Vehicle Sales Tax Questions

rsharrill · March 2007

I have a VA license expired since July 2006 - and VA DMV authorize an extension for military members due to deployments, etc. The VA DMV informed me I was eligible for a "military license extension" which they mailed to me - it is a credit-card sized paper card which extends the license for 3 years from date of expiration (or 60 days after returning to VA, whichever comes first). The card must be carried with your expired drivers license. The process was pain-free and only requires a 5-10min phone call (after the expected wait on hold).
In my case, I will properly renew my license next time I'm in VA however, since I make frequent business trips there.
I don't know how other states handle an expired military members license - probably varies by state is my guess.

mikej8 · March 2007

When you by a new car in Stark County, Ohio what price is the tax do on? e.g. The Sales price is $10000. There are "bonuses & rebates" of $2000. Is the tax due on $10000 or $8000?

debellocivili · March 2007

Here is the situation: My brother lives in Oregon (0% sales tax) and bought a new car 7 months ago and he is thinking about transferring the car to me (I live in California 7.75% sales tax). What sales/use tax, if any, is owed to the state of California at time of registration/transfer?

I've done my research, but I don't know if I believe it.
According to the California DMV website (http://www.dmv.ca.gov/pubs/brochures/howto/htvr1.htm) "On a regular transfer, Use tax based on the purchase price of the vehicle is due at the time of transfer. A family member transfer is exempt from use tax." Additionally, "A transfer between family members is exempt from reclassification of the vehicle value" for purposes of the Vehicle License Fee.
So no sales/use tax, right?

Then I plugged the appropriate numbers and dates into the DMV registration fee calculator (https://mv.dmv.ca.gov/FeeCalculatorWeb/newResidentForm.do) and came up with a nominal fee of $157. This is vs. $1,320 if I personally had purchased in Oregon from a dealer and - therefore - paid no sales tax. Again, because it is a family member transfer, no sales/use tax is owed to California

Finally, I went to my local DMV (No, really, I did. It was nice compared to 10 years ago. Person met me at the door, standard nonsensical number ticket, 5 minute wait to talk to someone in a booth...I wondered what the DMV in Beverly Hills, 90210 is like...) and spoke with an employee who said that I wouldn't have to pay tax.

I consider myself to be a reasonable person and I don't think - if what I've read and what people have told me is true- sales/use tax would be owed to California if my brother transfered the car to me; but that doesn't mean I trust the DMV. So I'm turning to Edmunds.

The questions are: Is it reasonable to trust the DMV? Should I go ahead with the transfer? Is the DMV estopped from charging me tax if their website and employees were wrong three times? Did I miss something?

joel0622 · March 2007

and spoke with an employee who said that I wouldn't have to pay tax.

That sounds right to me. I know here where I live you get a "Gift Affidavit". It means that a family member is gifting the car to you. The grey area on this is weather or not the DMV that you talked to new that taxes have never been paid in the first place on this vehicle in the state of CA.

Do a google search for "California Gift Affidavit" or call the number I posted a page back and see if they can fax you one.

debellocivili · March 2007

Thanks for replying,

The grey area on this is weather or not the DMV that you talked to new that taxes have never been paid in the first place on this vehicle in the state of CA.

Actually, it isn't too grey. She knew. I told her and she with out a doubt understood.

joel0622 · March 2007

Sounds like you are GTG then.

1mayb · April 2007

I tried to purchase a car in 2005 from one of the local dealerships in Missouri. I secured financing and purchased the car. However, the finance company later decided to deny my financing and I was required to return the vehicle to the dealership.(thereby voiding the sale or so i thought) The car was returned the next day. Now i have a letter from Missouri Department of Revenue stating Missouri law requires you to apply for title and pay all appropriate taxes on the vehicle in 30 days and these fees are due immediately. I don't understand why i'm required to pay taxes on this car when i don't own it. Any advice would be appreciated. Thanks in advance

paisan · April 2007

Interesting question. Why would a dealer sell you a car w/o getting paid for it? Also how can a loan company pull a loan back? Something is fishy.

-mike

tidester · April 2007

I was required to return the vehicle to the dealership

If the dealership accepted the car back then there was no sale. Revenue is just responding to notification from the dealer that a sale took place. Simply provide Revenue with this additional information. A letter from the dealership should help.

tidester, host
SUVs and Smart Shopper

taz16 · April 2007

Can anyone tell when you buy a vehicle in another state, do you pay for that state tax or pay for your own state tax?

joel0622 · April 2007

You pay taxes in the state you register the vehichle

aqrt60 · April 2007

Hi, I have an odd situation and was hoping someone could help me. I am in the military stationed in Colorado. But i will soon be moving for California and needed a new car. So when i had leave i went home to Kansas City, Kansas which is my permanent home. There i agreed to purchase a car in Kansas City, Missouri, on the other side of the state line. But i had to report back to base and wasn't able to complete the transaction. So my father purchased it for me. And I am going to purchase it from him. Sales tax wasn't paid in Missouri since it wasn't going to be registered in Missouri. And you pay kansas sales tax when you register your vechile which you have 30 days to do, but my father is going to sell me the car right away. If i buy it from my father then it is an immediate family transfer and isn't taxable. Have i done anything wrong if i go to the state and register it as such? And at the very least how do i make sure that my father is not liable for any taxes? Thank you.

