What should a dealer do if they believe a buyer is exempt from use tax?

If a dealer believes a buyer is exempt from use tax, the proper course of action is to provide the necessary documentation to prove the exemption. This documentation may include specific forms or certificates that establish the buyer's eligibility for an exemption based on certain criteria, such as being a government entity or qualifying for other exemptions outlined in state tax regulations.

This approach ensures compliance with tax laws while protecting both the dealer and the buyer from potential legal issues regarding improper collection of tax. Understanding and applying the correct documentation reflects a dealer's commitment to lawful business practices and aids in maintaining their reputation.

Other actions, such as charging the buyer regardless or refunding tax after it has been collected, can lead to complications. Additionally, merely contacting the DMV for clarification may not resolve the immediate need for proper documentation, and may not assist in establishing the buyer’s exemption during the transaction.