Purchase/Register auto in another state to save on taxes?

[surfer349]

What is the name of your state (only U.S. law)? AZ

Hey,

So I just moved to AZ and am looking at purchasing a new/used auto. AZ in one of the least friendly places for car taxes. Has anyone had success with registering in another state but still using primarily in another state? Any idea about how to go about this?

Oregon is one of the cheapest places for tax and registration. Would I just need to have a PO box in the other state? How about how I would get the mail from the PO box to my 'real' address in AZ?

Would I need to take the auto to the other state to get tested and checked out? I'm looking at cars off ebay, so I could always buy one from that state and fly out to pick it up and drive it back to AZ.

any tips?

 

[Zigner]

What is the name of your state (only U.S. law)? AZ

Hey,

So I just moved to AZ and am looking at purchasing a new/used auto. AZ in one of the least friendly places for car taxes. Has anyone had success with registering in another state but still using primarily in another state? Any idea about how to go about this?

Oregon is one of the cheapest places for tax and registration. Would I just need to have a PO box in the other state? How about how I would get the mail from the PO box to my 'real' address in AZ?

Would I need to take the auto to the other state to get tested and checked out? I'm looking at cars off ebay, so I could always buy one from that state and fly out to pick it up and drive it back to AZ.

any tips?

Nobody's going to help you to defraud the state...dude.

 

[abda53]

You could get a PO Box to forward your mail... but you are still defrauding the state and having an address so far away will most likely give red flags. Not only that but if you get pulled over in AZ, you will have an AZ license.. and you are supposed to re-register your car in your current state after say many days (usually 30 or so).


If you can't afford to buy a car and have it registered, should you really be buying a car?

 

[FlyingRon]

Can't vouch for AZ but around here (especially since we also have local property tax on autos) they're pretty good at ferreting out cars that ought to be locally registered but aren't.

As pointed out, this isn't the how to break the law forum.

 

[Mass_Shyster]

You could form a corporation on Oregon and have the corp loan the car to you. This would be perfectly legal, although your insurance is usually based on where the auto is principally garaged. If you tell the insurance company that the vehicle is principally garaged in Oregon, when, in fact, it's principally garaged in Arizona, you are committing insurance fraud. The insurer would be within his rights to deny any claim.

You would also be liable for use tax rather than sales tax, as the vehicle would primarily be used in AZ.

You would also be liable for any local property tax on the vehicle, based on the location of the vehicle.

You would need to check the AZ laws to see how long an out of state vehicle can be operated within the state before it's considered an in state vehicle.

Back in the 1970s, my father drove a company car that had out of state plates on it. He was stopped one day by a police officer who said "I notice you've been driving this out of state vehicle for several months - you need to register it here".

Those damn cops notice everything.

 

[surfer349]

Nobody's going to help you to defraud the state...dude.

If you've ever bought something online (amazon.com anybody) and not paid sales tax, then you're "defrauding" the state...I wasn't asking for a holier than thou opinion.

Last I checked, it is perfectly legal to try to avoid tax (Tax avoidance is the legal utilization of the tax regime to one's own advantage, to reduce the amount of tax that is payable by means that are within the law. ) Why do you think CPA's exist? To help manage one's finances to help find ways to not overpay taxes.

 

[Zigner]

If you've ever bought something online (amazon.com anybody) and not paid sales tax, then you're "defrauding" the state

This statement is not correct. Try to learn a bit about the subject. If I buy something from out of state, I am under no legal obligation what-so-ever to pay any sales tax. Period.

Last I checked, it is perfectly legal to try to avoid tax (Tax avoidance is the legal utilization of the tax regime to one's own advantage, to reduce the amount of tax that is payable by means that are within the law. ) Why do you think CPA's exist? To help manage one's finances to help find ways to not overpay taxes.

Avoiding tax by all legal means is fine.

What you are proposing is against the law, dude.

 

[musicman654321]

If you've ever bought something online (amazon.com anybody) and not paid sales tax, then you're "defrauding" the state...

ROFL ! You are the most honest person I know if you pay use tax on online purchases. Kudos to you!

 

[davew128]

If you've ever bought something online (amazon.com anybody) and not paid sales tax, then you're "defrauding" the state...I wasn't asking for a holier than thou opinion.

It's not fraud because sales tax is only required when the purchase occurs in the state. USE tax is due, usually on the income tax return on that purchase.

Last I checked, it is perfectly legal to try to avoid tax (Tax avoidance is the legal utilization of the tax regime to one's own advantage, to reduce the amount of tax that is payable by means that are within the law. ) Why do you think CPA's exist? To help manage one's finances to help find ways to not overpay taxes.

The definition you gave is for tax REDUCTION. Tax AVOIDANCE usually entails engaging in a series of transactions or conduct solely for the benefit or reducing tax which in the context of most taxing jurisdictions has been held to be invalid.

 

[tranquility]

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands: Taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant."

- Honorable Learned Hand, U.S. Appeals Court Judge, Helvering v. Gregory, 69 F.2d 809 (1934)



Tax avoidance is fine. Tax evasion is not. (See Tax avoidance and tax evasion - Wikipedia, the free encyclopedia )



"I live in Alexandria Virginia. Near the Supreme Court Chambers is a toll bridge across the Potomac. When in a rush, I pay the dollar toll and get home early. However, I usually drive outside the downtown section of the city and cross the Potomac on a free bridge.

This bridge was placed outside the downtown Washington, DC area to serve a useful social service, getting drivers to drive the extra mile and to help alleviate congestion during the rush hour.

If I went over the toll bridge and through the barrier without paying the toll, I would be committing tax evasion.

If, however, I drive the extra mile and drive outside the city of Washington to the free bridge, I am using a legitimate, logical, and suitable method of tax avoidance, and I am performing a useful social service by doing so.

For my tax evasion, I should be punished.

For my tax avoidance, I should be commended. The tragedy of life today is that so few people know that the free bridge even exists."
---Justice Louis D. Brandeis

 

[davew128]

Most states will ignore business transactions that have the sole purpose of avoiding tax and no otherwise valid business purpose, especially with related entities when dealing with interest payments and royalties. Many state corporate income tax returns specifically add back deductions for those sorts of things.

Thats not to say one cannot use the law to minimize tax liability, only that especially in a business context one cannot artificially create deductions for the sole purpose of reducing tax.