joel0622 · April 2007

Before your father can sell the car to you he has to have it registered in his name. If not its not his car to sell and you will have a skipped title. Once he registers and pays sales tax on the car he can sell it to you. Most states have a rule where if a family member is buying your car you don't have to pay taxes on the transaction.

paisan · April 2007

hmm, that's an odd situation. I'd think you need someone who knows the local tax laws of KS on this one.

-mike

joel0622 · April 2007

Forgot a few important questions.

Did you finance it?

What state are you ultimatley going to register it in?

What state did your claim as residence when he bought it?

demps18 · April 2007

I'm ready to lease an suv from a NY dealer. I live in Pa and plan to immediately title the auto in Pa, as required. The list price is 42000, the capital cost is 38000 and the residual is 29000. The dealer is quoting a lease price "without title and taxes". I'm confused on the sales tax issue, how must it be handled. We have 6% sales tax in Pa, but I don't understand the basis for the application of the tax rate.
Help.............

kyfdx · April 2007

The dealer is probably quoting "without title and taxes", because he isn't sure of PA sales tax regs, and doesn't want to lead you astray.

As far as I know, PA sales tax is applied to the monthly payment... but, here is the kicker: There is an extra 3% tax on leases in PA, so if your local/state tax rate is 6%, the tax on your lease will be 9%.

Hope that helps... (hope I'm right)

regards,
kyfdx

batman8 · April 2007

I own a business with a business car in Virginia. I am shutting down the business and moving to Maryland with the same car. When I go to register the car in Maryland, the car will no longer be a "business car" but will change to being my personal privately owned car. The Car Title currently has the business as the owner. Will I have to pay a Maryland sales tax for this transaction, even though I did not buy it from my company?

paisan · April 2007

IIRC Maryland charges you tax if you move there with a car regardless of if you bought it or not. I remember a friend moved there and got majorly taken for taxes on his cars.

-mike

bobst · April 2007

When we moved to Maryland in 1972, we had to pay 3% of our cars value to register the car.

I think this is reasonable. Since you are going to be driving on Maryland roads, it is reasonable to ask you to pay for it.

aqrt60 · April 2007

Yes, i financed it through my bank, and Kansas is where it will be registered in and where i claimed residence.

paisan · April 2007

When we moved to Maryland in 1972, we had to pay 3% of our cars value to register the car.

I think this is reasonable. Since you are going to be driving on Maryland roads, it is reasonable to ask you to pay for it.

But you paid for the "road" tax when you originally paid tax to the state where it was originally registered. You've now been double-taxed on the car. Unless Maryland doesn't charge registration fees or fuel taxes you are paying and paying for that use of Maryland roads over and over

-mike

nj2pa2nc · April 2007

when we moved from Pa to north carolina in 2005 we had to pay 3% highway use tax +the other fees to register our cars.When we moved from NJ to Pa in 1994 we did not have to pay any additional taxes. I guess it depends on the states.

bobst · April 2007

Yes, it does seem to depend on the state. When we chose to move to Virginia to avoid the court ordered busing of our school children, we did not have to pay any additional tax to Virginia.

whitall · April 2007

I bought a used car. I paid kbb price for a good condition, but I should have paid less, per edmunds. Only agreed to the amount because of the aggravation of finding a suitable car for my teenager in the price range, and he really liked this one and I was tired of looking. The older man selling it got me to go an extra $200 by saying he's give me a receipt for 1000 instead of the approx 6000 I paid for it (cash). I agreed. Now I am worried that the DMV will question me on the price. People say I should say that it needs work done on it, or I thought maybe just say it was a family friend and he gave my kid a break because he doesn't need it anymore (partly true as his wife died and it was for her use). I hate the idea of paying the tax because I am the third owner, so it's been taxes twice already. Plus, my husband will flip out if he finds out we owe hundreds more (7% state).

Its a 2001 with 85000 miles. It's a midsize family type car. (no more info, in case you are DMV spies!)

ANy suggestions, maybe pick a more "off" number like 1100?

I know it's less than honest, but my pocketbook is tired of taxes!! and my marriage will suffer!

joel0622 · April 2007

Depends on your state. Some states will just let it pass and you pay taxes on the stated amount on the Bill Of Sale. Some states take it more serious and will look at the NADA Value of the car compared to what you are stating the price to be.

whitall · April 2007

I'm in NJ. My friend bought a 98 explorer with all options and paid between 3500-4000, she put down 2400 on the title. Book is about 7000. They didn't blink....

joel0622 · April 2007

Well there is your answer then. I guess at this point you just let your conscious be your guide.

