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New Car Dealer says they forgot to charge me tax

Hi, I bought a new Toyota back at the beginning of December, last year (2013) and have been enjoying it. Then yesterday, January 20, 2014, I get a phone message and an email from the salesperson I worked with telling me that they didn’t add in the sales tax on the contract. Now he says, I have to pay them the money, by the end of the week! or else the state of California would put a suspension on the license plates and possibly more, if I didn’t give them the money. This totals to over $2700.
I looked over the paperwork and on the line for sales tax there is a printed N/A. I noticed the price was a little less than I was expecting, but didn’t notice that no tax had been added in. All I had was a number in my head on the agreed price.
I figure I probably owe something, but can they really get to me by threatening the state will take my license plates or whatever? I am really angry about this, and have filed a case with Toyota to get someone else to look into the situation.
So far, no one from the dealership has called me back. I left a message and now have the name of the customer relations person, who supposedly has a couple days to get back to me.
Has anyone else had any similar situations happen to them? I would like to know what you ended up doing about it. I am also waiting to hear back from some legal people on what my rights are…

The dealership fouled up but you may have to pay the taxes anyway. $2700 is a lot of money so the dealership should pay half in any regard. If you wind up paying for this dealership boo boo then I would make sure the local paper(s) get wind of this situation. Adverse publicity has a way of getting things accomplished that may not be accomplished otherwise. It was not really your fault but you did say the price was less than what you were expecting. The ball is in your court.

I doubt they can impound your car because they “forgot” to add it on the invoice. The fact they put “N/A” (not applicable in the space puts the onus on them.

I can imagine at least a million or so Californians who would say “Come and get it”.

To be sue, I would consult an attorney to make sure I was not liable.

“To be sue, I would consult an attorney to make sure I was not liable.”

I think that Doc meant, “To be sure…”.
Hopefully he wasn’t implying something about the OP being sued.


If they believed the buyer was an out of state resident and the vehicle would be titled and registered in a different stat the tax wouldn’t be collected. Did you provide an out of state address?

If the dealer was mistaken it wouldn’t relieve the buyer of the tax obligation. It could be argued that the vehicle is no longer affordable but good luck getting someone to listen.

Take your contract to your local DMV and have them calculate the sales tax for you. If it is less than $2700, then see if you can get the plates and title by paying the DMV directly and not paying the dealer.

Thanks for the responses to this situation. I paid in full at the time, and already have received the title and license plates and the registration, in my name. All the DMV fees were paid by me already.
I even remember discussing the sales tax with the salesman, because my city has a half % higher sales tax rate than where the dealer is located, and I would have to pay the higher amount.

Every state I lived in that had a sales tax…I could NOT register the vehicle until I proved I paid the sales tax. This was to prevent people from buying a vehicle from another state and then registering it in their home state. If you live in NY on the NY/MA border and you buy a car in MA…the dealership can NOT charge you NY sales tax (since the dealership is in MA). And they don’t collect MA tax because the vehicle is being used in NY. When you register the car in NY you’ll have to pay the sales tax to register it in NY.

I’ve bought a couple of vehicles in MA when living in NH. The dealer NEVER charged me sales tax. And NH doesn’t have a sales tax…So I just had to pay the excise tax.

I am in California and the sale was all in-state, everything was paid as it should for the dmv and registration, it was all included in the contract. I have all of the papers. I don’t think they have any hold on me through that, I think they are bluffing to try and make me pay.

Seems like the dealer paid all the DMV fees because you have the title, registration and license. So now they are only after you for their own error and want their money.
There is a function on the CA DMV site that you could calculate all the fees for registering your car based on make, model and sales price along with county/city. Calculate the fees, look in your paperwork and see how much you owe the dealership. Then offer them half with a release letter from them; see what would they say.

The answer probably depends on the exact language of Calif state law. An attorney could probably look it up for you. That’s the only way to know for certain. I expect though that car dealerships have lobbied together to get provisions into Calif state law that deal with situations like this, removing them from the liability of having to pay the tax themselves due to clerical mistakes. I expect you’ll end up eventually either paying up, or having your registration revoked. The suggestions above of trying to work out a deal where you pay 1/2 and the dealership pays 1/2 is probably your best bet. But I’m doubtful you’ll be successful unless you already have a long term relationship with the dealership. Doesn’t hurt to ask.

I think the dealer doesn’t have a legal leg to stand on

You already have the title, registration and license plates. Plus, the car is already paid for

I would visit a lawyer and ask him if you’re legally required to pay anything. I wouldn’t be surprised if you’re not liable for anything. After all, the paperwork clearly says n/a for the sales tax

Perhaps the lawyer could send a letter to the dealer, explaining in fancy words that they themselves made the mistake, and that you’re not going to give them anything, because you’re not required to.

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I’d tell them to go pound sand. They may be doing this to everyone just to see how many people pony up with no questions asked.

It’s not likely at all that they would be calling you if they had double-dipped you and owed you money.

This really might be better answered by a lawyer. This forum offers excellent advice on no-start or poor running conditions, can debate oil viscosities at length and offer excellant personal advice but “California Lawyer Talk” it is not.

"I get a phone message and an email from the salesperson I worked with telling me that they didn’t add in the sales tax on the contract. Now he says, I have to pay them the money, by the end of the week! or else the state of California would put a suspension on the license plates and possibly more, if. . . "
I would question why the email and telephone call came from the salesperson. I would think that a certified letter would have come from the business manager of the dealership. Every new car I have ever purchased, a personnel in the business office handles the final transaction after we have an agreed upon price.

I am sure to bad so sad does not apply, I think it should!

First I’d go down and talk to your local DMV just to get the straight story. The dealer acts as the agent and collects tax and license, then gets the plates for you after paying the fees. They probably went ahead and did this. Then someone noticed the salesman or closer screwed up and didn’t collect it and now someone is in deep trouble. Might be a lesson learned for them but you want to get the story from the DMV. Also usually sales tax (at least in Minnesota) is the new car price minus the trade in, not the full new car price.

I think you should be talking to a tax lawyer, not strangers on the internet.

Most people include sales tax in the financing, so paying out of pocket shouldn’t be necessary. If you’re really on the hook for the sales taxes, ask the dealership to correct the mistake by redoing your loan. Since they made the mistake, I’d try to negotiate a lower interest rate at the same time.

Ca. would know if you didn’t pay the tax. Let Ca. notify you if anything is wrong. It’s not up to the dealer to represent the state.

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What ever you do, do not pay the dealer anything ! Even if the tax needs to be paid by you, pay it directly to the state. I am in agreement with @Galant except for offering the dealer anything. Our state requires proof of payment for sales tax. You need to go to the DMV and find out how your car was registered without it. Personally, I would work with the DMV and the state, NOT THE DEALER to get a resolution.

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