So this isn't for me, but a friend selling an expensive car, and finally they found a buyer. Thing is buyer is asking for some help by declaring the vehicle for about half of the sale price. Car is rather new and not cheap. Friend wants to help buyer (mostly just to get the damn thing sold, it's been forever) but also is scared of the legality of reporting low figures to DMV. I'm doubly worried for them because it's a fairly new car and the value would be pretty well established I'd think. What's the skinny?

Edit:
Also this buyer is saying that some bonified dealers have been extending this 'arrangement' for him under the pretense that another car was traded, hence the low money value exchange. Could this be true? How's a private seller supposed to compete with dealers who pull this stuff?

DMV, in Calif, only collects the money. The Board of Equalization is the one that will "audit" this. The BOE is resonsible for sales tax in Calif. and the they do good job of it. Collecting that is. They will audit anything that does not look reasonable. Then you and the buyer will be facing fraud. Want to play the odds. to save a few bucks.

mike

Yea not something for your friend to mess around with. Up here in WI I bought a car for $300. DMV or who ever is in charge sent the original owner a letter wanting to know the sale price of the car.
They check up on this kind of stuff. I am sure the fines are hefty

Also, I believe in Ca - if it's a gift or a transfer between family members...
All of the rules change in your favor

I hear that the California DMV pays particular attention to market value vs. selling price for lease vehicles bought and sold for the first five years. This makes up the largest category every year. Sales beyond five years are considered not as important and receive less scrutiny. Still though, don't make it sound ridiculously cheap because it will just attract unwanted attention. This comes from a close friend of mine who holds a dealer license in CA. Not sure about other states.

I've done this before with a brother-in-law, he reported it as sold for less than the actual sale, he drew up a sales contract that stated the vehicle was being sold "as-is" which we thought would help if there was any question to its sale price compared to actual value....later, I did receive a letter from the State of California asking me what was the amount that I had sold it to him, fortunatly, I remembered the amount that was reported.

So, I guess they can and sometimes do audit these things.

I think you do have to be careful, and stay away from really low balling the sales amount.

here is an easy way to sell the car and NOT have any potential problems since it is an expensive car:

Take the actual sales price, and subtract the amount of half of the sales tax that would have to be paid, this gets the car sold to a serious buyer, and costs ONLY a couple of hundred dollars and everyone is happy, including Ahr-nold and his goonies. I once read that most car sales that fall through are disputes over 2 or 3 hundred dollars, but if you think of the percentages, it is not worth the fight.

most car values have a poor, medium and high value.

You could get away with selling at the poor book value. Anything under that and it will raise ?'s.

Make sure you get payed in cash (not another cheque, cash) on anything over the value on the bill of sale.

I hate to say it but, there is a thing called integrety here also. What is your friend's good name worth. There are other buyers out there. I know it's old fashioned. Time for your friend to take a good long look at what he's made of. The answer is inside him and not on a forum on the internet.

Dave

AFAIR, the "Use Tax" didn't come in till after Prop 13 cut their revenue for "fact finding" trips to the Bahamas. Fuck 'Em .... I'll take money away from them anyway that I can. You have to be suspicious of someone that will spend $2 Mil to get a job worth $50 K per year.

In spite of what most think, any branch of state of local govt (at least in California) involved in collecting taxes/ registrations/ etc, have become VERY efficient!

San Mateo County runs three yacht harbors. You pay a monthly rent of course for the convenience of a place to tie up the boat (electrical and water are extra). San Mateo County also charges "property tax" on the boat, because it is "occupying space in the county". They asked me what I thought it was worth, then did their own "research" and came up with a valuation about 30% higher than mine. I get taxed on this valuation, but they DO depreciate it each year, so my tax is reduced.

I thought about fighting the elevated valuation they put on it, but I would be bickering over 1% of the 30% difference which I'm sure they intended, wouldn't be worth haggling with county employees. There are SOME shrewd state/county employees out there setting policy although you wouldn't think so....

Sales tax is the biggest rip off.....you should only pay tax on a car when it's new.....

If the state wants to tax used sales....it's should be a lower rated "use" or transfer tax....less people would cheat if it was that way.

It's lame enough already sales tax is being collected on an item more than once. Once, when it was sold new and each time it is sold used.

The other issue is the odd chance there would be a total loss of the vehicle. The insurance company could go back to the sales tax records and pay you for what you claim to have paid.

For private transactions, what they pay and what you have paper billed them for can be what ever if all is done in cash. They then have to prove the transaction if they decide to look into the matter. From my experience, when you go to the DMV, the vehicle will have a minimum value they must charge you for taxes. If your bill of sale shows a 20K car sold to you for 5K because the dude was a crack head heading into a divorce, then it his loss and your gain. Since the time of Christ, tax people were look down on and they had nothing on todays high tech tax thieves.


