An RV dealership in Elkhart County that used the open road to help certain customers avoid Indiana sales tax, told the Indiana Supreme Court on Friday its actions were greenlighted by the state’s statue and regulations.
This story by Marilyn Odendahl originally appeared in The Indiana Lawyer.
Richardson’s RV in Middlebury, gave buyers, who were not exempted from paying Indiana sales tax, the option of physically picking up their vehicles across the state line in Michigan. The Hoosier state has reciprocal agreements with 41 states that enables customers to avoid paying Indiana sales tax but customers from the other nine states had to pay the sales tax from Indiana as well as their home state.
By physically handing over the keys at a dirt lot in White Pigeon, Mich., 7.8 miles north of the dealership, Richardson’s maintains the transaction was completed outside Indiana and therefore not subject to Indiana sales tax.
The Indiana Department of State Revenue disagreed. It found that every aspect of the sale — the selection of the vehicle, the financing, the mechanical adjustments and the titling — were all completed on the lot in Middlebury. Driving the RV to Michigan before giving it to the customer was an impermissible attempt to avoid Indiana sales tax.
Concluding the sales did take place in Indiana and the RV dealer should have collected state sales tax on those Michigan transactions, the department assessed additional tax liabilities against Richardson’s for 2010, 2011 and 2012.
Richardson’s successfully appealed to the Indiana Tax Court. In granting a motion for summary judgment, the court agreed that because physical delivery was made across state lines, the RVs were not subject to Indiana sales tax.