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Proper Handling of Export Transactions can be Taxing..

By Phil Villegas

Is your dealership properly handling exports transactions in accordance with state and federal laws?

In our Axiom Analysis, we often discover weaknesses in vehicle export processes and documentation. If an international customer purchases a vehicle with the intent to export, the customer is not exempt from sales tax unless he or she provides proper documentation.

If a customer intends to export a vehicle, the dealership has the responsibility to prevent the customer from driving the vehicle off the lot by issuing a temporary tag. Direct exports are typically not charged sales tax and are not registered. In turn, typical export rules indicate the vehicle must be paid in full, an affidavit that the vehicle won’t be driven in the selling dealer’s state must be signed, and a bill of lading must be collected for the deal jacket. In addition, we often recommend new vehicles be titled to prevent a MSO from being sent overseas and resold as a new vehicle by an unauthorized dealer. After the vehicle purchase, the customer may ask to keep the vehicle on the dealership’s lot for up to 72 hours in order to clear U.S. Customs and Border Protection. During this period the vehicle does not need to be insured and when the customer removes the vehicle from the lot the dealer should maintains proof of how the vehicle was removed.

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