purchases through the internet, by mail or by phone from out-of-state retailers that do not collect and remit sales or use tax from their customers."