ST 2007-04 – Sales and Use Tax: Sales of Motor Vehicles to
Nonresidents of Ohio –Issued August 2007; Revised March 2009;
Revised October 2011
The purpose of this information release is to explain the
application of Ohio sales and use tax to sales of motor
vehicles by Ohio motor vehicle dealers to nonresidents of
Ohio (“Nonresidents”).
R.C. 5739.029 allows the imposition of Ohio sales tax on the
purchase of motor vehicles by Nonresidents in certain cases.
That provision applies only to sales of motor vehicles
to Nonresidents made on and after August 1, 2007.
Leases to Nonresidents continue to not be subject to
sales tax.
To What Transactions Does R.C. 5739.029
Apply?
R.C. 5739.029 applies to all sales of motor vehicles by an
Ohio motor vehicle dealer to a Nonresident who removes the
vehicle from Ohio to be titled, registered or used outside
Ohio, whether in another state or in a foreign nation.
This provision does not affect the application of sales tax
to motor vehicle purchases by Ohio residents. An Ohio
resident must pay the sales tax on a motor vehicle that will
be titled in and used in Ohio. In addition, residents
of most other states will continue to be exempt from Ohio
sales tax on the purchase of motor vehicles in Ohio.
Currently, motor vehicle dealers are only required to collect
sales tax on sales of motor vehicles to Nonresidents who will
remove the vehicle to one of these seven states--Arizona,
California, Florida, Indiana, Massachusetts, Michigan and
South Carolina.
How Is the Sales Tax Calculated?
The amount of sales tax to collect on sales of motor vehicles
to Nonresidents who will remove the vehicle purchased to any
of the above seven states to be titled, registered or used is
the lesser of the:
- Sales tax due to Ohio; or
- Amount of sales tax the Nonresident would pay in the
state of titling, registration or use.
A trade-in allowance reduces the price of a new or used
vehicle to nonresident purchasers if allowed by the state to
which the vehicle will be removed. Rebates or other
cash back offers paid by someone other than a dealer do not
reduce the tax base, except in South Carolina.
Here’s how to determine the tax due from Nonresidents who
will remove the motor vehicle to one of the seven listed
states:
- Calculate the Ohio price of the vehicle under Ohio law,
i.e., as you would for a sale to an Ohio resident, taking
into account the trade-in deduction if a new vehicle is
purchased. The sales tax rate to apply to the Ohio price is
6.0%.
- Calculate the price in the applicable state taking into
account the adjustments in the chart below, such as a
trade-in allowance if permitted by the state, and apply the
sales tax rate of the appropriate state listed in the chart
below. Please note that the sales tax rates listed in
the chart below may be subject to change.
- The lesser of the two amounts must be collected as the
sales tax due from the customer.
The following is the list of the states, applicable tax rate,
and the adjustments required to determine the proper amount
of sales tax to
collect:
|
State
|
Sales Tax Rate
|
Trade-In Allowance
|
Special Provisions
|
|
Arizona
|
6.60%
|
Yes –New and Used
|
|
|
California
|
7.25%
|
No
|
|
|
Florida
|
6.00%
|
Yes- New and Used
|
|
|
Indiana
|
7.00%
|
Yes-New and Used
|
Nonresident exemption for RVs and trailers with a load
capacity of at least 2200 pounds
|
|
Massachusetts
|
6.25%
|
Yes-New and Used
|
|
|
Michigan
|
6.00%
|
No
|
|
|
South Carolina
|
5.00%
|
Yes-New and Used
|
Tax cap of $300.00
|
For sales to Nonresidents who remove the vehicle to South
Carolina for titling, registration or use, collect no more
than $300, the maximum sales tax due on the purchase of a
motor vehicle in that state.
Sales to Nonresidents who remove the vehicle to any other
state (including, on or after September 23, 2008, any
province of Canada) not listed above for titling,
registration or use are not subject to Ohio
sales tax, provided the proper affidavit is completed by the
purchaser and filed with the Clerk of Courts when application
for title is made. The purchaser must complete Form
STEC-NR, Affidavit Regarding Sale of a Motor Vehicle,
Off-Highway, Motorcycle, or All-Purpose Vehicle to an
Out-of-State Resident. The affidavit requires the date
of sale which is the date the customer pays for the vehicle,
or takes delivery, whichever comes first, the amount of sales
tax collected on the sale, if any, and the trade-in
amount.
