I changed the way the California DMV determines the Sales Tax when a vehicle is sold

B

brunswick1901

AzB Gold Member
Gold Member
I won the first celebrity 8-Ball tournament at the Hollywood Athletic Club and the first prize was a Suzuki RF600 motorcycle.

When I picked up the motorcycle, the Suzuki Corporation gave me a letter stating that they were giving me the motorcycle for free and the price on the Bill of Sale was zero.

After attending the Motor Safety Class and getting a license to ride a motorcycle I went to the California Department of Motor Vehicles to register the motorcycle in my name.

When I gave the clerk the letter and the Bill of Sale to the clerk at the DMV the lady said, "I need a moment".

After a while the lady returned with a lady, who I think was the person in charge. She would have to send my letter and Bill of Sale to Sacramento. I asked if she could send a copy and she shook her head and said no.
About a week later I got a call from the lady who said I could come in to transfer the title to me for a $10 transfer fee.

She said the delay was because the sales tax due is based on the vehicle’s selling price and she wasn't sure she could transfer the title without charging sales tax. Because the sale price was zero the DMV could not collect any sales tax.

I am not sure when it happened but the California DMV, and I am sure other state’s DMV changed the way they determine the sales tax.

The sales tax is now based on the fair market value of the vehicle.

There was a tiny announcement in Billiard Digest that I won the tournament, That announcement cost me the chance to play some of the guys that noticed it.
 
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brunswick1901 said:
I won the first celebrity 8-Ball tournament at the Hollywood Athletic Club and the first prize was a Suzuki RF600 motorcycle.

When I picked up the motorcycle, the Suzuki Corporation gave me a letter stating that they were giving me the motorcycle for free and the price on the Bill of Sale was zero.

After attending the Motor Safety Class and getting a license to ride a motorcycle I went to the California Department of Motor Vehicles to register the motorcycle in my name.

When I gave the clerk the letter and the Bill of Sale to the clerk at the DMV the lady said, "I need a moment".

After a while the lady returned with a lady, who I think was the person in charge. She would have to send my letter and Bill of Sale to Sacramento. I asked if she could send a copy and she shook her head and said no.
About a week later I got a call from the lady who said I could come in to transfer the title to me for a $10 transfer fee.

She said the delay was because the sales tax due is based on the vehicle’s selling price and she wasn't sure she could transfer the title without charging sales tax. Because the sale price was zero the DMV could not collect any sales tax.

I am not sure when it happened but the California DMV, and I am sure other state’s DMV changed the way they determine the sales tax.

The sales tax is now based on the fair market value of the vehicle.
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congratulations
on winning the tournament
winning the motorcycle
and not having to give the state of california any more than necessary of your money
 
Had a friend buy a motorhome, high end diesel, for no tax. He studied the laws, lived in Wis, bought it in Arizona and told them he would pay tax in Wis. He then went and did something with the ownership and did something with an LLC. When he got back to Wis he had a big problem where Wis motor vehicle wanted the tax on it's sale and he fought it and won. Got it registered and never did pay any sales tax on it. This was years ago and about 225k at the time.
 
About 2 years ago we moved to AR from Az . We had 3 years left on our Az car plate . Ar has personal property tax that also includes vehicles . When getting new DLs the clerk asked if we were going to put Ar tags on our car....no thanks said I ,I also have property in Az . No problems so far. We live just a few miles from an AFB so vehicles with out of state plates are a common sight .
 
I bought a brand new 1995 bmw 325is in Atlanta while I was working there. I got Georgia plates and at the dmv I gave them my Colorado address. She said “oh, out of state” and didn’t charge sales tax. When I took it to get plates in CO they said “Oh, transfer from out of state” and didn‘t charge me tax. Saved about $2,300.
 
Here's one from the other side of the fence:
Way back in the early-mid 1980s, I was buying a used car. It was a sweet Olds Delta 88 Royale Brougham. Had those pillowy, velvet looking seats, and was overall in great shape. The car was in a nearby town and the guy that owned the car was in another state, but his daughter was the contact where the car was. Super nice woman, and we dickered a bit on price, (she had him on the phone) and were a few hundred apart, and nobody is moving. I suggested that I'd give him his price if I could state that I paid less for it, and save myself sales tax. Everyone agrees, daughter already had the signed title, and I title and register it at the DMV. This was in NJ. About 5-6 months later I get a letter from the state, I think it was Dept of Taxation, stating that the vehicle was purchased for less than what they felt fair market value should have been. I think I paid $6k, but listed $3.5k on the paperwork, and saved myself some tax fees. They claimed that the vehicle, with the options and mileage it had, should have been worth $6.5k, and unless I could get a letter from the seller stating the sales price and reason it was under market value, they wanted the difference from what I paid, and their estimation of a $6.5k value. My only hope was to go to the house where I first viewed the car, ring the doorbell, and hope she remembered me. She did, was very nice, and assured me it wouldn't be a problem. I remember feeling happy that this was all working out so well. She called her dad and he proceeded to rip me a new one, telling me that I was a "chiseler" (only time in my life I've been called that) and that he would do no such thing. I ended up paying that extra tax to the state for more money than I actually paid for the car in the first place.
 
