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I recently purchased a GMC off of a guy from Craigslist in Arizona. The seller stated that the vehicle was his father's and he no longer needed it due to his age. After looking at the truck at the sellers house, I decided to purchase at $9500.
It's turns out the title is under a Dealerships name in Indiana owned by the sellers father(original owner). I didn't think it was going to be a problem, concidering it was his father's personal vehicle . Now the MVD is stating that I have to pay state taxes on it because it was sold from a Dealership. Unless I provide them with a signed Bill of Sale from the Dealership who supposedly sold it to me, I would have to pay 5.5% of the vehicles value.
According to Kelly Blue Books website the truck is valued no more than $8900. However, the MVD states that according to their quide lines and cryteria the value ithey show is $11800. Which means either I get a bill of sale from a dealership I've never stepped foot in and pay taxes on the $9500 that I originally paid, or go with the supposed value amount per MVD.
Is this even legal?
Can the Government really charge me sales tax on a "Private Transaction"?
Please help me out..Thanks!
Last edited by lillyr88; 07-31-2015 at 11:47 PM..
Reason: misspelled words
Sounds legal to me. Tax is based on what the vehicle is worth unless you can prove other wise. You can thank all the people who have tried and commuted tax fraud in the past by saying they bought the vehicle for basically nothing to avoid paying taxes. State probably uses NADA or black book value.
Last edited by Me007gold; 08-01-2015 at 05:12 AM..
In Colorado at least, you pay sales tax regardless. If you buy it at the dealership, the dealership collects taxes. If it's a private party transaction, the DMV collects taxes. Taxes are collected at the price sold, though, and not what the value of the vehicle is.
It's not clear whether the original post is asking whether it is proper for the state to collect the sales tax, or whether the valuation is proper.
No question about the validity of the tax.
With regard to the amount of the tax, the state may have an appeal process whereby the purchaser can present evidence that the actual value of the vehicle was what he paid. It might be worth investigating that and finding out how much comparable vehicles are selling for in the vicinity.
yes the tax is legal. the state used to collect a sales tax on private transactions years ago, but dropped that, and now only collects the sales tax on transactions from out of state vehicles being registered here.
Texas charges sales tax on private party transactions, and USUALLY the amount on the bill of sale is good enough for them.
However, they have a system in place that can really ********* sometimes, and I ran across it a few years back when we bought our Jeep Grand Cherokee. We got a really good deal on it (really good!) and I drew up a bill of sale and everything was signed and all that.
Took my bill of sale to the Tax Assessors office like I've done for all my other vehicles, and gave them all the info. TX has a rate of 6.25% for auto sales, so I figured out what my tax liability would be based on the sales price.
The woman input the VIN into her system, and said I'd have to pay taxes on the "standard presumptive value." Basically, what the state thinks the vehicle is worth based on mileage and VIN. I was pissed, because they charged me about $500 more in taxes (they had the value at almost 8k more than I paid.)
Only way around it is to find a licensed vehicle insurance appraiser or go to a dealer and have them give you an appraisal, and hope that it's in line with what you actually paid.
If, according to the title, the vehicle was "owned" by a dealer, regardless of the state and/or what the seller may have claimed, your transaction was no longer a Private Party Sale so Arizona State Sales Taxes are valid and must be paid prior to registering.
As far as value . . . naturally the "tax value" will be determined by the Arizona MVD. Otherwise, you could show up with a Bill of Sale for 50 Bucks and only be required to pay taxes on that amount.
On the positive side . . . if you had purchased the vehicle from a dealer here in Arizona, the rate of Arizona Sales Tax would be about DOUBLE (State, County and City Taxes) so you are still way ahead on this one.
In my state, they will usually defer to the bill of sale to tax on hence I always get the bill of sale written out less than what I bought it for.
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