If the sale is to a Nonresident who will remove the vehicle
purchased to any foreign country (except, on or after
September 23, 2008, Canada) for titling, registration or use,
the Ohio sales tax should be collected at six percent (6%) of
the price of the vehicle.
A sale to a Nonresident who will remove the vehicle purchased
to one of the seven states where sales tax must be collected
may still qualify for exemption from the sales tax if a valid
Ohio exemption exists. For example, a trucking company from
Michigan may claim an exemption for tangible personal
property used in highway transportation for hire if they are
carrying goods belonging to others and hold a permit or
certificate issued by the United States authorizing the
holder to engage in transportation of tangible personal
property belonging to others for consideration over or on
highways. If an exemption applies, the purchaser must
complete Form STEC-MV, Sales and Use Tax Certificate of
Exemption Regarding Sale of a Motor Vehicle, Off-Highway
Motorcycle, or All-Purpose Vehicle.
Exemptions allowed in other states but not in Ohio do not
exempt the sale from Ohio sales tax.
Examples
Example 1: An Indiana resident purchases a
new vehicle from an Ohio dealer. There is no trade-in
involved in the transaction.
|
|
Ohio Calculation
|
|
Indiana Calculation
|
|
Purchase Price
|
$23,000.00
|
|
$23,000.00
|
|
Tax Rate
|
6.00%
|
|
7.00%
|
|
Calculated Tax
|
$1,380.00
|
|
$1,610.00
|
|
Tax to be Remitted to Ohio
|
|
$1,380.00
|
|
Example 2: A Florida resident purchases a
new vehicle from an Ohio dealer. The customer has a trade-in.
|
|
Ohio Calculation
|
|
Florida Calculation
|
|
Purchase Price
|
$25,000.00
|
|
$25,000.00
|
|
Trade-In Allowance
|
$7,500.00
|
|
$7,500.00
|
|
Tax Base
|
$17,500.00
|
|
$17,500.00
|
|
Tax Rate
|
6.00%
|
|
6.00%
|
|
Calculated Tax
|
$1,050.00
|
|
$1,050.00
|
|
Tax to be Remitted to Ohio
|
|
$1,050.00
|
|
Example 3: A Michigan resident purchases a
new vehicle from an Ohio dealer. The customer has a trade-in.
Michigan does not allow a trade-in allowance.
|
|
Ohio Calculation
|
|
Michigan Calculation
|
|
Purchase Price
|
$28,000.00
|
|
$28,000.00
|
|
Trade-In Allowance
|
$7,500.00
|
|
$7,500.00
|
|
Tax Base
|
$20,500.00
|
|
$28,000.00
|
|
Tax Rate
|
6.00%
|
|
6.00%
|
|
Calculated Tax
|
$1,230.00
|
|
$1,680.00
|
|
Tax to be Remitted to Ohio
|
|
$1,230.00
|
|
Example 4: A California resident purchases a
new vehicle from an Ohio dealer. There is no trade-in
involved in the transaction.
|
|
Ohio Calculation
|
|
California Calculation
|
|
Purchase Price
|
$33,000.00
|
|
$33,000.00
|
|
Tax Rate
|
6.00%
|
|
7.25%
|
|
Calculated Tax
|
$1,980.00
|
|
$2,392.50
|
|
Tax to be Remitted to Ohio
|
|
$1,980.00
|
|
Note on Examples 1, 3 and 4. In these
examples, the dealer will report and pay to Ohio a sales tax
amount less than due in the resident state. Upon return to
his or her home state, the purchaser may owe additional sales
or use tax to that state. The Ohio dealer, at the request of
the customer, may collect the full amount of sales tax due to
both states for the transaction. The bill of sale should
separately list the sales tax amounts for the two states.
When completing the application for an Ohio title and the
nonresident affidavit, the dealer should include only the
Ohio sales tax collected and should remit that amount, less
discount, to the Clerk of Courts. Sales tax a dealer
collects for another state must be remitted by the dealer to
the appropriate state according to that state’s law.
