Sales Tax Exemption

This is not very common, however there are a handful of states that require the purchasers to take physical possession out of state or the state sales tax applies regardless of you exemption that may be available in your home state. Not every state honors the interstate motor carrier exemption either.

When I was selling trucks in California we delivered most of them into Nevada or Arizona for our out of state customers to avoid the sales tax.

As for being refunded by your home state, that too varies by state and not all will refund or credit sales tax paid out of state.

 

They may be considering you hauling it home yourself as putting it into service inside of Florida, making it subject to Florida sales tax. Hiring a third party to transport it out of the state would be positive evidence that you did not place it into service for first use inside of Florida. The auction house has no way of knowing if you are going to take it directly out of state empty or if you will do a "load-out" and take a revenue load out of the state after picking it up at the auction, maybe even loading something else you purchased from the same sale on to it to haul home.

 

We have always claimed sales tax exempt when purchasing equipment in Georgia as well using the ST-5. We cross state lines but our company is in Georgia. We recently had an audit and were told to claim this exemption you must haul over 50% outside of the state of Georgia. In the wording on the ST-5 it does not clarify this. It simply states "principally to cross the borders". We cross state borders all day every day but more than 50% of our miles are from the state of Georgia. Has anyone else ran into this or had any issues with an audit like this? If what the auditor is telling us is true then it could be a very costly mistake for us and many others. Thank you for any help!

 

IANAL, but I can confirm first hand that Georgia DOR auditors are stupid, and think up all kinds of stupid ideas about how business operates.

You should probably consult a Georgia tax attorney if you believe what they're telling you, and if your risk exposure is enough to worry about. On the surface, this appears to be what one stupid auditor thinks you should be doing versus what's actually written into state law. It's been some years since I read it, but if memory serves the qualification is possessing interstate carrier authority, and nothing further.

 

Thank you for your reply. The entire audit has been a nightmare with her interpretations. The ST-5 does refer to holding a common carrier authority in interstate commerce and we have that. The problem is that she interprets "Principally to cross state borders" as hauling more than 50% outside of Georgia and I interpret it as written...we cross state borders all day everyday. We just don't haul more out of state miles than in state miles.

 

I got that. What I'm saying is: you'll probably have to wait until they lay an assessment on you then use the protest process to get to someone capable of critical thinking to review the case. Percentage of miles is just one measure of what "principally" means. Other statistics would possibly support your case. For example, percentage of days working out of state. That could matter if you were based in Dalton hauling product out of Chattanooga into GA. Or similarly, based down near Brunswick somewhere hauling cans out of Jacksonville. Both of those examples might yield low out of state miles, but actually going out of GA nearly every day, maybe several times a day.

I went thru this sort of thing with an IFTA/IRP audit where the outcome was a $400 assessment on IFTA and a 25¢ refund on IRP, despite the mileage numbers being exactly the same set. The auditor also needed a lesson on how to read logbooks when the shift includes midnight. She didn't understand a 900 mile day since she was incapable of seeing it as one and a half shifts. Turns out most of the "finding" was her using PCMiler to second guess routes, insisting that it was superior to my ELD system, with exact gps produced tracking straight from the provider not touched by me the carrier or drivers. The higher-up that my protest got to agreed with me and dismissed the whole thing, issuing a letter proclaiming "no discrepancies found."

 

Sales tax exemption depends on the state that you're registered in. Some states allow you to claim sales tax exempt, some don't.

 

I have found out that the auditor is incorrect by using mileage as "principally crossing state borders". It is calculated by how many times you cross the state border not how many miles you ran out of state.
I appreciate everyone's input.