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More on sold cars leaving U.S.

November 16, 2010

The May 5 edition of this publication reviewed the sales tax liabilities on vehicle sales when the owner intends to export the vehicle out of the country. If the customer takes possession of the vehicle, sales tax is due—usually.

The Illinois Revenue Department indicates drive away permits can be issued for vehicles destined for Canada and Mexico. The only other way for a vehicle that will be leaving U.S. boundaries to avoid sales tax is if the dealer delivers the vehicle to a freight forwarder for export.

Important, the dealer must make the arrangements with the freight forwarder, not the customer. The revenue department’s stance is that, if the customer makes the arrangements for the shipment, the freight company is accepting the vehicle (taking delivery) on behalf of the customer, and tax would be due.  If the dealer makes the arrangements, the customer does not accept delivery until the vehicle reaches in its foreign destination.