From my experience, tax people are freekin nuts and will never change.

I Voted the DMV is the man because without them, you could not drive legally unless your from south of the border and you go to court and get slapped on the wrist for not having a drivers permit or insurance. Hey, I know someone who has gone 9X and is still driving today and he also has fled the scene at least 4X and thats just one dude!

Your friend is helping the buyer already, probably by lower his asking price to sell the car. Why should he legally sticking his neck out to put himself in a position of vulnerabilty. I vote no.
Tell the buyer he can manipulate the documents all he wants, after the sale is finalized.'
CCL

You bet , and they want every dime they can get too. It would be one thing if you bought a car for $500 and reported the sale price as $200 - $300, but an "expensive" car, near to new? Probably not too likely to get away with it unnoticed by someone in the chain.

If I were the seller, I would be asking myself, why would someone who wants to buy a near-to-new, "expensive" car need a break on the taxes? He's going to be shelling out for insurance, etc. anyway. I guess some people are known to be...cheap.

Somebody's blowing smoke on the dealer thing. Any legitimate dealer MUST report the total value of the sale, not just the cash. The total value is the agreed value of the trade in plus the sum of the cash or other negotiable instruments. Any dealer understating the value on a consistent basis is gonna get caught and lose his livelihood. Not something most of them take lightly. "Sure, we'll fool the DMV for a few hundred bucks, and I'll give up my license, pay heavy taxes, fines, and penalties, have a criminal record, and look for a job in another field." Hmmmmmm ...... Seems like a good deal to me .............. The Cap'n

I've done it before but on a expensive car I would be nervous.

10 grand in taxes sucks alot. Thats like 4 sets of kinesis wheels and tires

They just passed a law here in Texas that you have to pay taxes on 80% or the retail value of the car. You can contest it, but then you have to hire an appraiser for $300. I tell you, this is turning into a socialist county. This is when the government has overstepped its bounds. The governement has no business in this matter, from a natual law point of view.

I bought my wife's 99 Audi for 1/3 of the retail value because it had a broken timing belt. If there is a signed receipt from the seller to the new owner, that should be enough to determine the tax value, because a car is ultuimatley only worth what someone is willing to pay for it.

Couldn't agree more! I remember a few years ago, Al Checci (owner of Northworst Airlines), spent $35 million for his failed California senate run... All for a 140K per year job ...know what you mean.

And as they do, we need to look good on paper and in the public eye by wheelin and dealin and covering up our tracks.

:beer1:Its only illegal if one gets caught right, even if everyone else is doing the same thing and we know they all are? One thing that is happening everywhere is that "the man" is making us all focus on I as opposed to we.

WA DMV figured this out years ago. In favor of them of course. They no longer care what you bought the car for. They tax you on what they think it's worth. All you do is tell them whether it is in good, med or poor condition. I bought my 914 for $2500 and told them it was in med condition. They looked it up in their value guide and said it was worth $6200 and that was what they were going to charge excise tax on. HOLY CRAP!
I had to file a certified document that declared all the warts and problems with the car and then get the seller to agree by signing it too. I felt like I was a criminal for making a willing buyer/seller deal.

I hate the F$&*@g gubment.

Crap. Now I'm probably going to get asked to strip naked the next time I try to get on an airplane.

I have a firm policy of never committing fraud unless the benefit is greater than $1million. I want to be able to afford a decent attorney.

Let your "freind" know there will be a starving bureaucrat somewhere in California because of him.

Its no different than cheating on your taxes. Do people do it? Yep! Is it a wise practice? Nope!

You can transfer the title as a gift. I did my bike for $10. but it had a salvage title...

The only time I did this, I was selling a vehicle that had been totalled out and issued a salvage title. I would be very hesitant to try this on something newer and more expensive, just in case someone was paying attention at the DMV...

I try to rationalize my questionable behaviors, too, but Dave is right. I wouldn't do it, because I would be already caught by myself.

That said, I, too think it is HIGHLY lame that CA and other states get sales tax on used cars or any other items where they have already collected sales tax.

My old 911 was bought and sold 6 times in 18 months or so (always between friends and everyone REALLY wanted it and then, for whatever reason, didn't) and the state of CA made close to half the car's value in taxes during that period...



pete

If its in Cali, they should give the car as a 'GIFT', only if his "friend" pays him cash. I think they removed the gift tax, and you only have to pay title transfer fee and registration fees if tags are expired. Don't quote me on that. I sold a truck recently and gave it as a 'gift'. Tags were current. As far as I know, only the title transfer fee and smog were needed.