Does use tax apply if the buyer is a nonresident registering the vehicle in another state?

• A. Yes, always
• B. No, they are generally exempt
• C. Only if they register the vehicle later
• D. Yes, but only for certain vehicles

Answer: (B)

Use tax is generally based on the principle that it applies to the use of tangible personal property, including vehicles, within a state. Nonresidents who purchase a vehicle and plan to register it in another state are typically exempt from paying use tax in the state of purchase. This exemption is designed to prevent double taxation, as the nonresident will encounter tax obligations in their home state when they register the vehicle there.

When a nonresident buys a vehicle and registers it elsewhere, they are not utilizing the vehicle in the state where it was purchased. Therefore, they do not incur use tax liability in that state. It's important to understand that tax laws may vary by state, but this exemption is a common practice to encourage out-of-state sales and maintain fairness in tax obligations.

The other options present scenarios that do not align with the common guidelines regarding use tax for nonresidents. They imply situations where taxes would be assessed under circumstances not typically applicable to the majority of nonresident buyers.