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taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 390
Experience:  Licensed CPA, MA, MST with 29 year's experience. Teach Accounting and Tax courses at Masters level.
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I purchased my at Indiana in 2010 and paid 7% tax on it. I

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I purchased my at Indiana in 2010 and paid 7% tax on it. I made an even trade this year, 2013, at the same car dealer in Indiana. (Even trade means I do not have to pay anything for the new car. The value of my old car covers the document fee and tax for the new car)

However, I moved to Louisiana and tried to transfer my car registration at Louisiana. The DMV asked me to pay a 9% sales tax on my new car. I felt is was unfair for me to pay tax twice, both in Indiana and Louisiana. Nevertheless, I had to transfer my registration. So, I paid the tax+registration+plate at Louisiana DMV.

I am wondering if I was supposed to pay that 9% automobile tax in Louisiana. If not, can I get my tax back, and how? thanks!
Submitted: 10 months ago.
Category: Tax
Expert:  taxmanrog replied 10 months ago.

Welcome to Just Answers! Thank you for giving me the opportunity to assist you! I will do my best to help!

 

Unfortunately, you were subject to the tax and had to pay it. Louisiana assesses a 4% state use tax on all motor vehicles that are brought into the state by new residents. In addition, the individual parishes can assess a 1% to 5.5% tax on top of this. The State of Louisiana allows a credit of up to 4% for taxes paid to other states if that other state allows a similar credit for Louisiana residents who move to that state.

 

Unfortunately, Indiana allows no such credit or exemption. The Indiana law states that, absent a statutory exemption, all sales of motor vehicles and trailers purchased in Indiana are subject to Indiana sales and use tax. This includes sales where the purchaser intends to immediately register, license and/or title the motor vehicle or trailer for use in another state.

 

So, since Indiana allows absolutely no credits for anyone, then Louisiana will not give you the credit either.

 

I wish I had better news! If you have any questions, please let me know. If my answer has been helpful, please rate me highly. I would appreciate it!

 

Again, thanks! Have a great week!

 

Roger

Customer: replied 10 months ago.

Thank you for your quick answer. But I paid for 9% automobile tax in Louisiana instead of 4%. So, I wonder where the 4% comes from.

Expert:  taxmanrog replied 10 months ago.

As I stated above, the State of Louisiana assesses a 4% state use tax rate. The local parishes also assess a local use tax. This can range from 1% to 5.5%. You must have moved into a parish that has a 5% use tax rate. The 4% state tax rate plus the 5% parish rate gives you the 9% rate that you paid.

 

I hope this answers your question. If you have any more, please feel free to ask! Again, if you have found my answer helpful, please rate me highly. I would appreciate it!

 

Again, thanks!

 

Roger

Customer: replied 10 months ago.

so, what is your best advice for avoiding double taxation on automobile purchase?

Expert:  taxmanrog replied 10 months ago.

Short of not buying it in Indiana, I don't think that there is much you can do.

 

Louisiana is going to tax you at 9% on your car purchase. That is the MINIMUM that you can pay. If you buy from a dealer that is in a state that has a tax agreement with Louisiana, then you can get a maximum of 4% credit against the 9%, but you have to pay that 4% or more to get that credit. The credit is limited to the lesser of 4% or the amount of tax you paid to the other state, and like I said, that is limited to the few states that have agreements with Louisiana.

 

So, I guess that Louisiana is trying to make sure that people buy cars in Louisiana!

 

If you have any more questions, please let me know.

 

Thanks!

 

Roger

taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 390
Experience: Licensed CPA, MA, MST with 29 year's experience. Teach Accounting and Tax courses at Masters level.
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