by Melissa Crumish on July 09, 2012
It’s not impossible to avoid sales tax when purchasing a book or shirt online. Unfortunately, there’s no such tax-immunity when it comes to buying used cars on the Internet. You still have to pay your state’s sales tax when registering the vehicle. regardless of the purchase location.
How Auto Sales Tax Works When Buying Online
You don’t pay the sales tax rate of where you purchased the used car, but the sales tax rate of where you register it.
For example, say you reside in Myrtle Beach, South Carolina and you purchase a car online from a private seller in Rapid City, South Dakota. Even though the purchase takes place in Rapid City, where the sales tax rate is 4%, you would pay Myrtle Beach’s 8% auto sales tax rate.
The same applies when purchasing used vehicles online from one
of the five states without sales tax – Alaska, Delaware, Montana, New Hampshire, and Oregon. Even though used car taxes don’t apply there, you’d still pay the sales tax of your state.
How Sales Tax is Calculated
When registering the vehicle with your Department of Motor Vehicles (DMV) you might be expected to provide a bill of sale. This is important. The state needs it for determining your sales tax based on the used car’s purchase price. Whether you bought the car in person or over the Internet has no bearing.
The DMV will then apply your local sales rate to the car’s sales price.
NOTE: Some states may charge a use tax in lieu of a sales tax. In most cases it’s the same rate, but a different name. Washington, for example, employs a use tax when a used car is purchased from a private party.