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cm02WS6
08-22-2007, 10:46 PM
Hopefully someone might be able to help me out here. I'm getting close to making a deal on my ski club's boat, but the guy is from Canada and he's asking about sales tax on the purchase. The transaction will take place in Illinois, if that matters any (I assume it might).

Basically, I'm wondering if the buyer will pay any state sales tax? I know that if a buyer is from certain US states, they won't have to pay any Illinois state sales tax on the purchase, but I have no idea what applies if the buyer is from another country. I've searched the Illinois Department of Revenue website and even called their offices but couldn't find anything conclusive. I also tried asking my dealer but they are useless.

The buyer knows he will have to pay 6% tax to get it across the border no matter what he pays to buy it, so I think it might be a deal breaker if he has to pay Illinois state sales tax. Hopefully someone can help answer this.

Thanks for the help!

Chris

east tx skier
08-22-2007, 10:51 PM
This won't help, but in Texas, buyer pays about 6.25% sales tax on the boat and on the trailer regardless of where he purchased the boat. There are forms that the seller has to sign, which contain affidavits to transfer title/registration. Executing separate bills of sale for boat and trailer doesn't hurt.

If the seller is a dealer (in Texas), he's responsible for collecting the taxes at the sale.

So basically, it depends on what the law in Illinois is. And it may depend on what the law in Canada is. And let's not forget about importing a boat. I'm sure there will be some duty.

My head hurts.

bigmac
08-22-2007, 10:52 PM
Sales tax isn't paid at the point of sale unless the seller is a retail establishment that has a state sales/use tax account. Paying the sales tax is the buyer's problem and it's usually due when the boat is re-titled or re-registered. If he doesn't register it in Illinois, Illinois doesn't get any sales tax. All you have to do is collect the purchase price, give him the boat, give him a bill of sale, sign over the title, and wave goodbye. The rest is up to him.

dmayer84
08-22-2007, 11:00 PM
Sales tax isn't paid at the point of sale unless the seller is a retail establishment that has a state sales/use tax account.

Not always true, I bought my boat from a dealer in NY that did not collect sales tax even though they had a state sales/use tax account. When it is a vehicle that is going to be registered in another state, or country in this case, the tax will be paid where ever it ends up being registered or taken across the border.

bigmac
08-22-2007, 11:08 PM
Not always true, I bought my boat from a dealer in NY that did not collect sales tax even though they had a state sales/use tax account. When it is a vehicle that is going to be registered in another state, or country in this case, the tax will be paid where ever it ends up being registered or taken across the border.Excuse me...I stated that rather unclearly. I was referring to retail goods other than vehicles. I agree, vehicle dealers don't collect sales tax on vehicles because sales tax on vehicles is paid when it's titled and registered. When I bought my boat, I did pay the dealer the sales tax, but that was only because he was titling and registering it for me only as a courtesy. He wasn't obligated to do so.

east tx skier
08-22-2007, 11:11 PM
Excuse me...I stated that rather unclearly. I was thinking of retail goods other than vehicles. I agree, vehicle dealers don't collect sales tax on vehicles because sales tax on vehicles is paid when it's titled and registered. When I bought my boat, I did pay the dealer the sales tax, but that was only because he was titling and registering it for me only as a courtesy. He wasn't obligated to do so.

It's a matter of state law if I recall correctly. In Texas, if the boat and trailer are to be titled in Texas, I believe a dealer is required to collect the taxes upon the sale. I'll probably review this just for grins when I get to the point of selling the boat (even though I know I just need to wave and smile). :wavey:

/edit. BigMac, I think you may be right. It may be just a courtesy.

dmayer84
08-22-2007, 11:11 PM
Excuse me...I stated that rather unclearly. I was referring to retail goods other than vehicles. I agree, vehicle dealers don't collect sales tax on vehicles because sales tax on vehicles is paid when it's titled and registered. When I bought my boat, I did pay the dealer the sales tax, but that was only because he was titling and registering it for me only as a courtesy. He wasn't obligated to do so.

Sorry, thought you were talking about vehicles, not merchandise in general.

88 PS190
08-22-2007, 11:22 PM
Our family does used cars as a bit of a hobby.

Every car we have done is as was described, you sell the car, the buyer takes the title (which has the reassignment of the title filled in on the back) along with a bill of sale (with the price the vehicle was sold for) to the Secretary of State or the Department of motor vehicles depends on the state.

When a dealer sells a car (atleast in MI) they have the dealer deliver the RD108 (sales form) and bill of sale, and title to the secretary of state, because alot of people would otherwise purchase the vehicle take it home, try to slide some old plates onto it or just register a vehicle they already own and drive it.

IL is less difficult, though we have sold people cars, and then traded later for a different car and taken the first back, and notice that they never paid sales tax or reassigned the title.

So if you are just selling the guy a boat in IL, I would get the title, make up a bill of sale, fill the reassignment of title section in, send him to the currency exchange to pay his sales tax there and then he can register the boat.

6ballsisall
08-22-2007, 11:51 PM
If you buy a boat in state they can collect the sales tax.....When I bought my 95' In Indy the MC dealer collected all state sales taxes.

