Sales tax is a transaction cost, not depreciation.
You could call it whatever you want, but it's still a total cost out of pocket. Just because you call it a transaction cost, doesn't mean it costs the buyer any less. I always count total cost. And I tend to buy and register my cars in states where there's no sales tax for buying from private party. I have a LLC set up for my vehicles, based in a certain state where I do some business and move my cars through the LLCs.
I have owned some wonderful cars, all with minimal total cost of ownership because I look for vehicles with motivated sellers and in high demand or limited supply. Half of the vehicles I've purchased, used for a while, and sold I've actually made money on.
If you register a vehicle in State X which has no sales tax, but you then bring the car into State Y and use it there, you almost certainly owe use tax on the sale in State Y. If you are ever audited, expect to pay the tax plus penalties and interest. By purposefully doing this to dodge taxes, you may even incur higher than normal penalties.
Sales tax is due in the state where the vehicle is registered.
And if you don't pay tax in that state, and then bring the vehicle into another state and use it there, you owe use tax. Here is an illustrative FAQ from California--virtually every state has the same policy.
https://www.boe.ca.gov/sutax/faqtrans.htm"Use tax applies to the cost of vehicles, vessels, and aircraft purchased from non-dealers (for example, private parties)
or from outside California for use in this state."
Valhalla tried to justify his tax evasion for two different reasons: (1) the government has bigger things to worry about and won't audit him for stuff like that, because after all, no one pays tax on online orders; and (2) other people are doing back-door Roths, so purposefully evading sales tax on vehicles is o.k.
On the first point, small businesses are actually prime audit targets, precisely because owners are often engage in tax shenanigans like this. And it is very easy to audit for this issue--people get caught on this all the time. And with respect to individuals dodging their use tax liability on un-taxed internet purchases, you're correct, individuals are not audited for this, but if you don't think this is a "real problem" or "high priority issue" for state and local governments, you are uninformed. They are in active revolt against the tax collection rules as we speak, and it's the number one priority for many states right now to force companies to collect the tax on remote sales. See, e.g.,
https://www.bna.com/states-retailers-continue-n57982086624/The second point is a non-sequitur. While back-door Roths are aggressive, they are tacitly blessed by Congress and the IRS, both of which are aware of the position and have so far done nothing about it. A back-door Roth does not rise to the level of tax evasion. But registering an automobile through your business in a no tax jurisdiction when you know it will be primarily used in a different, higher tax jurisdiction, in order to evade paying tax, is illegal tax evasion. And I guarantee you there are no state departments of revenue that would be o.k. with people purposely avoiding sales/use tax on big ticket items like automobiles. So it's not like a back-door Roth in this regard.
I am very sympathetic to small business owners, and the plight they face with the myriad of burdensome and mostly unnecessary regulations passed by the feds and the states. But skipping on your taxes isn't right, whether you own a business or not.