Example 5: An Indiana resident purchases a
used vehicle from an Ohio dealer. The customer has a
trade-in.
|
|
Ohio Calculation
|
|
Indiana Calculation
|
|
Purchase Price
|
$17,000.00
|
|
$17,000.00
|
|
Trade-In-Allowance
|
$3,500.00
|
|
$3,500.00
|
|
Tax Base
|
$17,000.00
|
|
$13,500.00
|
|
Tax Rate
|
6.00%
|
|
7.00%
|
|
Calculated Tax
|
$1,020.00
|
|
$945.00
|
|
Tax to be Remitted to Ohio
|
|
$945.00
|
|
Example 6: A South Carolina resident
purchases a new vehicle from an Ohio dealer. The customer has
a trade-in. South Carolina has a $300.00 cap on sales tax on
the purchase of a motor vehicle.
|
|
Ohio Calculation
|
|
South Carolina Calculation
|
|
Purchase Price
|
$24,000.00
|
|
$24,000.00
|
|
Trade-In-Allowance
|
$4,500.00
|
|
$4,500.00
|
|
Tax Base
|
$19,500.00
|
|
$19,500.00
|
|
Tax Rate
|
6.00%
|
|
5.00%
|
|
Calculated Tax
|
$1,170.00
|
|
$975.00
|
|
Tax to be Remitted to Ohio
|
|
$300.00
|
|
How Is the Tax Reported and Remitted to the
Ohio?
The dealer must remit the sales tax to the Clerk of Courts at
the time it applies for the nonresident title.
What Impact Does This Have on Motor Vehicle Sales to
Ohio Residents?
R.C. 5739.029 does not apply to any motor
vehicle sale to an Ohio resident.
If an Ohio resident purchases a motor vehicle from an Ohio
motor vehicle dealer and takes possession of the vehicle in
Ohio, the dealer must collect sales tax and remit it to the
Clerk of Courts at the time the dealer obtains the title for
the vehicle. The Ohio sales tax must be paid based upon
the purchaser’s county of residence. The purchaser’s subsequent
removal of the vehicle from Ohio does not affect the Ohio tax
liability.
If an Ohio resident purchases a motor vehicle from an Ohio
dealer and instructs the dealer to deliver the vehicle to a
location outside Ohio where the vehicle will subsequently be
titled, registered or used, the dealer should complete a
notarized Form STEC IC, Statement Regarding Sale of a Motor
Vehicle, Off-Highway Motorcycle, or All-Purpose Vehicle in
Interstate Commerce, and present it to the Clerk of
Courts. The dealer may then obtain an Ohio title
without collection or payment of the Ohio sales tax, as the
sale will be a sale in interstate commerce.
Questions?
If you have any questions regarding this matter, please call
1-888-405-4039.
OHIO RELAY SERVICES FOR THE
HEARING OR SPEECH IMPAIRED
Phone: 1-800-750-0750
R.C. 5739.029(G)(2) defines the term “state” for purposes of
this statute to include states, districts, commonwealths, or
territories of the United States, such as the District of
Columbia, U. S. Virgin Islands, Puerto Rico, and any province
of Canada.
Note: Indiana provides an exemption for purchases of
recreational vehicles and trailers with a load capacity of at
least 2200 pounds by nonresidents who remove the vehicle for
titling outside Indiana. Therefore, sales of these
types of vehicles by Ohio dealers to Nonresidents who will
remove the recreational vehicle or trailer to Indiana for
titling, registration or use are not subject to Ohio sales
tax.
Available on the Department of Taxation’s (“ODT”) Web site at
http://tax.ohio.gov/documents/forms/fill-in/sales_and_use/exemption_certificates/ST_STEC_NR_FI.pdf.
Available on ODT’s Web site at
http://tax.ohio.gov/documents/forms/fill-in/sales_and_use/exemption_certificates/ST_STEC_MV_FI.pdf.
Available on ODT’s Web site at
http://tax.ohio.gov/documents/forms/sales_and_use/exemption_certificates/ST_STEC_IC_FI.pdf.