Used Car Sales Tax Question
04-15-2010, 12:22 PM
#1
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Used Car Sales Tax Question
Hey fellas,
Well, the days are winding down until I pickup my used '08 S5! She's pretty much brand new though with only 12k miles on it and I'm getting it for a steal!
The question I have--and fitting for April 15--is, would the state have any clue or be able catch you if the sale price stated is less than what was actually paid for the car? For example, if I paid 41k, but reported it as 31k, how would they ever know? I wonder what the repercussions would be?
Thanks fellas!
Well, the days are winding down until I pickup my used '08 S5! She's pretty much brand new though with only 12k miles on it and I'm getting it for a steal!
The question I have--and fitting for April 15--is, would the state have any clue or be able catch you if the sale price stated is less than what was actually paid for the car? For example, if I paid 41k, but reported it as 31k, how would they ever know? I wonder what the repercussions would be?
Thanks fellas!
04-15-2010, 12:26 PM
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please clarify---did you trade in another car and the trade difference is 31k? If so, taxes on the difference (in most, if not all states) is what you would pa
Or, are you saying you would like to see if you can tell them you paid 31k, and not 41k, which you actually paid?
If so, pay what is due. period.
and yes, they would catch it anyway.
Or, are you saying you would like to see if you can tell them you paid 31k, and not 41k, which you actually paid?
If so, pay what is due. period.
and yes, they would catch it anyway.
Last edited by IAS5; 04-15-2010 at 12:34 PM.
04-15-2010, 01:57 PM
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In Texas, used cars get hit with sales tax based on their value according to the state, not according to what you paid for the car. In the "old days" you could report that you paid $1000 for a car and just pay the $65.00 in sales tax and hope (with pretty good certainty) that nobody would look into it most of the time. The state closed the loophole and now assesses sales tax based on their version of book value. So misreporting in Texas would do nothing for you other than call into question the validity of the bill of sale. Not sure how your state works, though.
04-15-2010, 02:05 PM
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Car Sales and Excise Tax Deduction: Questions and Answers
Q. What is this new car sales tax deduction?
A. The American Recovery and Reinvestment Act of 2009 provides a deduction for state and local sales and excise taxes paid on the purchase of qualified new vehicles through 2009.
Q. What are considered to be “qualified motor vehicles” for the purpose of this deduction?
A. A qualified motor vehicle is a passenger automobile, light truck or motorcycle which has a gross vehicle weight rating of 8,500 pounds or less. A motor home is also considered a qualified motor vehicle.
Q. If I purchase a really expensive car, can I deduct the entire amount of state and local sales taxes paid on the vehicle?
A. No, only state and local sales taxes paid on up to $49,500 of the purchase price of a qualifying vehicle are deductible.
Q. Does the purchase of a used car qualify for this deduction?
A. No. In order to take the deduction, you must be the first owner of the vehicle.
Q. What is this new car sales tax deduction?
A. The American Recovery and Reinvestment Act of 2009 provides a deduction for state and local sales and excise taxes paid on the purchase of qualified new vehicles through 2009.
Q. What are considered to be “qualified motor vehicles” for the purpose of this deduction?
A. A qualified motor vehicle is a passenger automobile, light truck or motorcycle which has a gross vehicle weight rating of 8,500 pounds or less. A motor home is also considered a qualified motor vehicle.
Q. If I purchase a really expensive car, can I deduct the entire amount of state and local sales taxes paid on the vehicle?
A. No, only state and local sales taxes paid on up to $49,500 of the purchase price of a qualifying vehicle are deductible.
Q. Does the purchase of a used car qualify for this deduction?
A. No. In order to take the deduction, you must be the first owner of the vehicle.
04-15-2010, 02:09 PM
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it's irrelevant altogether-new or used-- i don't think he's talking deductibility on his tax returns... he's referring to wanting to pay less sales tax at the time of purchase.
Two totally different scenarios.
Two totally different scenarios.
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04-15-2010, 02:23 PM
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Understood!
If he buys from a private person, he can write down whatever price he wants but it should be believable and not raise an eyebrow. If it's a dealer, they have to report the selling price for real. The computer prints all forms to match and they can't risk the illegalities of it.
In Ohio, you pay tax on the whole amount of a USED car but pay the difference when trading in on a new car. Someone brought that up but I am not sure how it corrulated.
If he buys from a private person, he can write down whatever price he wants but it should be believable and not raise an eyebrow. If it's a dealer, they have to report the selling price for real. The computer prints all forms to match and they can't risk the illegalities of it.
In Ohio, you pay tax on the whole amount of a USED car but pay the difference when trading in on a new car. Someone brought that up but I am not sure how it corrulated.
04-15-2010, 02:30 PM
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Understood!
If he buys from a private person, he can write down whatever price he wants but it should be believable and not raise an eyebrow. If it's a dealer, they have to report the selling price for real. The computer prints all forms to match and they can't risk the illegalities of it.
If he buys from a private person, he can write down whatever price he wants but it should be believable and not raise an eyebrow. If it's a dealer, they have to report the selling price for real. The computer prints all forms to match and they can't risk the illegalities of it.
the real ethical question is "why is he looking to do this..."
The DMV will probably catch it, and not sure if they would ever follow up to press evasion charges. Extreme, but could see it happen....
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