Skip to comments.Buying a used car? Prepare for the tax bill [TEXAS]
Posted on 09/26/2006 6:30:36 AM PDT by Dubya
Used-car buyers beware -- of your sales tax bill.
Starting Sunday, tax offices across Texas will use a new system to determine sales taxes on private used-car purchases, which could set the value at more than someone actually pays for the vehicle.
Tarrant County is considering placing deputies or constables at tax offices when the new law takes effect.
"It's going to be a little bit of a shock to some people," said Betsy Price, Tarrant County tax assessor-collector. "We might have to charge them a lot more if the vehicle is valued higher."
Called "standard presumptive value," tax assessor-collectors will use a Texas Department of Transportation guide to determine a vehicle's value, regardless of how much a person pays for the car. The law would not apply to vehicles purchased through licensed dealers.
Buyers should expect to pay tax on at least 80 percent of the state-determined value, even if they paid less than that for the vehicle. State sales tax on used cars is 6.25 percent.
Mary Nell Mathis, tax advisor to consumer advocacy group Common Cause Texas, said the new guidelines could be fair.
"A $500 difference in the price of the car would only be $31.25 difference in sales tax," she said. "For most people, that's hardly worth arguing over. Some people will win and some people will lose."
New state guidelines meant to prevent fraud in used-car sales among private parties could mean higher sales taxes for used-car buyers.
Buyers will pay taxes based on a state assessment of the value, even if they paid less for the vehicle.
The law applies only to private transactions; it will not affect sales that go through licensed dealers.
A buyer can appeal the state's value of the car within 20 working days of purchase by getting a licensed car dealer or insurance adjuster to appraise the vehicle and fill out state forms, a process that could cost as much as $300.
The measure was among several bills passed by the Texas Legislature to generate money for school financing.
And Gov Perry.
It's for the kids.
Already done here in the People's Republik.
Sucks too, you can't write a receipt for $1 because they will check the blue book and then tax accordingly.
I'm sick of taxes.
Most of these vehicles have already been taxed in Texas once on the original purchase, now the greedy tax collectors,not only are taxing a car at least twice, but want to make their own apprasial of the car.
So someone buying a car cheap because it needs work is going to get taxed as if it's in good working order. Nice.
Kansas tried that. I think sales tax is on the sale price; period, if they raise property taxes/tag rates that is a whole different beast.
I haven't bought a vehical since the laws were bantered so am not sure how it is now.
The government is an organized crime syndicate specializing in extortion.
I'd certainly trade your tax regimen cheerfully for California's, where you hit the maximum 9.3% tax bracket on all income over (I think it was) $40k or so.
How do they handle the fact that the value of cars depends dramatically on mechanical condition? This might make cars in poor condition entirely unsellable in Texas.
I guess the car dealer lobby has been hard at work.
Guess the car dealerships are going to be very busy on Saturday.
So next time I go to a garage sale or flea market can I expect a tax bill from the state on the "assumed value" of the used items, etc. that I purchase? Sounds like a greasy slide toward a pile of ....
A little something to help the new and used car dealers associations (one of the biggest guilds contributing to state and local government).
Quote of the day. Mind if I borrow that for a tagline after the election?
Would this apply if the vehicle was purchased out of state?
The blue book is WAY HIGH on the actual value of most cars. In luxury cars, it is up to 5000 high! Bend over, and grab your ankles!!
If I couldn't prove that a tax was paid on it at some point since its manufacture and subsequent transfers and sales....I had to pay Washington State sales tax on it.
Seriously. It's ridiculous.
It will definitely send some cars that would otherwise be salvagable to the scrap yards. You can't afford to buy the car needing work, pay the sales taxes on it as if the work is already done and then pay the sales taxes all over again when you go to buy the parts to fix it.
I think if they could, they'd outlaw self-sufficiency outright.