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Indiana: Exemption for RVs Sought


 Should they be exempt for out-of-state buyers?

With the keys to an RV in your pocket, you can travel the continent. You can head to the Yukon and gaze at the northern lights, sit in the emptiness of South Dakota’s Badlands, and bathe in the warm waters of the Gulf of Mexico. You’ll make new friends. You’ll live the dream.

For a price.

The average price of a new RV is $122,000. $200,000 to $500,000 gives you more space, finer finishes, and more options. You can pay less, but there’s always a hidden cost: Your comfort? Your marriage?

Sales and use tax on recreational vehicles tends to be substantial. More than one state department of revenue therefore strives to ensure that residents have paid sales or use tax on RVs stored or used in the state. If you live in Minnesota and don’t register and pay sales or use tax on your RV, for example, you could be convicted of a felony and put in prison. That’s not exactly living the dream.

Indiana may take a different approach, actively courting out-of-state consumers of RVs. If Indiana Senate Bill 156 is enacted, all recreational vehicles and cargo trailers purchased in Indiana and subsequently registered in another state or country would be exempt from Indiana sales tax.

RVs are already exempt from Indiana sales tax for residents of 41 states with a reciprocal agreement with Indiana. Residents of those states don’t pay Indiana sales tax on purchases of RVs (removed from Indiana), and in turn, Indiana residents receive similar exemptions in those states. SB 156 would allow that exemption for all out-of-state RV buyers.

Why?

According to bill sponsor Sen. Carlin Yoder (R-Middlebury), “Indiana has lost a lot of RV dealers because of the way we make customers pay double in sales tax.”

Dave Titus, owner of International RV Wholesaler in Elkhard, says he loses about $1 million in revenue annually under the current tax system. He says he can offer great deals, “but that is all lost when you have to pay sales tax twice” (South Bend Tribune).

What?

Residents of the handful of states without reciprocity have to pay Indiana sales tax if they buy an RV in Indiana. Unless they live in a state with no sales tax, they'll probably also owe use tax on the RV to their home state. Most states will credit the 7% Indiana sales tax paid against the amount owed to the resident state.

Matthew Troup, manager of Total Value RV in Elkhart, hasn’t heard many complaints about sales tax from customers. According to him, most customers coming from a state with a higher sales tax, typically "get credit for the 7 percent sales tax paid and Indiana." They only have to pay the difference to their state.

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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.