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Indiana lawmakers approved a limited sales-tax exemption for non-Indiana residents who buy new RVs and larger cargo trailers from Indiana dealers, moving the legislation to Gov. Mitch Daniels for signature.
According to a report in the South Bend Tribune, the bill essentially exempts the difference between a higher Indiana sales tax and the tax rate in the customer’s home state.
“In a sense it levels the playing field, where a customer’s no longer penalized for buying in Indiana,” said Mark Bowersox, recreation vehicles director at the Recreation Vehicle Indiana Council.
Indiana has never actually penalized anyone for buying RVs. But until last July, the state waived all sales taxes on new RVs destined for out-of-state titling and registration.
When lawmakers eliminated the exemption to boost tax revenues, retail sales of new RVs fell dramatically, according to the industry.
Most states have a sales tax, and the Indiana exemption did not excuse people from paying the appropriate sales tax at home. But Hoosier retailers and industry associations said the correlation between the exemption’s end and falling sales was too strong to ignore.
“Since this law went into effect in the summer of 2004,” Bowersox said, “the customers stopped coming.”
RV retailers hope to recover that traffic once word of the new law spreads to consumers.
The bill represents a victory of sorts for Hoosier retailers, but they will still have to contend with another provision of the law that they find troublesome.
Dealers are required to have on file, within 60 days of sale, a copy of the buyer’s out-of-state title or registration. If that provision isn’t met, the retailer is liable for the exempt share of the tax.
“We’ll begin exploring what our options are to require consumers to send back that proof,” Bowersox said.