What was the reason this was made law? (I am not asking what it helps or prevents in our society or economy.)
What kind of tax? You mean sales tax? That’s a state function, so depends on where you are. As far as I’m aware, Texas doesn’t get to collect tax when you buy a used car.
Is that the case in every state? I know it is in California. But some states have no sales tax.
Presumably, states collect sales taxes on private car sales because:
- they can because the state will know if a car has been sold because you have to register it with a state agency
- the state can pick up some revenue this way and it doesn’t cost the state very much to collect it.
For the same reason any other tax law is enacted. To raise money.
That is absolutely wrong. You will pay the sales tax on a used car purchase in Texas when you transfer the title.
I’m not sure but I think he is asking why tax is being collected on a single item more than once (after the initial sale). You would think that the government would be happy enough with taking their share the first time but the greedy bastards are never happy. In principal they can collect the sales tax on a single car a countless number of times to where the total amount of tax taken could surpass the original price of the automobile when purchased new!
Its bullshit is what it is. Pretty slick…but bullshit just the same!!!
Is that what you were talking about Hauss?
As to the why, I think it might be because, automobiles requiring ownership registration, it’s a sales history they can track.
Why would the sale being private have any effect on this?
When I buy goods at Target, it’s a private transaction between me and Target Corp., but I still pay sales tax on it.
My NYS tax return has a line on it this year for unpaid use taxes on items purchased and brought into NY on which NY sales taxes weren’t paid. Sounds like a new tax, but people were always supposed to pay the the use tax- it’s just that car registration makes it possible to actually collect it on cars that were bought out of state or from people who are not obligated to collect the tax.
BTW, regarding the same item being taxed multiple times- happens all the time. I pay sales taxes when I buy furniture, clothing, books etc. I then sell or donate the items to a thrift shop, a used book store etc. When they resell the items, tax is collected again.
Yes, but Target didn’t pay sales tax when they bought it, because they didn’t buy it at retail. They have a sales tax certificate that asserts they will collect sales tax later so the distributors doesn’t need to collect it now. So the tax is still only collected once.
Because theycan . I am serious here. They have a record of the date & amout, so they can. In theory they’d like to charge sales taxe when you sell your used treadmill to your neighbor- but it breaks down in practice. In CA they try to even charge sales tax on interstate commerce (which is very likely unConstitutional)- they call it “use tax”.
From the 3 states I’ve lived in, they all have a box where you list the price paid for the used car. If you’re buying it from Bob down the road, who’s to say how much you paid? The state won’t expect a notorized reciept.
The only way you don’t pay is if the car is given to you, where the price box is just listed as “Gift”.
Hit submit too soon.
My question was always about buying out-of-state. Let’s say I buy a car from a family member in PA and I live in NY. When I register the car in NY, why the hell do they get sales tax? The transaction wasn’t in PA. Also, since it it did take place in PA, shouldn’t NY kick a little something back?
It’s a money grab. That’s all it is. The law was enacted that said, “We will collect a percentage of a sale of anything, anytime, anywhere we so choose”.
Time for another Tea Party? Who’s with me?
The state might very well determine what they feel the car is really worth and then bill you for the difference. Happened to my brother-in-law. He bought a car for cheap and New Jersey decided on their own that its price must have been higher, so they sent him a bill for the extra tax. He had to scrounge around for repair receipts to prove his case that the car was a beater when he bought it. As I recall, he was successful.
So any place that sells used clothing or books shouldn’t have to pay sales tax? Why not?
You sound like one of those people who don’t understand what “double taxation” means and tries to apply it where it patently absurd.
You have to be careful in WI. The State “knows” what the car should sell for. If you falsify the sale price they can nail you. They have called up the buyers of vehicles and tried to corroborate the sale prices behind the back of the person selling the vehicle (who may or may not have put the correct amount down on the DMV registration form). If the seller and the buyer are in cahoots with each other they can agree on a sale price for legal (illegal) reasons that is different than the actual monetary exchange. Say the car sold for 4 grand, they can agree that it exchanged hands for 1 grand so if the buyer gets a call from the state he can verify the false amount. This is of course illegal. The state may question why the car was sold for much less than market price and dig deeper.
Pardon,
It`s the buyer that pays the sales tax. Switch seller and buyer in the above post for clarity.
This is opening a can of worms. Now I’m curious of different state laws. I can see this happening in the NE and maybe west of the Sierra Nevadas (BTW, can anyone tell me what the Hell that translates to?) We plan to move to the Reno area soon.
Anyway, I’m wondering why NJ would determine the sales tax. Quick history.
As some may know, my mom died last year, and I bought her car from the estate. Because of estate laws (state/Fed not sure) I was able to get it for 75% of wholesale value (there were 4 of us). The title was transferred to me with no tax paid. This was partly because of the gift transfer, and seconded by the fact that I never actually paid money for it, as it was deducted from the estate. Those whom have been involved in estates may know what I’m talking about.
With that history out of the way, now I’m curious, would I be subject to NJ tax under this scenario? It’s already titled in my name in ND, but is there a way they could still get me under these circumstances? I ask that because I have a pre-conceiveved notion of any NE state getting what they can.