Out-of-state RV buyers may get tax break
Since the summer of 2004, whenever a customer pushes back from the desk and opts to think about the deal over a cup of coffee and a sandwich, Bill Beck, owner of Mobile Structures and MSI Trailers, knows the sale is dead.
Beck said his sales, like the sales of many recreational vehicle and cargo trailer dealers across the state, have fallen since the Indiana General Assembly enacted a bill that required out-of-state buyers to pay Indiana sales tax on RVs and cargo trailers. Estimating that more than 85 percent of his business is to non-Indiana residents, Beck has watched his sales “cut down by a couple of million dollars.”
A pair of bills moving through the Indiana General Assembly will attempt to remedy the situation by exempting many out-of-state customers from paying the 6 percent Indiana sales tax.
A Senate bill would lift the sales tax requirement for non-Indiana residents who register the RV or cargo trailer in a state that provides the same sales tax exemption for Hoosiers who buy RVs and cargo trailers in that state.
Forty-one states offer the “drive-away exemption,” said Dennis Harney, executive director of the Indiana Manufactured Housing Association and Recreation Vehicle Indiana Council.
A House bill makes a broader sweep by eliminating the requirement to pay Indiana sales tax when the out-of-state buyer registers the RV or cargo trailer in any other state within 30 days of the purchase.
The Senate bill, whose sponsors include Marvin Riegsecker, R-Goshen, passed the chamber Tuesday by a vote of 49 to 1. The House bill, whose sponsors include Jackie Walorski, R-Lakeville, and Tim Neese, R-Elkhart, met no opposition as it passed on a vote of 94 to 0.
“This is good news,” said Walorski.
Riegsecker agreed. “We’ve made the case that we’re the RV capital of the world in Elkhart County. We’re important to the state of Indiana.”
The law requiring out-of-state residents to pay Indiana sales tax went into effect July 1, 2004. In 2005, the General Assembly changed the law and allowed out-of-state residents to pay either the Indiana sales tax or their state’s sales tax, depending on which was lower.
Dealers, however, then had to provide proof that the non-resident customer actually did license and tag the RV or cargo trailer in the other state.
“It was confusing,” said Rob Reid, owner of Great Lakes RV Center. “It just became an accounting nightmare.”
According to RV Business, the Legislature passed the original bill to raise revenue during a “financial crisis” within Indiana.
Beck does not believe the state realized any financial gain from the law because he believes any increase in sales tax revenue would have been offset by a decline in income tax revenue from dealers.
Moreover, Beck and Reid pointed out that the law hurt not only dealers but other businesses as well because buyers who came to Elkhart to buy a motorhome or trailer, would often stay in local hotels, eat at local restaurants and take time to sightsee and shop around the area.
“It has been a drastic situation for everyone in the business,” Beck said. “The bad thing is, it’s been so unfair.”
