Sales Tax On The Road

Today TaxMama hears from Dave in New Hampshire, who asks. “I am a New Hampshire resident, and traveling to the West Coast. I’ve heard that in other states, such as Washington, New Hampshire residents do not have to pay sales tax. Is this true for all other states? If so, what do I do to tell retailers that I am exempt from sales tax?”

Dear Dave,

The nation’s top expert on sales tax, Diana DiBello , formerly Vertex Inc.’s Director of Tax, [now at www.dibellotaxconsulting.com ] responded to your question. Here’s what she said.

Sales tax is typically imposed on the “sale, use or consumption” of tangible personal property. When a resident of a state travels to another state and makes purchases in a retail store they typically will be charged the sales tax.

If the purchaser requests to have the product shipped to their home state (which in this case does not impose a tax), they may request that the home state tax be charged. However, this may be difficult for the retailer to accomplish as their point of sales systems are coded with that location’s tax rate and applying another tax rate may be difficult.

Besides, the likelihood of a retail cashier understanding what the heck you are talking about are slim to none.

Finally, if the NH resident will be consuming the goods or putting them into first use in the state of California, for example, then I am sorry to say, they need to pay the tax. I don’t know about you but if I buy something new, I want to wear/use it right away…

My best advice to the New Hampshire resident is to plan for paying the sales taxes. They may want to call the specific state(s) for guidance. Depending on the state, there may be some sort of refund provision. The enclosed link has some Washington information. [ Exemption rules in Washington State http://www.leg.wa.gov/RCW/index.cfm?section=82.08.0273&fuseaction=section ]

This explains that if the purchaser can prove their state of residence and that the purchase will be put to use in that state, they may claim exemption. I hope this helps.” So, now you have it.

And remember, you’ll find answers to questions about sales tax and all kinds of tax issues, free. Where? Where else? At TaxMama.com

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