A stroke of Gov. Eric Holcomb’s pen could lead to an economic boom for Indiana recreational vehicle dealers.
As reported by the Elkhart Truth, Senate Bill 172 passed the House of Representatives in Indianapolis by a 96-1 vote on Tuesday (March 22), paving the way for out-of-state RV and cargo trailer buyers from nine states, including Michigan, to finally avoid being double taxed when they purchase their new RV here in Indiana.
If Holcomb signs the bill, it will become law.
Currently, 41 states have reciprocal agreements with Indiana that exempt out-of-state RV buyers from having to pay the 7% Indiana sales tax, with Indiana residents receiving a similar exemption for purchases in those states.
If you live in the other nine states — Michigan, Florida, California, Arizona, Hawaii, Massachusetts, Mississippi, North Carolina and South Carolina — there is the potential you could be double taxed. That means customers from one of those states could pay Indiana’s 7% sales tax at the time of purchase and then be required to pay sales tax in their home state as well.
The Truth reported that the new bill will enact a two-year trial period from June 30, 2017, to July 1, 2019, that will enable the state’s Department of State Revenue to work out reciprocal agreements with the nine states that do not currently have them in place. While that is being accomplished, the state will only collect the amount of sales tax equal to the state in which the RV or cargo trailer is being registered.
According to Ron Breymier, executive director of the Indiana Manufactured Housing Association-Recreation Vehicle Indiana Council (MHIA-RVIC), eight of the nine states have lower sales tax rates than Indiana, meaning buyers will be saving some money.
“Most of their home states will credit them the sales tax they have already paid, so they avoid being double taxed when they get home,” he said. “The one hiccup may be Mississippi.”
Two area Republican legislators, Sen. Blake Doriot of New Paris and Rep. Doug Miller of Elkhart, have been pushing the bill through the Statehouse.
Indiana used to be home to every No. 1 dealer in the country, but now they have relocated to Michigan or Ohio, according to Dave Titus, owner of International RV Wholesalers in Elkhart. Before 2004 Titus was completing 50 sales to Florida on an annual basis, but without a reciprocal agreement in place out-of-state RV buyers are no longer finding the cheapest RVs in Indiana.
That could all change with this bill, said Breymier. Shipping RVs out-of-state is not cheap and with over 85% of the world’s RVs manufactured in Indiana, the state is posed to save buyers big money if they make the trip.
“We have always had an edge here,” said Titus. “The sales tax rule took that away from us.”
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