If I buy a $10,000 vehicle for $6,000…I think it’s only fair to pay tax on $10,000.///Really? Wow. It’s one thing to target tax thieves, but to punish those who drive a hard bargain…let me ask you: if you pay OVER blue book, should the state let you off the hook for the excess? (And what do you suppose the chances of that actually happening are?)//// @galant: The more I hear about CA’s policies, the more I realize the only way I could live there would be to also maintain a crash pad in Carson City.
The value of anything is determined by what a willing buyer and a willing seller agrees to, not what’s in any kind of blue book that reflects purchases of other cars. So if you pay $6000 and others pay $10,000, the value of your car is still only $6000. I understand they are simply trying to end run people that would falsify sales documents, but I’d want to look at the statute and resulting rules first before paying it.
Found the following per the state of PA DMV site; cut and pasted below. Sounds like they get theirs just like OK no matter what happens between the buyer and seller.
When purchasing or selling used vehicles (including motorcycles) in Pennsylvania, many taxpayers are unaware that sales tax due to the Department of Revenue is a percentage of the fair market value of a vehicle, rather than a percentage of the purchase price. When a purchase price is set considerably lower than fair market value – as often happens in transactions between family members – the PA Department of Revenue has the authority to review the transaction to determine and collect the correct amount of sales tax due.
Yes, it is a very different system. I’d rather just pay income tax than figure out. With a few exceptions I’m CA, you just copy one number from your Federal return, look up the tax and you’re done. There are a few more special programs and exceptions than there used to be, but none that apply to me. Couldn’t be any simpler. The property tax calculations on the condo are simple, too. The CA DMV has rightly earned a lousy reputation for slow service by surly staff, but most things ate done by mail, and you can make appointments for the rest. It sure does help.
It’s my disability paperwork that is complicated, because I get paid by three entities, with two other programs giving discounts.
I agree with @Bing here. If the buyer and seller agree on $6K, then that is the value of the car or what ever else being sold. To tax it at an arbitrary inflated value is just wrong. I bet if the price was set at $10K but the buyers were bidding over each other and ended up paying $14K, the state would tax them at the $14K price, not the $10K.
Let me clarify my earlier statement a little: I know some may disagree but I still think it’s fair to pay the sales tax on the “fair market” value of a vehicle. That’s the only way the state can collect their “fair” share when a vehicle is sold. In most cases…I have sold the vehicle for more than the “fair market” value. I get that tax money back on the “selling” end of the deal. It usually works out for me but I can understand why people think it’s unfair. I think I pay way more in federal income taxes than I should…but I do it anyway.
If we are talking sales tax (not excise or property), I don’t understand how anything other than the ACTUAL amount of money changing hands is the “fair” amount to tax. By your thinking if I buy a pair of jeans at discount from $60 to $30 I would still have to pay sales tax on $60 because that’s what the fair market value is. Is that what you’re saying?
“I think I pay way more in federal income taxes than I should…but I do it anyway.”
Well, yeah, I bet we all feel that way. But to me the larger issue is the way state and local governments continue to find ways to tax and tax and tax again and by and large the general public just shrugs it off.
Where I live I have to pay 9.5% sales tax on almost everything I buy, 9.6% sales tax on a car I buy, gasoline tax and sales tax when I fill up my car, $5200/year property tax on an average home, tax on liquor and tobacco, .3% business and occupation tax just for the privilige of doing business in a city, on and on. You bet I’m going to refuse to pay $3400 worth of sales tax on a $1500 sale. At the shop, I could increase my revenue if I charged more sales tax than was actually owed on a transaction but as I understand the local tax code that would be illegal.
@MarkM
I’ll assume you also live in California . . .
As far as the DMV goes, I do everything online, or at my auto club offices, whenever possible.
Every time I actually must go to the DMV in person, I make an appointment online.
When I get there, there are usually hundreds of people waiting in line. But those are the guys in the “non-appointment” line. I bypass them and go to the appointment line, which is usually very short.
Sometimes I’m the only one there. A few times, I didn’t even get a chance to sit down before they called my number.
If you want the auto club to take care of your stuff, you also have to make an appointment. But it’s really easy, and they’ve always been friendly. After all, you’re a club member.
I have something disturbing . . . and not surprising . . . to say about the DMV. I have noticed that you get friendlier staff and better service . . . they don’t always go hand in hand . . . at DMVs which are located in wealthier areas.
This should surprise nobody
If you must go to the DMV for some reason, it’s sometimes worth it to drive a little further for a more pleasant and tolerable experience.
I live in PA. It is a sales tax state, so you pay the sales tax when you title and register the car. The bill of sale or sales receipt shows the price paid and that determines the sales tax. If the price paid for the car is far below the “book value” you might have to provide additional proof of the price paid. In PA the amount paid is entered into a box on the back of the old title. I had a case where I bought a high mileage Volvo for less than the book value. I provided proof of the condition of the car with photo’s of rodent nesting, and the bill of sale. This was acceptable to the agent and I paid the sales tax on the actual amount I paid for the car.
In PA you don’t deal directly with DMV, you go to a private license service which is staffed by a notary. Just visit a local notary and the OP will get all the answers he or she needs.
Yeah, I got it done at AAA. They were really nice and it went through without a hitch. I guess there’s a small but finite chance of an audit…and like a tax audit, it’s just a matter of having records.
////The first notary I went to, though, was hard-core about it, treating me like a scammer. I guess in states where stuff like this is privatized, it’s a matter of going to the right place. (I know it is for inspections…)
If I need anything notarized, I go to AAA. Might as well take advantage of the “free” services, considering I’m paying to be a member
Yup,@db4690, I like the appointment system. It’s a great improvement, though there still seems to be one more person in the loop who seems unnecessary. The office is still dumpy and croded, but if I only spend less than an hour, I,m time with it. It’s nothing like the
“If I need anything notarized, I go to AAA”
Or, if the AAA office is distant from your house, you could just go to your bank.
Banks always have at least one notary on their staff, and they provide this service–gratis–for depositors. And in my experience, the bank-based notaries tend to be very accommodating, and are not suspicious of ulterior motives.
Update: Just got this car sold today for $3900! I got nearly asking price; the young lady (IMO) got a good car for her money. I didn’t have a problem when I bought it (though I guess there’s a small chance PennDOT could send me a letter), and she didn’t have a problem registering it.
I don’t suppose there’s much “added value” in this post–I guess I just wanted to brag a bit! First ever successful “flip” 