Sales tax on sawmill purchase

[pnyberg]

As I've mentioned a couple of times, I've been giving some serious consideration to buying a sawmill, and starting a portable custom sawing business.  The probability of my doing this has been climbing steadily, and has reached the point where I called Wood-Mizer this morning to ask a couple of preliminary logistical questions. 

Mostly, I was wondering about lead-time.  I've never pulled a trailer that weighed more than a few hundred pounds, and I'd really like to avoid having my first experience being a long drive across New York state in the dead of winter.  It seems that Hannibal gets shipments from Indianapolis fairly frequently, to the lead time is likely to be weeks, not months.

But in the course of the very brief conversation I had with Charlie, I got an ear-full having something to do with sales tax.  I think the point was if they delivered the mill to me in Connecticut (which I didn't even know was an option), they would definitely charge me the Connecticut sales tax, but if I picked up the mill in Hannibal, they'd give me some paperwork, and send me on my way, and whatever happens after that is between me and the state of Connecticut.  There was also some mention of tax numbers and tax exempt status that I didn't really follow.

I may have gotten the whole thing wrong, but my impression was that Charlie was doing a bit of a wink-wink, nudge-nudge routine, and trying to tell me without actually telling me that if I pick up the mill in Hannibal, I basically can get away without paying Connecticut sales tax.  This seems unlikely to me, especially since I'm pretty sure I'll have to register the "trailer" with the DMV.

What's other people's experience with this question?

Thanks,
    Peter

[DR Buck]

I think its dependent on your states tax laws.  Since I have an agriculture operation (farm) and my mill is consider part of my farm operation it as well as other farm equipment in VA is exempt from state sales tax.  I think I had to do a sales tax exempt form for PA when I picked up the mill.

[scsmith42]

Peter, as Dr. Buck stated it depends upon your individual state. 

It also is determined by "what state the sale is made in".  If Woodmizer sells the sawmill delivered to your state, then most states consider the sale to have been made in your state, and sales tax must be collected.

If they sell it to an out of state purchaser in their state, then usually no sales tax is collected in either state.  That's one reason why internet sales have flourished.

Pulling a trailer is not a big deal and the mills are not that heavy.  There are several important things to check, including making sure that your tow vehicle is adequate for the load, that all brakes and lights are working properly, make sure that all of the tires are at maximum recommended inflation, and keep in mind that you will need to make "larger" turns from a turning radius perspective.

If you're comfortable with the drive, you shouldn't worry about towing.

[Part_Timer]

Yep  Indiana stuck me with sales tax and my mill was from New Zealand.  

[Gary_C]

Yes, as others have said, it's a state thing and you should check your local sales tax laws. We also have a agricultural exemption from sales taxes but the trailer is another question that is not at all clear. If you have to license the trailer, and it is not clear in many states if you do, the state will require you to pay sales tax before licensing the mill.

However when I bought my Woodmizer, they gave me a separate bill of sale called a "certificate of origin" for the trailer option only and I paid sales tax on the trailer portion only and got a license for the mill. The state DMV does not know what a portable sawmill is anyway and they did not question the price. If they had questioned it, I would have claimed it was ag equipment but then you could not license it and would not be allowed on interstate highways and other major roads. But in some cases they do not even license boat trailers in this state.

[woodmills1]

woodmizers trailer very well

yes, you get a ceritificate of origin and register on the trailer value, so sales tax would be small

[nas]

In Ontario and also in some states, a sawmill is a piece of equipment and not a trailer, therefore it doesn't need to be licensed.

Nick

[beenthere]

pnyberg
Would be a good thing for you to find out more about your state tax laws.  ;) ;)

It's you that will be liable, if you get caught doing something to avoid paying taxes. Not someone else.

But you've heard about the options, which is good to know and to be fair with those who told you about them.
Might be that it isn't an option any more.  ;) ;) ;)

[Chuck White]

When I got my LT40HDG, I had questions to!

Then, during a visit to the local DMV it was determined that in NY it is stated that "If the primary function of the unit is not as a trailer, it is not required to be licensed!"  As we all know, it is primarily a sawmill, not a trailer!

[Magicman]

Mine is also considered "farm equipment".   Really no different than a hay bailer.  It has wheels, is towed, but isn't a trailer.

