Vehicle Sales Tax Questions

To offer much help you would have to explain and give us numbers - what they charged, what you paid, how they figured sales tax, etc. Did you trade in a car that you owned, owed money on (financed), or leased? What state are you in and does your state give a tax break when trading cars? Mine does, so if they gave you $10k for your trade toward a $30k new car, then you only owe tax on $20k (as long as the trade was owned by you). What state did you buy the car in? What is your tax rate and their tax rate? What is their tax trade in policy?

Buying out of state can be tricky if the dealer is not near the border and used to doing your state's taxes. Maybe they gave you their state's tax break and your state does not have one? Maybe they paid at the wrong rate?

It could be they made an honest mistake and you really due owe them money. It could be that they are crooks and you don't owe them anything. It could be they are wrong NOW in asking for more money.

If we figure out how the taxes should have been done then we compare with what they did,and then we find the error. It appears they overpaid your taxes to your state since they seem to want you to go get a check from your DMV. What they paid should be shown on your registration and given your state's rate we can figure out if that was the right amount or not (once we have the other numbers).

The UCS-124 thing implies a small claims court. It could be a bluff or could be legit and failure to respond (state your case) in court to lead to a finding that you owe the money.

Is the amout there are asking for exactly $1,000? If so, then they probably had a finger check on their adding machine or something. If they did overpay (in you name) to the DMV then you COULD present your evidence of the over pay to the DMV and they should refund you the difference.

So what I would do is figure out what happened and then work from there. If they charged you too little that is one thing, but if they just paid too much tax or something that is on them. Once you know what happened then perhaps consult an attorney have them send a letter to the dealership outlining the error your found in their figures and that you do not plan (assuming their error) to pay them anything else

BTW, I alway re-do all the dealer's numbers myself before I sign anything - no matter if it purchase or lease. If I can't see where every penny goes then I don't sign until I do. They could still pay the wrong amount in taxes later, but the right amount is on my paperwork.

#1030 of 1081 Re: Was sales tax paid on full value of vehicle? [albeback] by dwynne

Apr 02, 2011 (10:09 am)

Replying to: albeback (Feb 12, 2011 8:42 pm)

John and kyfdx both gave good answers, but I will toss in the questions "What state do you live in?" and "What state was the original lease (assume TX)?". I (and most everyone else) lives in a state that charges tax on the payment. So *I* would be afraid if I assumed a TX lease (tax rolled into payment already) that the lease bank would ask me to pay assumed payment + my state's tax. Assume one from another tax on payment state is easier, you would take the base payment they pay (w/o tax) and add your tax to it to get your payment.

In any case, I think full sales tax would be due if you buy the car at lease end. Even if the original lessee paid full tax on it in TX at time of lease.

#1031 of 1081 Re: dealer asking for more $ after 3 months [sweendogy] by kyfdx HOST

Apr 02, 2011 (11:31 am)

Replying to: sweendogy (Apr 02, 2011 7:00 am)

If that's the case, then you are most likely straight with the taxing authorities, and the only issue is between you and the dealer. At least, that simplifies things, and decreases any leverage they might have over you.

Where I live, the neighboring state is only 3 miles away, and that's where I buy/lease most of my cars.. Those dealers are very familiar with transferring titles to the neighboring state, etc.... and, not very likely to make a major mistake on taxation between the states. (basically, I don't pay the tax over there, but in my home state... no credits against tax paid elsewhere).

However, if I were to travel to another state, not contiguous to mine, then those dealers might not be so savvy. I wouldn't automatically assume they are trying to screw you. It's possible they didn't know the exact tax law, or didn't calculate it correctly. It's also possible they assumed you would get a credit for taxes paid in their state, but that isn't so. Or, it's possible they paid tax for you in their state that shouldn't have been paid, at all.

Before I wrote them a check, I'd want to know exactly what was paid, what is still due, and the logic behind it. If they simply miscalculated the tax, and you paid less than what you should have, then you'll probably have to pay it. If they paid tax to the wrong state, assuming reciprocity, when they shouldn't have, then they should get it back, or eat it..

Knowing the two states involved would help..

