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Various Vehicular State Sales Tax Tips

  • Jul 3, 2014 | Gail Cole

 Lower Manhattan: home to many, many parked cars.

Nothing says summer like a scenic drive. Maybe that’s why several state departments of revenue are posting information pertaining to vehicles, parking, and sales tax.

Illinois: out-of-state buyer exemption

Nonresidents who purchase a motor vehicle or trailer in Illinois may only claim the “out-of-state” buyer exemption if the vehicles/trailers “will be titled in a state that does not give Illinois residents an ‘out-of-state’ buyer exemption on their purchases in that state of motor vehicles or trailers that will be titled in Illinois.” In other words, unless you scratch my back I won’t scratch yours.

Check out the Illinois Department of Revenue’s Reciprocal – Non-Reciprocal Vehicle Tax Rate Chart for July 2014 for additional information.

Indiana: vehicles for use in another state                            

When a car is purchased in Indiana for use in another state, the rate of sales tax in that other state applies to the sale.

According to an information bulletin published by the Indiana Department of Revenue, “the sales tax rate imposed on such sales will be the state level sales tax rate of the state in which the vehicle will be titled and/or registered.” must be taxed at the rate of sales tax.” This policy is effective July 1, 2014.

Additional details and examples are provided on the information bulletin.

Michigan: perks for in-laws

Meanwhile, in Michigan, numerous vehicles transferred from one family member to another are exempt from use tax. Under House Bill 5261, effective retroactively to January 1, 2014, use tax:

“does not apply to a transfer of a vehicle, ORV, manufactured housing, aircraft, snowmobile, or watercraft if the transferee or purchaser is the father-in-law, mother-in-law, brother-in-law, sister-in-law, son-in-law, daughter-in-law, or grandparent-in-law of the transferor.”

Cousins are out of luck.

New Jersey: so many ways to park a car

A 7% sales tax is imposed on parking, storing and garaging motor vehicles in New Jersey. However, certain exceptions apply. Sales tax is not collected on the following:

  • Residential parking;
  • Employee parking when provided by an employer or at an employer-owned/operated facility;
  • Municipal parking, storing or garaging; and
  • "Receipts from parking, storing, or garaging a motor vehicle subject to tax pursuant to any other law or ordinance."

There are so many ways to park a car. The New Jersey Division of Taxation has published updated information about when sales tax applies to various parking services and when it doesn't. Numerous examples are provided, from parking charges paid to a homeowners' association to parking at Atlantic City Casino Hotels.

Please note the last bullet point above. New Jersey state sales tax does not apply to any parking charges already subject to tax "pursuant to any other law or ordinance." As of this writing, the following cities impose a municipal parking tax:

  • Camden
  • Elizabeth
  • Fort Lee
  • Jersey City
  • Newark

Additional information is available on the New Jersey Division of Taxation bulletin on parking.

New York: parking blues

Parking in New York City has sparked day-long arguments (Jerry Seinfeld) and dreams of a 113 story parking garage. It causes a strange alternate street parking dance as car-owners avoid street sweepers. And it is subject to New York State sales tax.

In the Big Apple, parking services, garaging services, and the storage of motor vehicles are subject to a combined state and local sales tax rate of 10 3/8%, broken down as follows:

  • 4% state sales tax;
  • 6% NYC local tax; and
  • 3/8% Metropolitan Commuter Transportation District (MCTD) tax.

Manhattan has an additional 8% parking tax, for a combined rate of 18 3/8%. Wow! However, residents of Manhattan are eligible for an exemption from the extra 8% tax.

Operators of Manhattan parking garages are required to maintain certain “special recordkeeping and enforcement provisions related to parking.” These are described on the New York State Department of Taxation tax bulletin, Parking Services in New York City.

And parking operators, beware! Employees of the Tax Department may “conduct a walkabout observation of a parking facility in Manhattan” any time the facility is open, without advance notice. “If the parking facility operator fails to keep and make records available or does not cooperate with the authorized employee conducting the walkabout, the department may estimate the amount of tax due.” If tax is found due, penalties may apply.

Additional information about parking in New York, including examples of taxable and exempt services, is available on another tax bulletin.

Don’t let summer scenic drives be niggled by sales tax. Learn how an automated sales tax solution works.

photo credit: andrew c mace via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.