It's really not that hard. You won this item. The maximum sales tax that you should pay would be based of the fee for the tournament. Sales tax was paid by the people purchasing the bike for the contest. Your bike was basically a gift
 
measureman said:
A victory for the little guy.
I was given a 2002 Blazer 2 years ago and the sales price on the title was zero.
The lady at the Colorado motor vehicle never blinked and charged me no sales tax,just transfer fees,title fees,etc I think it was under $100.
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Two clear examples of managing outcomes.

One unsucessful and one successful.

Code written:
4% of sale price, or
4% of sale price or $100, whichever is greater.

Many problems are only problems coz the processes are flawed.
 
Rickhem said:
Here's one from the other side of the fence:
Way back in the early-mid 1980s, I was buying a used car. It was a sweet Olds Delta 88 Royale Brougham. Had those pillowy, velvet looking seats, and was overall in great shape. The car was in a nearby town and the guy that owned the car was in another state, but his daughter was the contact where the car was. Super nice woman, and we dickered a bit on price, (she had him on the phone) and were a few hundred apart, and nobody is moving. I suggested that I'd give him his price if I could state that I paid less for it, and save myself sales tax. Everyone agrees, daughter already had the signed title, and I title and register it at the DMV. This was in NJ. About 5-6 months later I get a letter from the state, I think it was Dept of Taxation, stating that the vehicle was purchased for less than what they felt fair market value should have been. I think I paid $6k, but listed $3.5k on the paperwork, and saved myself some tax fees. They claimed that the vehicle, with the options and mileage it had, should have been worth $6.5k, and unless I could get a letter from the seller stating the sales price and reason it was under market value, they wanted the difference from what I paid, and their estimation of a $6.5k value. My only hope was to go to the house where I first viewed the car, ring the doorbell, and hope she remembered me. She did, was very nice, and assured me it wouldn't be a problem. I remember feeling happy that this was all working out so well. She called her dad and he proceeded to rip me a new one, telling me that I was a "chiseler" (only time in my life I've been called that) and that he would do no such thing. I ended up paying that extra tax to the state for more money than I actually paid for the car in the first place.
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The State cannot determine the fair market value of a car unless they are there to appraise it at time of sale. Maybe you got it cheap because it needed tires, brakes shocks, exhaust, front end work, tune-up, etc. Who is the State to decide what 2 private individuals determine is a fair price for a car? I don't understand why there is sales tax on used cars sold privately in the first place. The tax was already paid on that car when it was bought new from wages that again were taxed.
 
Zerksies said:
It's really not that hard. You won this item. The maximum sales tax that you should pay would be based of the fee for the tournament. Sales tax was paid by the people purchasing the bike for the contest. Your bike was basically a gift
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That's not how that works. Anything you win would (should) be claimed on your taxes at fair market value and you pay your effective tax rate (see below) for those winnings.

I.e. If your effective tax rate is 18% and you win a $100,000.00 car then, you would owe $18,000 in INCOME taxes. I have no input regarding sales tax.

To calculate your own effective tax rate you can simply look at a paystub and divide your total tax deductions by your gross salary - that will get you close enough in most situations.
 
fastone371 said:
The State cannot determine the fair market value of a car unless they are there to appraise it at time of sale. Maybe you got it cheap because it needed tires, brakes shocks, exhaust, front end work, tune-up, etc. Who is the State to decide what 2 private individuals determine is a fair price for a car? I don't understand why there is sales tax on used cars sold privately in the first place. The tax was already paid on that car when it was bought new from wages that again were taxed.
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I agree, and I mulled over fighting that for a while, but without any support from the seller, I didn't think that a wise decision. Even if I decided to fess up and tell them the real purchase price, I would then be admitting to tax fraud by listing a lower price originally.
Just one of those things in life where you take your shot and occasionally it goes in a completely unintended and unpredictable way. I paid the extra and moved on.
 
Chili Palmer said:
That's not how that works. Anything you win would (should) be claimed on your taxes at fair market value and you pay your effective tax rate (see below) for those winnings.

I.e. If your effective tax rate is 18% and you win a $100,000.00 car then, you would owe $18,000 in INCOME taxes. I have no input regarding sales tax.

To calculate your own effective tax rate you can simply look at a paystub and divide your total tax deductions by your gross salary - that will get you close enough in most situations.
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This is sales tax not income tax this is diffirent. He's not paying 18% on the motorcycle for DWV.
 
Zerksies said:
It's really not that hard. You won this item. The maximum sales tax that you should pay would be based of the fee for the tournament. Sales tax was paid by the people purchasing the bike for the contest. Your bike was basically a gift
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The fact that it was purchased previously by someone else isn't really the important factor here. In most states, you still pay sales tax even if you are the 2nd, 3rd or 75th buyer. They just needed to rule on whether to accept a zero dollar sales price. You don't give a counter clerk that authority or we'd all declare zero.

The contest people likely will...or should...send a 1099 and there is income tax due.
 
Zerksies said:
It's really not that hard. You won this item. The maximum sales tax that you should pay would be based of the fee for the tournament. Sales tax was paid by the people purchasing the bike for the contest. Your bike was basically a gift
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It was not a gift, it was income. Income doesn't have sales tax. Income is subject to income tax.

I'm not just guessing or stating what I think it is or wish it was...that's simply the way tax law works.
 
logical said:
It was not a gift, it was income. Income doesn't have sales tax. Income is subject to income tax.

I'm not just guessing or stating what I think it is or wish it was...that's simply the way tax law works.
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Income is diffirent then sales. Sales tax should not be paid on this
 
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