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Smart Shopper Smart Shopper-Archives Any Questions for a Car Dealer? 
16377 messages, Last post on Feb 11, 2006 at 4:59 AM
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Replying to: robr2 (Jan 20, 2006 12:36 pm) OK your not I am, you would be hard pressed to prove this as tax evasion since if the car were sold to another person who is unknown to the original owner at that price the same tax consequences would happen. However one must look at what reasonable prices are for the trades. Say in the example given the current car being traded between the two friends was a rusted out Yugo with a blown engine then you would be in a grey area. That is because you grossly misrepresented the value of the car but either way the state gets the same amount. Now lets say in the example the dealer gives a 10K trade in, your friend buys it for 5K and someone slips 5K under the table to the dealer then you have tax evasion. I can't see how a court would accept any other reason for 2 related parties to conduct a transaction through a third party other than to avoid the tax. Courts all the time recognize dealings done to avoid taxes. There is nothing wrong with avoiding taxes, people do it all the time and people make a good living helping people to avoid taxes. Now if the court said it was done to evade taxes thats a whole other kettle of fish. Tax evasion is illegal and the last example I gave you is an example of it. Now what started all of this was about buying the car at the end of the lease and turning it around for a profit. thats a whole other discussion. But FWIW i don't think it changes the tax situation one iota.
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Replying to: snakeweasel (Jan 20, 2006 1:23 pm) OK your not I am, you would be hard pressed to prove this as tax evasion since if the car were sold to another person who is unknown to the original owner at that price the same tax consequences would happen. That's true but the key here is that the parties we have been discussing are known to each other. If they were unknown, then I have no issue. But even if you bring a buyer you found through an ad to the dealer, then he is no longer unknown to you. Now if the court said it was done to evade taxes thats a whole other kettle of fish. Tax evasion is illegal and the last example I gave you is an example of it. And that's all I was saying. If a court determined it to be evasion, then it's illegal. Is an in and out illegal? IMHO yes if the intent is to evade paying sales tax. But in the real world, it's such a small amount that most tax collecting agencies wouldn't bother chasing. There seems to be a fine line between tax avoidance and tax evasion.
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Replying to: snakeweasel (Jan 20, 2006 1:23 pm) oh, and the dealer would be out some money for making the vehicle road worthy. |
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Replying to: robr2 (Jan 20, 2006 1:41 pm) Sorry thats not the key, the key is what would have happened if it was an arms length transaction? So unless you can prove that there were improper transactions there is no wrong doing. And that's all I was saying. If a court determined it to be evasion, The problem is you will not find a court that would call it evasion, not in the U.S at least. In similar cases it was found that deals like these were not evasive.
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Replying to: snakeweasel (Jan 20, 2006 2:09 pm) Well why didn't you just say so up front?? It would've saved lots of typing!!  But IMHO - I repeat IMHO - it's fishy. If I were a dealer, I'd avoid it. It's not ethical.
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Replying to: robr2 (Jan 20, 2006 2:15 pm) Person leases a car. Person fulfills their obligation. Person buys the car (add 6% sales tax) and sells it to Johnny Mercedes. Johnny pays 6% sales tax. -OR- Car dealer buys the car from Leasing Co. Car dealer sells it to Johnny Mercedes. Johnny pays 6% sales tax. There is nothing wrong with the 2nd scenario. I understand why a lot of car dealers don't want to get involved; I think we heard the list of possible complications. But if it's properly done -- i.e. posession of the car passes from the Leasing Co. to the car dealer, and then to Johnny -- then it isn't illegal. Heck, it COULDN'T be illegal. What is the crime here, aggravated turnover in the first degree? -Mathias
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Replying to: steine13 (Jan 20, 2006 4:38 pm)
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Replying to: robr2 (Jan 20, 2006 5:37 pm) You're mixing up -- I think -- two different things. #1 is that in some states -- not MI where I live -- you pay sales tax on the difference between the trade-in and the new car. #2 is that if you buy out your leased car, you pay sales tax on the purchase price. ------------------- #1 does not apply, as you cannot "trade in" a leased car unless you own it, and if you don't buy it from the leasing company, you DON'T own it. The tax savings comes in because if the *dealer* buys out your leased car, no sales tax is owed on that purchase. The new buyer pays the tax when he takes possession. The tax being avoided is the double sales tax on the purchase price of the leased car; first by the person who leases, then buys the car, and AGAIN by the person who buys the car from him 5 minutes later. Avoiding THAT sales tax is not illegal, if all the i's are crossed and the t's are dotted. There is no way, I don't think, to "trade in" a leased car and take the sales tax break. To "trade in" something, you have to own it first. -Mathias
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Recently I took my wife's Lexus RX 300 for a major service to my local Toyota dealer who was willing to do the service for $600 when the Lexus dealer wanted $1300! Anyway, I took the car back after the service and the next morning noticed a deep dent on the front bumper that was not there before. I immediately took the car in and complained, prepared for a long and hard battle. To my surprise, the dealer immediately agreed to fix it in their body shop and gave us an Explorer as a loaner. All this for no charge. And, a couple of days later, I got back the Lexus, all washed and clean, sans the dent. I am, of course, going to give all my business to them from now on, but wanted to know if I could do something else to return this very nice gesture. Would writing a letter to Toyota help?
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| I assume you talked to the Service Manager who made things right? Probably the most effective would be a letter to the dealer principal, just stating how happy you were with your overall treatment at his store. Since you are looking at this as an over all positive, I'd leave out the gory dent detail that potentially could get somebody in trouble. | |
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