JimN
08-23-2007, 12:58 AM
Where the buyer is from doesn't matter. Where the sale takes place is what determines the sales tax rate. If you ship it to him and the sale is completed with no face-to-face interaction at all, he'll probably have to pay duties, which he may have to anyway, but sales tax may be waived. Contact the Illinois Department of Revenue to find out. US and/or Canadian Customs will be able to advise about transporting over the border after the sale and what charges will be incurred.

88 PS190
08-23-2007, 01:01 AM
Where the buyer is from doesn't matter. Where the sale takes place is what determines the sales tax rate. If you ship it to him and the sale is completed with no face-to-face interaction at all, he'll probably have to pay duties, which he may have to anyway, but sales tax may be waived. Contact the Illinois Department of Revenue to find out. US and/or Canadian Customs will be able to advise about transporting over the border after the sale and what charges will be incurred.

That hasn't been my experience, all taxation on vehicle sales that I have experienced has happened at the DMV or Sec. of state, or DOT as part of the transfer of the title.

cm02WS6
08-23-2007, 09:19 AM
You guys bring up some good points, and a lot of this makes more sense now. I'll do some more checking with the Department of Revenue.

One thing I forgot to mention is that our club would prefer that the deal be done through our dealer, so that we can show the sale as a trade-in and pay less sales tax on next year's boat. We can sell outright, but then it makes a considerable difference in the bottom line on next year's boat due to the tax differences.

Are there any Illinois boat dealers out there? Erk?

CBergerson
08-23-2007, 09:54 AM
In Minnesota, there is no sales tax on the purchase of a used boat from a private party. This also includes boats brought in from out of state, like when I bought mine from Andy G last fall. It made the deal that much sweeter to take advantage of that nice little loophole.

T Scott
08-23-2007, 10:07 AM
Disclaimer: Laws/regualtions vary from state to state. Check with your local DMV to obtains specific laws for your specific state.

I am a licensed auto/boat dealer here in Florida. When a buyer is out of state or country, I do not collect sales tax as they are responsible for paying taxes in their own state or country. The buyer never p[ays taxes in both stes (State of deal origination and home state) If a buyer is a Florida resident, I collect sales tax and registration fees. I sold a boat to a Canadian last year and the only taxes he had to pay were those required by Canadian law. He payed nothing here in the US.

bigmac
08-23-2007, 10:42 AM
That hasn't been my experience, all taxation on vehicle sales that I have experienced has happened at the DMV or Sec. of state, or DOT as part of the transfer of the title.Yeh I think that's wrong too. If I buy a vehicle in Wisconsin, I don't pay sales tax until I title it and register it, which I do here at home, not there....and then I pay the sales tax rate that's applicable where I live, not where I bought it.

Jorski
08-23-2007, 10:47 AM
I purchased my boat in Ohio, and imported it into Canada. I also have several friends who have imported cars from various states.

In all of those experiences, state sales tax was not charged, as the boat was not registered or titled in the state. The buyer pays provincial and federal sales tax (PST and GST) at the border when he imports the boat/car.

Hope that helps.

T Scott
08-23-2007, 10:49 AM
If I buy a vehicle in Wisconsin, I don't pay sales tax until I title it and register it, which I do here at home, not there....and then I pay the sales tax rate that's applicable where I live, not where I bought it.

BINGO!!!!!!!!

JimN
08-23-2007, 11:17 AM
Sorry, I think I was remembering the tax being collected at the dealer but we generally took care of the registration, too. I just can't see the Department of Revenue, in any state, allowing that much money to not be collected. He!!, they still want to tax internet sales!

bigmac
08-23-2007, 11:47 AM
Sorry, I think I was remembering the tax being collected at the dealer but we generally took care of the registration, too. I just can't see the Department of Revenue, in any state, allowing that much money to not be collected. He!!, they still want to tax internet sales!Technically, we are all liable for those internet or mail-order sales. The problem (for the states that have a sales/use tax law) is that there's no practical way to enforce it.

Chicago190
08-23-2007, 11:54 AM
Sorry, I think I was remembering the tax being collected at the dealer but we generally took care of the registration, too. I just can't see the Department of Revenue, in any state, allowing that much money to not be collected. He!!, they still want to tax internet sales!

I've never heard of people being taxed twice when purchasing vehicles. When I bought my car in Indiana I just slapped the old plates on the car and drove the speed limit home, and then paid sales tax when I registered it in Illinois. The only reason dealers collect the taxes is because they handle the registration. I worked at a car dealership in Illinois and I remember one time someone out of state bought a car and had it shipped up to Wisconsin. He didn't pay taxes on the car because it wasn't being registered in Illinois.

Of course, this probably varies by state, but I don't think Illinois will make him pay tax twice, but I'd be certain before you complete the sale. It wouldn't be fun to get stuck with $1000 in taxes when the guy is up in Canada saying too bad for you.

pepi
08-29-2007, 12:24 PM
I purchased my boat in Ohio, and imported it into Canada. I also have several friends who have imported cars from various states.

In all of those experiences, state sales tax was not charged, as the boat was not registered or titled in the state. The buyer pays provincial and federal sales tax (PST and GST) at the border when he imports the boat/car.

Hope that helps.


I agree...Should be no tax at point of sale but PST (depending on the province of registration) and GST at the border. Should be duty free if built in the US.