Posted on 09/29/2006 9:06:45 AM PDT by Snickering Hound
SAN ANTONIO — A new state law intended to collect taxes on the full retail value of used vehicles sold in private-party exchanges takes effect Sunday.
The so-called "liar's affidavit" law requires that buyers pay sales tax on 80 percent or more of a used vehicle's retail value, regardless of the actual purchase price.
The law is meant to stop the two parties in a used-car deal from agreeing to lower the official sales price so the buyer pays less sales tax.
State officials say the law, which the Legislature passed this year, is expected to generate $35 million annually. Private transactions make up about one-third of the state's used-car sales.
Sylvia Romo, the Bexar County tax assessor-collector, said she expects a backlash from unhappy consumers.
"There are going to be a lot of unhappy people," she said. "People just don't know what is going to hit them."
Under the new law, a person who spends $6,000 on a used car with a retail value of $10,000 would still pay taxes based on 80 percent of the retail value, or $8,000. With the state's 6.25 percent motor vehicle tax rate, that means taxes of $500 rather than $375.
The law covers cars, trucks, motorcycles, recreational vehicles and trailers.
The law does not apply to used-vehicle sales at dealerships. Dealerships will continue to calculate taxes based on the sales price and not the retail value.
Buyers who disagree with the state's valuation of a used vehicle can challenge it by getting an appraisal from an auto dealership or a licensed insurance adjuster within 20 working days of the sale. The appraisals are expected to cost from $100 to $300.
Joey Blackmon, vice president of operations at Ancira Auto Group in San Antonio, said the company's executives will soon decide how much their dealerships will charge for appraisals. The state mandates they must charge at least $100, he said.
"We don't expect a lot of people coming in, because the amount of money they would save in taxation they would give to the dealer to get the appraisal done," Blackmon said.
Romo said the law could push private used-car sellers to exploit the state's gift tax. The state tax on vehicles given as gifts is only $10. She said she expects more people will report gifts of vehicles from complete strangers.
Another strike against Governor Goodhair.
Didn't they already collect full tax on the vehicle the first time it was sold?
Why exempt dealerships?
In their dreams . . . as noted in the final paragraph of the article. Pennsylvania tried to milk me for something similar after I got a seeming bargain on a used car from a private party. They backed off after I showed them over $1200 in paid repair invoices to get it into Kelly Blue Book shape.
This kind of crap is why people are getting angry with Republicans. Dems are worse, far worse, but people are mad at the behavior of Republicans, and that will tend to decrease turnout and cause a few at the margins to vote for alternatives, like Kinky. The proven, time-tested way to obtain and hold office is for Republicans to be steadfast conservatives, in the mold of Reagan. When they slide towards Gerald Ford, they will lose.
Dealerships are exempt from the liar's affidavit law because used car salesmen don't lie.
I agree. I can't see that much revenue, since dealerships are exempt from this statute. This law only applies to private sales between individuals.
Excuse me, but I need to correct your spelling. "This could never happen in TAXUS. The (TAXANS) told me so." :)
In California, tax increases take a 2/3 vote of the legislature and also a vote of the people for property tax increases per Proposition 13. Maybe Taxans will learn what Californians already know: that the people cannot trust politicians (GOP or not) with the power to raise taxes with a majority vote.
Soon Taxans will be fleeing Taxus to find refuge in California at this rate.
Yep, and they taxed it every year after that to keep it registered, they taxed you on the fuel and other consumables, and they'll tax it each time it's sold after that.
I can see a 15 year-old car that's changed hands several times having been taxed for more than the initial purchase price.
Render unto Caesar...and he wants it ALL!
Cars with even minor problems will be junked.
Why buy a car worth $5,000 in good shape if you have to put a couple of thousand into it?
Hmmmm...how many of the politicians who voted this into law own dealerships, or have relatives in the auto business, or own stock in such businesses?
Arizona tried taxing private sales of used cars at Kelley a few years ago. The result was a horrendous mess, and quickly abandoned.
Honesty. Used Car Dealers rank right up there with lawyers and politicians as the most trustworthy people in our society.
Phantom Tax in Texas!
I had to furnish them with all sorts of copies of receipts for repairs and checks, that maybe they will accept as evidence that the price I agreed to with the seller was actually reasonable; and THEY get to decide.
It seems to me that they must have just made these sorts of tax bills up, without even bothering with the formality of law; and that the only legal avenue would have been to attempt to charge me and/or the seller with fraud.
ML/NJ
They must have infected others or moved? Those cars already had tax paid on them and the resell tax is just double/triple/etc taxation!
Dealerships are subject to other state laws that private parties are not.
This is why you can submit an appraisal from a certified appraiser explaining why the car was sold for way less than the Black Book amount. Such as it has a blown engine, or significant body damage, or a bad transmission. The tax is figured on 80% of the black book figure - which, incidentally, is the "fair condition" amount. This law is to discourage private party sales where an artifically low price is submitted on the U130 form.
I work for a county vehicle registration office and believe me, this is going to be a lot more work for us too. OTOH, our county tax assessor-collector has already stated that he thinks there will be a lot more "gifted" cars and that he is taking the position that people are just being more "generous". IOW, he is undercutting this new state law by signalling that he doesn't intend to force private party sellers/buyers to provide the necessary documentation, but rather will accept $10 gift tax sales.