#1032 of 1081 more info on the issue by sweendogy

Apr 02, 2011 (11:53 am)

thank you all for the suggestions.. I called the dealer today.. they are looking into it.. I went back to look at the paperwork its seems the dealer told the dmv the full price for the car and not the difference in NEW minus Trade-- thus causing the tax problem... the dealer pays the dmv directly and I only paid the difference so that is where the dealer is coming up with the loss.. I paid the correct amount of total taxes but due to dealer error they paid the dmv the incorrect amount and want me now to make up the difference. I guess it also does not help that the dealer and my DMV are in 2 different state bought car in NY and registered in MA.

thanks again

Replies to this message:

dwynne (Apr 02, 2011 12:59 pm)
- sweendogy (Apr 02, 2011 1:17 pm)
  - stickguy (Apr 02, 2011 1:52 pm)
  - dwynne (Apr 04, 2011 11:09 am) and 2 more...
dwynne (Apr 05, 2011 4:51 am)

#1033 of 1081 Re: more info on the issue [sweendogy] by dwynne

Apr 02, 2011 (12:59 pm)

Replying to: sweendogy (Apr 02, 2011 11:53 am)

That helps.

Even though the dealer paid MA for your tax, they can't get a refund if they overpaid since it is in your name. Look on your registration it should show the amount paid to title and register the car. That should be too high by the amount of ((new - trade) * MA tax rate) and should also the same amount the dealer is asking about. If this is correct, then you could take your paperwork to the DMV along with your registration and show them the error and apply for a refund of the over payment. If you get it, then it is up to you if you want to return it to the dealer. I would, but I would have them pay me for the trouble to fix their mistake.

Looks like MA tax is 6.25%? o your trade was worth $16k?

Replies to this message:

sweendogy (Apr 02, 2011 1:17 pm)
- stickguy (Apr 02, 2011 1:52 pm)
- dwynne (Apr 04, 2011 11:09 am)
  - igozoomzoom (Apr 04, 2011 11:55 am) and 1 more...

#1034 of 1081 Re: more info on the issue [dwynne] by sweendogy

Apr 02, 2011 (1:17 pm)

Replying to: dwynne (Apr 02, 2011 12:59 pm)

you are correct that the amount they are asking for is the difference from the amount of tax they charged me (diff between new car and trade in) from the actual amount they paid the dmv.

onto the DMV, if i get it..what if i dont get it? I dont believe it should be on me to go to the DMV and figure out a dealer mistake-but to get this off my plate I would do it....and have no problem paying the correct tax (thats to you uncle sam) but double tax is a joke and the dealer should of figured this out-- its been over 3 months..

Replies to this message:

stickguy (Apr 02, 2011 1:52 pm)
dwynne (Apr 04, 2011 11:09 am)
- igozoomzoom (Apr 04, 2011 11:55 am)
  - tallman1 (Apr 04, 2011 1:29 pm)

#1035 of 1081 Re: more info on the issue [sweendogy] by stickguy

Apr 02, 2011 (1:52 pm)

Replying to: sweendogy (Apr 02, 2011 1:17 pm)

unless I am missing something, it sounds 100% like a dealer error, and there issue is with the DMV, not with you. so if they want a refund, then need to get it from the state (good luck with that!)

If you paid the correct amount in the first place, you should be out of the picture.

say they screwed up and paid too much to pay off your trade. Should you be on the hook to mkae up the error, or the finance company? Same situation here.

I would write a nice letter, documenting the numbers, and politely tell them to take up their problem with the DMV. Or take it out of the paycheck of whichever clerk screwed up in the first place.

#1036 of 1081 One thought by kyfdx HOST

Apr 03, 2011 (10:40 am)

Since you traded the car out-of-state, you may not be eligible for the reduction for trade-in. I don't know MA tax rules, but that would be the case in my state..

Replies to this message:

dwynne (Apr 04, 2011 11:11 am)

To POST a message, please Sign In.

Forum Tools

Search Forums

Enter Keyword(s):

Browse by Category

Browse by Vehicle

Browse by Board

Browse by Topic

View All Topics

Learn More, Do More

Edmunds Community

Explore Edmunds