Buying a car from another person, how does sales tax work?

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AMCRambler

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Jan 23, 2001
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I live in New York, and I'm going to buy a car from a person in West Virginia. I've been reading the NYS DMV website, but from what other people have told me, I'm confused. The DMV website sais the following regarding sales tax:

Proof of sales tax payment, sales tax exemption, or purchase price. You must pay the sales tax, prove that it was paid, or prove your exemption at the DMV office when there is a change of ownership, a lease agreement, or a new resident of NYS applies for a NYS registration or title certificate. You must get a sales tax receipt from the DMV even if the transaction is exempt from sales tax.
If the name of the owner that appears on the NYS title certificate will not change, sales tax forms and proofs are not required. See the information below if you were not a resident of NYS when the vehicle was purchased.
If you bought the vehicle from a NYS automobile dealer or an out-of-state dealer that is authorized to collect NYS sales tax, bring the dealer's bill of sale that shows that you paid NYS sales tax. Also bring form MV-50 (NYS dealer only) or form DTF-803 (out-of-state dealer). If NYS sales tax was paid to a NYS dealer, sales tax is not collected when you apply for a vehicle registration, and the DMV does not issue a sales tax receipt.
If you bought your vehicle from another person in a private sale, both the buyer and the seller must complete form DTF-802. Bring the form to a DMV office. The DMV calculates and collects the sales tax, and issues a sales tax receipt.
If you leased the vehicle, see the information about leased vehicles.
If the vehicle was a gift or was purchased from a family member, use form DTF-802 to receive a sales tax exemption.
If you paid out-of-state sales tax, show the out-of-state dealer bill of sale. The bill of sale must show the purchase price and the amount of out-of-state sales tax paid to the dealer. Use form DTF-804 to claim credit for the state and local sales taxes you paid in the other state. This process can reduce the amount of your NYS sales tax if NYS and the other state have an agreement about sales tax.


Now other people have said that you don't need to pay the tax if you get the seller to write down the selling amount as the real selling amount - amount of tax. IE if I buy a car for $10,000 and sales tax is 5% they put down $9500 as the selling price and $500 as tax paid. This kind of makes sense, but do they actually pay the tax? That wouldn't make sense because then they wouldn't be getting what they asked for the car. If they don't actually pay the tax , how do I show proof to the DMV that sales tax was paid? This is the first car I'm buying and I have to say it is entirely too much of a pain in the butt just to get the damn transaction legal so I can register and drive the car! Anybody buy a car recently that can tell me how they did this? Since the car is in West Virginia I want to make sure I've got everything I need signed sealed etc since most of it's going to be done by mail. I'd like to get everything with one letter back and forth taken care of.
 

iamwiz82

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Jan 10, 2001
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the seller puts the price sold on the title. You take that to the DMV to register the car they take the selling price and add the tax, which is then due. You could take the loan out for whatever the price of the car is plus tax and have the seller give you a refund, if they trust you.

Putting a different selling price on the title is neither ethical nor legal.
 

AMCRambler

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Jan 23, 2001
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It may not be legal but I can argue it being ethical. It seems quite unethical for the state to be able to charge you tax on a car that has already had tax paid on it. I can see if perhaps you are buying it from a commercial used car dealership. They are a business, and they're making money off the sale. But for a private party selling the car? There's no mark up for them, heck they are just trying to break even. Just doesn't seem right to me. Thanks for your advice though. I guess I've got to take out a bigger loan so I can pay the stupid sales tax.
 

EagleKeeper

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Oct 30, 2000
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Originally posted by: iamwiz82
the seller puts the price sold on the title. You take that to the DMV to register the car they take the selling price and add the tax, which is then due. You could take the loan out for whatever the price of the car is plus tax and have the seller give you a refund, if they trust you.

Putting a different selling price on the title is neither ethical nor legal.

If the price indicated for the sale is felt by the DMV to unreasonably low, they can/will tax based on the reasonable value of the vehicle. It is then up to you to dispute it.

 

Spencer278

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Oct 11, 2002
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At least in VT if you buy a car from a non-dealer they use the book value to determine the sales tax when you go to the DMV. I have no idea how you get the car from where you purchased it to NY state with out a valid plate.
 

AMCRambler

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Jan 23, 2001
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Originally posted by: Spencer278
At least in VT if you buy a car from a non-dealer they use the book value to determine the sales tax when you go to the DMV. I have no idea how you get the car from where you purchased it to NY state with out a valid plate.

