The financially beleaguered Indiana General Assembly in its waning moments in April partially restored a Hoosier sales tax exemption for out-of-state RV buyers.
Rather than paying the 6% Indiana sales tax, out-of-state buyers starting July 1 will only pay to Indiana the amount of sales tax they would pay in the state where they will register their vehicle. Reciprocal agreements between most states will allow the tax paid in Indiana to be credited in the purchaser’s home state.
The action gave dealers a little – but not a lot – of what was taken away from them when state sales tax laws changed last July. Prior to that time, out-of-state RV buyers paid no sales tax in Indiana at all.
“The legislature essentially leveled the playing field and removed the penalty against out-of-state buyers coming to Indiana,” said Mark Bowersox, director of recreation vehicles for the Recreation Vehicle Indiana Council (RVIC). “It’s not ideal. It’s not where we were two years ago, but it is going to be workable.
“We intend to go back next year and try to get it back to the way it was two years ago.”
Although Indiana’s exemption didn’t excuse the purchaser from paying sales taxes when he registered the unit in his home state, not requiring buyers to pay tax in Indiana gave a perceived marketing advantage to dealers in the state where more than 50% of RVs are manufactured.
After the change last July, a penalty accrued to buyers from 35 states with sales taxes lower than Indiana’s, and word quickly spread among potential consumers.
That penalty was hard for some large Hoosier dealers to take.
“Our business was up through the end of June last year and as soon as that tax law hit our business went down by more than 10%,” said Joel Rose, president of Stouts RV Sales Inc. in the Indianapolis suburb of Greenwood, Ind. “It just put the whammy on us.”
With Indiana’s budget out of balance, Rose doesn’t expect the Indiana legislature to ever return things to the way they were. “I doubt that will happen,” he said.
Dave Knabel, general manager of Tom Stinnett Freedom RV Center, Clarksville, Ind., which experienced a 30% decline in Class A motorhome sales after last July 1, expects business to return when word gets out that the law has been changed yet again.
“I hope it brings back some of the customers that we’ve lost,” Knabel said. “It could have been better, but we are pleased.”
Neither Knabel nor Rose were pleased with another provision in the new law that requires out-of-state buyers to return a copy of their registration and title to the dealership within 60 days of purchase.
“I don’t now how we are going to be able to chase that down,” Rose said. “It’s going to be hard to make someone send you a copy of documents like that after they’ve left you.”
Without the copies the dealer becomes responsible for paying the state the amount of the exemption.