VTR-40 - Sales Tax on a Vehicle Purchased out of State

Ordinarily, when a Tennessee resident purchases a vehicle out of state, the car dealer collects that state’s sales tax at the time of purchase.  Sometimes, the out of state dealership is registered to collect Tennessee sales tax on behalf of their Tennessee registrants and sends the tax collected to Tennessee.  In either case, when registering your vehicle in Tennessee, it is important to have the bill of sale to show that either state’s sales tax has been collected. If the sales tax rate is lower in the state where you purchased the vehicle than the rate in Tennessee, you will be responsible for the difference in those sales tax rates at the time of registration. You will also be responsible for Tennessee’s state single article tax, if it has not already been collected.

If no sales tax was collected on the out of state purchase of your vehicle, sales tax will be due at the time of titling and registering in Tennessee and collected by the local county clerk.

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