Avoiding CA tax

Avoiding CA tax

I'm about to place an order for a Model S P85. I have permanent residency in WA state but I've just started a job in CA and intend on moving here quite soon (Bay Area). If the vehicle is delivered to Seattle (no sales tax in WA on MS), and then I drive it down to CA, is there a legal way to avoid paying sales tax? Once I get it registered in CA, they'll charge me the sales tax, right? Even if I've already registered the vehicle in WA?

Also, if there's no legal way, how easy is it to get caught and what are the ramifications?

Roamer@AZ USA | October 21, 2013

To late Taxifornia already saw your post and put you in the tax targeting computer.

GDH | October 21, 2013

Try to find a new loaner P85 and get it sooner. I found 5 for sale.

RIsquare | October 21, 2013

This is off topic, but can you share where do you find loaner P85 for sale?

Roamer@AZ USA | October 21, 2013

If you buy in Taxifornia you will get taxed.

If you buy in Washington state you won't get taxed.

Pretty basic call, buy in WA and maybe get taxed in Taxifornia. Keep the Washington plates as long as possible.

Gizmotoy | October 21, 2013

Correct. You get charged sales tax if you bring a car into the state within a certain time frame. The calculator on the CA DMV site kind of stinks, but it seems to be somewhere between 1 and 3 years of ownership is how long before the sales tax is no longer due. You get credit on the tax paid to another state, but if you paid nothing you'll owe the entire amount.

There's no legal way to avoid the tax, since you need to have the car registered in CA within 20 days of residency (which is determined by signing a lease/taking a job/etc.) and penalties apply if you're late.

You could retain your WA registration and run out the clock on how long the sales tax is due and paying the penalty when you first register, but that's not legal.

GDH | October 21, 2013

My sales rep at the Tesla store in Portland sends me a list every week. You can call Tesla in Cali also and they will try to find a loaner for sale or a car that was never picked up. There are many.

NomoDinos | October 21, 2013

ara - there is a prior post about this topic, try to find the info. I believe there was no way of getting around it if you move to California within 1 year or something like that. You should also look into where your state tax credit will be coming from.

Would strongly recommend against not paying the sales tax if you owe it, the California government may be in shambles, but it is very good at finding money. Penalties include stiff fines. Good luck.

sellnout | October 21, 2013

I believe as long as the vehicle is purchased outside of California (i.e. you live in WA at the time of purchase) and the vehicle stays outside of California for one year, then you can avoid the CA sales tax/use tax.

Use Tax: Collected at the same rate as your California city of residence sales tax. Legislation requires payment of use tax on a vehicle purchased outside California and brought into California within 365 days of the purchase date.

redders | October 21, 2013

I doubt that you are going to make a choice about where to live based on car sales tax, but if you do end up paying tax in California, take a look at the local taxes (county and maybe city?). Maybe you can rent in a less burdensome CA county for a few months? I overheard someone trying to use their second CA residence for registration because it was in the boonies rather than LA County.

ellcyc | October 21, 2013

I somehow avoided paying this tax back in the mid 90s just by asking the DMV why I owed it. I had a car purchased in Arizona that was delivered in Europe (where I lived at the time) and then shipped to California. I think the DMV was confused by the novelty and they agreed it was reasonable to find the applicable regulations, which are actually not theirs but under the jurisdiction of the California Board of Equalization. My registration was put "under suspension" in order for the matter to be resolved. This meant I could drive my (nearly) new car for a couple of months. Eventually the BOE mailed me the information that indicated I owed the tax. I called up the DMV and said I was ready to pay the tax but the guy on the phone said I was too late -- someone had already lifted the suspension and issued the license plates. He suggested I call the BOE and pay the tax to them. Yeah right.

I agree, however, that the DMV will be unlikely to be confused about someone who, as a California resident, purchases a car physically present in Washington and then drives it back to California. This is not a novel idea to anyone. | October 21, 2013

If you bring your car into CA within a year of your original registration, the BoE will ding you for usage tax which is equal to the sales tax you would have paid if you bought the car in CA. Since this is done via the DMV when you register the car, I am not sure how you would escape it. If you maintain your WA address while actually living in CA it can cause you complications with your insurance company if you need to file a claim.


jeffsstuff | October 21, 2013

I have the same problem. My wife just took a new job in LA and we are moving (her in November and the kids and I probably in March). It looks like you pay unless the car is a year old or more. What sucks more is that, since I'll be registering my car in NJ first, I won't be eligible for the $2500 credit California offers on EVs since, to qualify, it must be first registered in CA. I don't mind missing one of the deals but I feel I shouldn't get screwed out of both (tax free in NJ and $2500 credit in CA). If you figure out a legal way around this, please let me know!

Mathew98 | October 22, 2013

@jeffsstuff - Let the wife go solo in LA for a year. Have a blast being a bachelor in NJ and enjoy the enormous Tesla grin until you have to report to duty to the drill sergeant a year later...

Brian H | October 22, 2013

Sounds like a recipe for a dishonorable discharge.

jeffsstuff | October 23, 2013

@brian H, You are absolutely correct! Besides, since I am "Mr. mom" and she's the one paying for the car (my birthday present), that would seem like a really bad idea. I have been told that I'm not getting another birthday present for the rest of my life.

Mathew98 | October 23, 2013

Well, it's a whole other ball game when kids are involved. There's no chance mama bird would leave Mr. Mom in charge of the kids for a year...

PatT | October 23, 2013

@jeffsstuff Why don't you just take delivery in CA and register the car using your wife's address? You can drive or ship the car to NJ if that is what you want to do and use some of the $2500 rebate to pay for the trip.