Well they have temporary transport plates you can get, but I will be completing the sale through the mail. They'll send me the title and I'll then register the car in NY, get the plates and go drive it back.
 

Asharus

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Oct 6, 2001
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Usually the seller is more than welcome to put a lower price on paper than how much it actually sold for. Just put down a reasonable amount, and figure in some body work, engine, suspension and other things to account for the book value. Works every time.
 

Hubris

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Jul 14, 2001
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Originally posted by: AMCRambler
Originally posted by: Spencer278
At least in VT if you buy a car from a non-dealer they use the book value to determine the sales tax when you go to the DMV. I have no idea how you get the car from where you purchased it to NY state with out a valid plate.

Well they have temporary transport plates you can get, but I will be completing the sale through the mail. They'll send me the title and I'll then register the car in NY, get the plates and go drive it back.

Well, I hope you trust them, cause seems like a weird way to do it.

And yeah, you've got to pay tax to register your car in-state. You do understand how taxes work, right? It's a privilege to own and operate a car, and you've got to pay for that privilege. Just like when you go to the store and buy a DVD, CD, etc. you've got to pay taxes on it. Same with a car.

As for tax already being paid on it, it was paid by the original buyer for the pirvilege to use the car for as long as they did. Now that you're buying the car, you've got to pay for the ability to use it yourself. It's the way the economy works. And yes, sometimes it sucks, as I just bought a new car, and had to pay $500 in taxes which kinda blew, but it's a one time thing, and it also keeps all the services that the city and state use running.
 

AMCRambler

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Jan 23, 2001
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Originally posted by: Hubris
Originally posted by: AMCRambler
Originally posted by: Spencer278
At least in VT if you buy a car from a non-dealer they use the book value to determine the sales tax when you go to the DMV. I have no idea how you get the car from where you purchased it to NY state with out a valid plate.

Well they have temporary transport plates you can get, but I will be completing the sale through the mail. They'll send me the title and I'll then register the car in NY, get the plates and go drive it back.

Well, I hope you trust them, cause seems like a weird way to do it.

And yeah, you've got to pay tax to register your car in-state. You do understand how taxes work, right? It's a privilege to own and operate a car, and you've got to pay for that privilege. Just like when you go to the store and buy a DVD, CD, etc. you've got to pay taxes on it. Same with a car.

As for tax already being paid on it, it was paid by the original buyer for the pirvilege to use the car for as long as they did. Now that you're buying the car, you've got to pay for the ability to use it yourself. It's the way the economy works. And yes, sometimes it sucks, as I just bought a new car, and had to pay $500 in taxes which kinda blew, but it's a one time thing, and it also keeps all the services that the city and state use running.

I always thought of the registration fee as the tax for the privilege of owning and operating a car. I don't think I would describe sales tax as paying for the privilege of doing something. When I go to the supermarket and buy food and pay sales tax, am I paying for the privilege to eat, lol? Nope. I understand sales tax is necessary, but IMO we get taxed entirely too much and my point is that paying sales tax on a car you buy from a private party is just another example of that. It's not going to end there though. Pretty soon you'll have to pay taxes on any private transaction. You buy something from a person off Ebay? They're going to find a way to tax that. Heck they'd tax people for having garage sales if they could find a way to enforce it! I'm going to pay my taxes like a good boy, so don't get your panties in a twist. I was just confused about what I heard from a number of people.
 

jfoster966

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Jul 15, 2012
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I always tell people when they offer advice: If you are not sure say I don't know rather than make something up, or steer someone wrong. The temp transport plates are "only" good for transporting vehicles from one point to another within NY, or out of NY. Not for vehicles coming into NY.
 

CPA

Elite Member
Nov 19, 2001
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It may not be legal but I can argue it being ethical. It seems quite unethical for the state to be able to charge you tax on a car that has already had tax paid on it. I can see if perhaps you are buying it from a commercial used car dealership. They are a business, and they're making money off the sale. But for a private party selling the car? There's no mark up for them, heck they are just trying to break even. Just doesn't seem right to me. Thanks for your advice though. I guess I've got to take out a bigger loan so I can pay the stupid sales tax.

That's not a matter of ethics, that's a matter of opinion.

BTW, I know some states, like TX, keep a database of vehicle fair values and will charge tax on the higher of the fair value or the purchase price when dealing with private party sales.
 
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