Do I charge sales tax on out-of-state sales?
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It depends on the states involved and how delivery occurs. If you deliver the vehicle to the buyer in their state, you may need to collect tax for that state (if you have nexus). If the buyer takes delivery in your state and drives it home, you typically collect your state's tax. Most out-of-state buyers will pay use tax when they register in their home state. Always get an exemption certificate if you're not collecting tax.
Does a trade-in reduce the taxable amount?
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In most states, yes. The trade-in credit reduces the taxable base — you only pay tax on the difference between the sale price and trade-in value. However, a few states do not allow trade-in credits (notably California for the full trade-in value in all cases, and Hawaii). Check your state's specific rules, as some cap the trade-in deduction or have different rules for leases.
What's the deal with doc fees? Is there really a cap?
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Many states cap documentary fees (also called dealer fees, processing fees, or admin fees). For example, California caps it at $85, Louisiana at $200, and Illinois at $300. Some states have no cap but require disclosure. Charging above the cap can result in refunds, fines, or regulatory action. Always check your state's current cap — they change.
Are wholesale transactions exempt from sales tax?
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Generally, yes. Dealer-to-dealer wholesale transactions are exempt from sales tax in most states because the vehicle is being purchased for resale. The buying dealer will collect tax when they sell to the retail customer. You must keep proper documentation (resale certificates, dealer licenses) to support the exemption. Some states require specific exemption forms.
When does a dealer have to collect tax vs. the buyer paying DMV?
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In most states, licensed dealers must collect sales tax at the point of sale and remit it to the state. The buyer should not pay tax again at DMV. However, in some situations — like out-of-state sales, private sales, or certain special transactions — the buyer pays use tax directly to DMV when registering. If you're a dealer, assume you must collect unless you have a specific exemption.