Myself, I would take the BOS the man offered at a lower price and go title the car.

steve326a · April 2007

Unfortunately, here in MA, you wouldn't get away with that. If MA can get their 5% sales or use tax they will. Unless it is immediate family or a MA certified dealer, you will pay full book value tax on it. I bought my car in VA and when I came back up here to MA, they said I had to pay book value tax. I started to question why and immediately the clerk waived over a state trooper who promptly told me that if I question a registry clerk again I will be cuffed and stuffed. He said if I want my car registred I'm to pay what I'm told and no questions about it period, end of discussion.

Steve :mad:

paisan · April 2007

NYS has a form you have to fill out and have signed by the seller, basically stating that it's undervalued. It's something like an "undervalued vehicle form" and that allows you to pay whatever is on your reciept.

-mike

jperfetti · April 2007

I leased a car in Maryland in July 06 and had to pay sales tax on the entire value of the car. I am moving to PA and I have been told I will be charged sales tax on my monthly payment. Can this be right?

kyfdx · April 2007

Probably.. and, to rub salt in the wound?

PA tax on leases is 3% higher than their normal sales tax.. Expect 9%-10% tax on top of your lease payment.

tidester · April 2007

I'm not so sure about that. If he has paid the full sales tax in Maryland he should be eligible for an exemption in Pennsylvania.

tidester, host
SUVs and Smart Shopper

kyfdx · April 2007

That's okay.. I'm sure..

regards,
kyfdx
(not the host here..)

tidester · April 2007

Wonderful! We do strive for fair and balanced. :shades:

tidester, host
SUVs and Smart Shopper

suvhunt · May 2007

Silly question: If I live in MD and buy a car in VA, what determines the sales tax?

joel0622 · May 2007

grandiose · May 2007

Maybe this was asked before, but I could not locate the thread. So, if I buy a car from a different zip code (different city as well) within CA will the sales tax be calculated for the city/zip code I live in or for the city/zip code that I purchase the vehicle from?

Thanx

Kirstie_H · May 2007

The general rule is that you will be charged the applicable rate for where you live rather than for where you purchase.

grandiose · May 2007

Thanx Kristie_h. Yes, I should've figured it out from the previous posts (how silly of me!)

Thanx
--g

timmboj · June 2007

So if I live in Tennessee, and I plan to lease in Pennsylvania is there anything special I need to tell the dealership in Pennsylvania regarding taxes? Or will they just know from my address, and be able to figure all the details? Any special preparations I need to make with the Tennessee government before negotiating?

timmboj · June 2007

Also, I'm looking at a specific vehicle in Chicago, Illinois. If I plan to lease there, but live in Knoxville, Tennessee, what tax issues will arise, if any? Is Illinois better or worse than Pennsylvania?

joel0622 · June 2007

Email me at my email in my profile. When you get to chicago you can have the F&I guy there call me and I will tell him everything he needs to know about TN taxes.

One thing you can do though is take the address for the Knox County Clerk with you, that is where they will have to mail all the title work

kyfdx · June 2007

Are you still looking for a BMW?

If so, BMWFS leases in every state.. They will automatically figure your taxes correctly. You pay your tax monthly on the payment in Tennessee, right?

There should be no tax issues in either PA or IL, because Tennessee is going to tax you on the car..

regards,
kyfdx

timmboj · June 2007

Thanks. Yes. Tax on payment is what I was figuring.

The car deal had gone back and forth a couple times, and in my head I was pretty much ready to seal the deal (in Eastern Pennsylvania), when the salesperson suddenly mentions their general manager had a past problem regarding tax issues leasing to someone in Tennessee, and that he wouldn't do it again.

I'm perplexed.

timmboj · June 2007

Thanks. Just e-mailed you.

I'm just trying to figure out what to expect, tax rate I think is 7% in Tennessee on vehicles, title fees, registration, plates, etc. so I can be prepared.

This tax issue has really thrown me for a loop. I wonder if its not just a sales ploy, but I dont' think so because it wasn't like "we can figure out the tax issue if you just pay us this extra fee...". It was just over and done.

timmboj · June 2007

I re-read his e-mail, its not Tennessee he has a problem with.

His exact words... "We had a problem before with a lease from a distant state on the taxes, and he does not want a repeat, so he said no to this. I can do a finance deal, or cash, but not a lease. I'm sorry, but there is nothing I can do."

joel0622 · June 2007

It is not a sales ploy. We refuse to do out of state leases also. They always end up being a bigger hassel then the sales is worth. I will be back in the office tomorrow and check out your email.

kyfdx · June 2007

Well.. if that is the case with that dealer, then find another one..

There are plenty of BMW dealers that don't have a problem doing out-of-state leases. BMWFS is in Dublin, Ohio.. and they have plenty of experience with it.

regards,
kyfdx

joel0622 · June 2007

I am pretty sure you can find a BMW dealer in TN. is it just a matter of the the one in IL has the car you want?

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