Sounds like the spirit of Thomas E. Dewey has been revived in, of all places, Texas.
So, under this law, there is a procedure for reducing the tax if you provide the documentation about its condition? That makes it less bad, but forcing people to file the extra paperwork means that a lot of people will just pay the tax. It would be a better procedure to flag all cars that seem ridiculously undervalued, and prosecute a few high-profile cheaters. That would keep most people in line, and seem to be a more efficient use of state resources.
Whew. I just bought a used car, I'm glad I didn't wait!
Yes, in some cases, they would be better off to pay the extra tax because the cost of the appraisal $100-$300 might be more than the difference in the tax.
This law is primarily to stop the sales where a car obviously worth $2,000 is submitted to the tax office with a selling price of $100 or so. There are a lot of cases of obvious fraud which this law is attempting to mitigate.
Even us county employees are not sure how this is going to shake out. In the meantime, like I said, it will be a PITA for us too.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." -Manuel II Paleologus
We've had this policy in NJ for many years now. Includes boats as well. Only exception is direct transfer to IMMEDIATE family members. According to the radio news this morning NJ is now also looking into taxing internet sales aggrements such as landscaping as well.
The Texas Automobile Association is one of the MOST powerful assoications in Texas. If the law was not good for them it would have never passed.
I paid off my SUV and went directly to Texas tax office to get the lien holder off title. The agent said it would cost me some huge figure and I said no thanks! I was only removing the lienholder. He said most don't remove the lienholder for the tax reason.
Logic means nothing to liberals. Everything you buy has been taxed even before you pay for it.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." -Manuel II Paleologus
Wow! What a mess.
I think you're right - but there could be another reason. I had a used car checked at a dealership through the AAA vehicle inspection program for about $96. The dealership, I realized later, has a conflict of interest when it does appraisals or inspections of used cars. When I got back the inspection form the dealership had marked off almost everything as being defective - probably so the sale wouldn't go through and I would buy from them. It was a waste of 96 bucks - they didn't even check the compression.
This Taxus law will let the local dealership find out who is looking to buy a car and figure out a way to hook the buyer for one of the lot cars. Ever see "Used Cars" where the used car salesman "hooks" customers with a fishing rod baited with a $20 bill? The new hook will be a "free" appraisal to get the fish on the lot.
When a dealership sells a used car the price is always above book value. If the state mandated dealers tax on book value, the state would get less money.
So they tax it when it is sold "new", then "used", then "used", until it is junked. Thus a fascist government gets money over and over again on the same vehicle. The effect of this will be to reduce the actual sales price slightly, and thus cheat the buyer and the seller.
Eventually the mind-numbed public will forget all about it, and happily submit to this unfair confiscation.
Someone tell me, what good are republicans?
Is it the nature of republicans to cheat on taxes?
It's not the nature of true conservatives to mandate the cost of services. Texas telling businesses they must charge 100.00 for services is liberal if I have ever saw it.
Texans will not happily pay a tax on something that does not exist. The 100.00 appraisal is a form of taxation since it mandated by the state.
You have an overly dramatic response to the state closing a loop hole.
This is not the first time. For many years, Texas kept their registration fee on imported used cars very low as a means to promote relocation from other states. As Texas grew to be a large importer of used cars from other states, they raised that fee.
And the next question is, when will the state do away with the reduced sales tax rates on new cars?
This is a 5th amendment violation because it ASSUMES guilty.
Whoever came up with this "liar law" is going to regret the law firm which will do the inevitable class action.
FL had a similar situation with an out of state impact tax class action.
This is going to be a swoosh, slam dunk, all net score for the law firm that picks it up.
liberals view property as a hot potato. You must be taxed temporally for possession. Thus you pay taxes for buying the property (any kind land, equity, or tangible) and then pay for each moment you have the priviledge of possessing the property.
THEN you pay again when you cease owning the property.
If your leinholder has released the lien on the front of the title, there is no need to get another title. As far as I know it would only cost you $33.00 for a corrected title. A lot of women who get married leave their titles in their maiden names for the same reason. Now if you're divorced maybe it's worth the money to get rid of that old name - ha ha.
read my tagline and you will know why.
In Texas, when you pay the lien off on your vehicle, the lien holder is required to send notice to the State of release of the lien and you will automatically receive a new clear title (with the lien holder removed) at no cost. Furthermore, no taxes are involved. You cannot remove the lien holder from the title since you do not have the prime title, only a copy of the title. Only the lien holder can clear the title. Furthermore, when you purchased the vehicle you had to file a "seller's affidavit" and pay the taxes at that time BEFORE any transfer of ownership could be performed. If the sale was from a car dealer, they handled the paperwork, but you still paid the taxes in your loan at that time.
If you were leasing to own, that's a whole different thing.
SInce when does NJ check the blue book value on used car sales? My friden registered one a month ago and the girl didn’t check anything. Is it done later? Is it done on every used car registration? Is this a new law written somewhere in NJ. I need to know as I jsut bought one for less than book value, and I felt I overpaid. If I get nailed for taxes on the book value I will be -—very unhappy to say the least!
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