Other Tax Questions
Questions and comments on other topics covered in Fairmark.com, such as UTMA accounts, and any tax questions that don't fit our other categories.
State and Local Sales Tax on Vehicle Purchased in Tennessee
Posted by: sejohnston, April 14, 2017 03:00AM
Can someone from Tennessee please help me out. On Schedule A of 1040 you are allowed to deduct State and Local Sales Tax on a Motor Vehicle. The invoice has the sales tax amount, a local sales tax amount, a local tax esp and a local sales tax esp, along with a business tax. I'm assuming the business tax is not deductible, but I am wondering about the other three "local" taxes. I'm not even sure what the local tax esp and local sales tax esp are. I've searched the internet to no avail.

Re: State and Local Sales Tax on Vehicle Purchased in Tennessee
Posted by: tomd37, April 14, 2017 03:38AM
Last month I purchased a new car here in Tennessee. The amount of state and local sales tax was clearly stated on the invoice. I happened to notice when I received my title from the state that the amount of state and local sales tax was identical to that on the invoice.

And no you cannot deduct anything but the state and local sales tax as indicated on the invoice. This matter has been discussed within the volunteer tax preparation service I work with for the past fourteen years and that question comes up frequently in those years that we have been eligible to deduct state and local sales tax. But don't forget that amount is in addition to the calculated amount based on your income.

Tom D.

Re: State and Local Sales Tax on Vehicle Purchased in Tennessee
Posted by: sejohnston, April 14, 2017 01:32PM
Thank you for the reply. I guess what I was specifically asking, and probably wasn't clear enough, was...whether the local sales tax esp was deductible. I'm not sure what esp stands for. Thanks again!

Re: State and Local Sales Tax on Vehicle Purchased in Tennessee
Posted by: tomd37, April 14, 2017 03:41PM
I'm looking at my invoice and it clearly shows three types of taxes; Business Tax Chapter 387, State Sales Tax, and Local Sales Tax. Only state and local sales tax is deductible. Our tax guide clearly states you cannot deduct sales tax in excess of the state and local rates. Why not ask the dealer for an explanation?

Tom D.

Re: State and Local Sales Tax on Vehicle Purchased in Tennessee
Posted by: sejohnston, April 15, 2017 02:34PM
Actually, I did contact the dealer and spoke with someone in bookkeeping who had no idea, thus, I resorted to this forum. I fully understand that only state and local sales tax is deductible, it's just that this invoice has five different taxes on it, including three different types of local taxes, two of which have the word sales tax in them. To be on the safe side, I guess I will take the sales tax and the local sales tax. I just wish I knew what the local tax esp and the local sales tax esp are. Maybe I will contact the dealership again and see if I can speak with someone else. Thanks!

Re: State and Local Sales Tax on Vehicle Purchased in Tennessee
Posted by: tomd37, April 15, 2017 02:51PM
I'm sure the dealership Finance Manager could explain it to you rather than just "someone" in bookkeeping. I know when we closed our purchase deal we met with the Finance Manager who went over everything on the invoice in detail.

Tom D.

Re: State and Local Sales Tax on Vehicle Purchased in Tennessee
Posted by: DeeDee, April 16, 2017 12:26AM
Does this help? [www.tn.gov]



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