A talk with your DMV will clear up any questions.

We didn't pay sales taxes on parts from WM  until after Katrina when they put an established droppoint, store, outlet, or whatever it's called in Perkinston, Ms.  Now all parts are taxed.... :(

[brdmkr]

I think its dependent on your states tax laws.  Since I have an agriculture operation (farm) and my mill is consider part of my farm operation it as well as other farm equipment in VA is exempt from state sales tax.  I think I had to do a sales tax exempt form for PA when I picked up the mill.

Works the same way here.  You can buy ag equipment without paying sales tax.

[raycon]

In CT if you don't register it no sales tax and it won't show up on your property taxes(On edit that is the wink-wink nod-nod part?).  Register it you get both property and sales tax.  Business  tax filing you get the equipment depreciation tax deduction. . An accountant with manufacturing clients/experience as his core business is a good friend to have.

I registered one mill. Have not registered the wood chipper,etc. . I forget how the law reads for CT but basically I needed to register my mill to trailer it in CT. DMV rules change and they are online so who knows definitely worth looking into. As for pulling the mill they are light. Every now and then I glance back just to see if its still there (compared to towing a skid steers & dump trailers).

Good luck.

[MartyParsons]

Collection of sales tax is not the same as charging for sales tax. You are required to pay sales tax for every state. There are some state laws that you may be eligible for an exemption from sales tax. I always ask you to check with your accountant and see if you may be state tax exempt. There are times we do not collect sales tax due to delivery to a state, you are still required to pay or report your purchase to the department of revenue in the state you reside in. No one wants to pay sales tax, but that is why there are laws. In Pennsylvania there is a form REV 1220-a you may fill out and we will not collect the tax if this is signed.  Sawmills in PA are not exempt if you are a farmer. Some sawmills owners use the processing exemption. ( processing logs to lumber) Then they collect the sales tax on the lumber they produce.
This subject is touchy for most owners we talk to. We always try to do the best for you. I can not make you sales tax exempt. You need to have the info filled out on the form and that is all we need. If anything you purchase is not reported to the Dep of Rev you could be fined or worse. We are not required to send the form to the dept of revenue but must have it on file in case of an aduit.
I hope this helps. I am not picking sides just giving you information. I dont think anyone wants to hear this. Not even me.  :
Marty

[DR Buck]

There have been a number of threads on similar topics over the past years.   Here are a few:

Vanity License Plates

License plate for portable saw mill? 

Insuring A Portable Sawmill

[Cedarman]

Part Timer,  I have not paid sales tax on any of the mills that we bought.  They are for production purposes therefore exempt.  But I am required to collect sales taxes from all sales unless to exempt purchasers.  It takes about 5 minutes to fill out the paper work at the end of each month for the sales tax.  It does take good record keeping of all sales and all taxes collected.

[Part_Timer]

Cedarman

I didn't have my LLC at the time I purchased the mill so no tax number to go with it.

now I have my LLC but I'm not as good at the paperwork as I should be. YUCK paperwork

[bandmiller2]

Pete,call the folks that milled for you and ask what they do.The states are professionals at fleecing us ,just give them the money and be done with it.Frank C.

[ellmoe]

  In Fla. if a sawmill buys used equipment from another mill, no sales tax. Buy the same equip. from a dealer or a manufacturer you must pay. ???

Mark

[Don K]

I may be faced with a similar situation. If I go to GA and buy a mill they charge sales tax. 12 to 14 hundred. If they deliver to me it only cost 700. I get the trailer sales slip to take to the county courthouse. I haven't seen anybody else with a tag on a portable mill. I hear that if I buy a farm tag for my truck I don't have to tag the trailer. I've got a cousin that is a state trooper, I will talk to him.

Don

[ErikC]

  I think the laws are more strict than some realize, but not always easily enforced, so we get lucky. In CA sales tax must be paid on all equipment, new or used unless there's an ag exemption. It is up to the purchaser to fess up and send in the money. Even online purchases. Hardly anyone does it however. The odds of getting caught would depend on what you are buying I guess, but it's something to consider.

[solidwoods]

If your starting a business-  Get A CPA.
Ask the CPA.
Tax mistakes are extremely expensive for American Citizens (our govt. seems to have some sort of exemption)
jim