New Acura / Tax Issues / Advice much needed
#1
New Acura / Tax Issues / Advice much needed
Hi everyone,
So I just posted a topic on my new Acura. I have a bit of a dilemma....... and would appreciate anyone's advice, especially if you are a "seasoned" car buyer.
So, I was negotiating the price down, and the guy wouldn't budge. He eventually said that we could put in the purchase contract that the sale price would be $18,000 (where in reality it was mid 20s). This would reduce my taxes paid by about $500 and save me $500. So in the bill of sale, it says the purchase price is about $4,000 less than I actually will pay (I have a deposit down and will be paying the balance this week).
Technically I am paying him the asking price but with tax only on the $18,000. This sounded good at the time but after some thought, I realized should the IRS audit him I could be partially liable since I signed, because he is essentially not reporting revenue (thereby not paying taxes on) the $4,000 differential. There will be a paper trail since I am paying with a check or money order (cash transaction).
My questions:
1) Should I be concerned about investigation by the IRS?
2) Since I am paying taxes on the car now, when I go into the DMV to register the car and get plates, do I need to show the bill of sale (a used car purchase).
3) Are there any other situations that could jeopardize me with regards to this tax 'evasion'?
4) Since I am not paying the balance until the end of the week, do you recommend that I just call him and tell him to change the bill of sale and suck up the $500 differential to not risk anything?
Thanks for your advice.
So I just posted a topic on my new Acura. I have a bit of a dilemma....... and would appreciate anyone's advice, especially if you are a "seasoned" car buyer.
So, I was negotiating the price down, and the guy wouldn't budge. He eventually said that we could put in the purchase contract that the sale price would be $18,000 (where in reality it was mid 20s). This would reduce my taxes paid by about $500 and save me $500. So in the bill of sale, it says the purchase price is about $4,000 less than I actually will pay (I have a deposit down and will be paying the balance this week).
Technically I am paying him the asking price but with tax only on the $18,000. This sounded good at the time but after some thought, I realized should the IRS audit him I could be partially liable since I signed, because he is essentially not reporting revenue (thereby not paying taxes on) the $4,000 differential. There will be a paper trail since I am paying with a check or money order (cash transaction).
My questions:
1) Should I be concerned about investigation by the IRS?
2) Since I am paying taxes on the car now, when I go into the DMV to register the car and get plates, do I need to show the bill of sale (a used car purchase).
3) Are there any other situations that could jeopardize me with regards to this tax 'evasion'?
4) Since I am not paying the balance until the end of the week, do you recommend that I just call him and tell him to change the bill of sale and suck up the $500 differential to not risk anything?
Thanks for your advice.
#3
Racer
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I wouldn't worry about it. With a private party sale can 99.8 percent get away with it no prob especially if your paying with cash or some cash plus a check. Iv done this before but never with a dealer. If the dealer recommended it I would do it but look over the paper work closely and ask alot of questions. The IRS is not going to audit something so small , this is small fish for them and not worth it. Now if you had a 20-40 k car and you try and fudge that sale then the reason for concern and most people would never do that deal.
#4
Skillionare
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1) Sounds like you need to chill out and quit being paranoid. The guy did you a favor.
2) Google how car sales tax is calculated in your state. It's usually, but not always, pretty comprehensive.
I know where I am at what I paid was different that what THE STATE deemed it's taxable value was. I wanna say every state is different. He presented you with a situation where yo both come out ahead of an entity that gives criminals your hard earned monies. He just ensured that some people will be getting less of it.
2) Google how car sales tax is calculated in your state. It's usually, but not always, pretty comprehensive.
I know where I am at what I paid was different that what THE STATE deemed it's taxable value was. I wanna say every state is different. He presented you with a situation where yo both come out ahead of an entity that gives criminals your hard earned monies. He just ensured that some people will be getting less of it.
#5
I am confuse about the "real" price you are paying.
But i am agree it would be a good idea to take it to an accountant.
Remember to bring your papers to him/her and with all other information
But i am agree it would be a good idea to take it to an accountant.
Remember to bring your papers to him/her and with all other information
#6
Racer
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Also if your trading a car in you are not taxed on the car your trading in either. So if you get 10000 for our car then you save whatever your state tax percentage is ( 7 percent- $700 savings ) is very significant when buying a car. Ask the dealer about this every state is different
#7
Race Director
Hi everyone,
So I just posted a topic on my new Acura. I have a bit of a dilemma....... and would appreciate anyone's advice, especially if you are a "seasoned" car buyer.
So, I was negotiating the price down, and the guy wouldn't budge. He eventually said that we could put in the purchase contract that the sale price would be $18,000 (where in reality it was mid 20s). This would reduce my taxes paid by about $500 and save me $500. So in the bill of sale, it says the purchase price is about $4,000 less than I actually will pay (I have a deposit down and will be paying the balance this week).
Technically I am paying him the asking price but with tax only on the $18,000. This sounded good at the time but after some thought, I realized should the IRS audit him I could be partially liable since I signed, because he is essentially not reporting revenue (thereby not paying taxes on) the $4,000 differential. There will be a paper trail since I am paying with a check or money order (cash transaction).
My questions:
1) Should I be concerned about investigation by the IRS?
2) Since I am paying taxes on the car now, when I go into the DMV to register the car and get plates, do I need to show the bill of sale (a used car purchase).
3) Are there any other situations that could jeopardize me with regards to this tax 'evasion'?
4) Since I am not paying the balance until the end of the week, do you recommend that I just call him and tell him to change the bill of sale and suck up the $500 differential to not risk anything?
Thanks for your advice.
So I just posted a topic on my new Acura. I have a bit of a dilemma....... and would appreciate anyone's advice, especially if you are a "seasoned" car buyer.
So, I was negotiating the price down, and the guy wouldn't budge. He eventually said that we could put in the purchase contract that the sale price would be $18,000 (where in reality it was mid 20s). This would reduce my taxes paid by about $500 and save me $500. So in the bill of sale, it says the purchase price is about $4,000 less than I actually will pay (I have a deposit down and will be paying the balance this week).
Technically I am paying him the asking price but with tax only on the $18,000. This sounded good at the time but after some thought, I realized should the IRS audit him I could be partially liable since I signed, because he is essentially not reporting revenue (thereby not paying taxes on) the $4,000 differential. There will be a paper trail since I am paying with a check or money order (cash transaction).
My questions:
1) Should I be concerned about investigation by the IRS?
2) Since I am paying taxes on the car now, when I go into the DMV to register the car and get plates, do I need to show the bill of sale (a used car purchase).
3) Are there any other situations that could jeopardize me with regards to this tax 'evasion'?
4) Since I am not paying the balance until the end of the week, do you recommend that I just call him and tell him to change the bill of sale and suck up the $500 differential to not risk anything?
Thanks for your advice.
Personally, I think your actions show a lack of integrity and apparently only the possibility of being caught is now giving you second thoughts.
BTW, welcome to Azine...
Last edited by nfnsquared; 04-25-2011 at 10:19 PM.
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#8
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#10
lol, I haven't paid yet so there is still time. I am across the state (out of town) and am not paying in full until the end of the week. So I think I am going to call him and ask him if he can change the bill of sale to say the sticker price and I'll just suck it up and pay the $500 extra.
It won't be legal since we both won't be able to sign it (it will be electronic) but assuming he hasn't transferred the title, it shouldn't be an issue.
When the dealer transfers the title at the DMV/County they put the sale price (and thus applicable tax) on the title, correct? So to verify that he did change everything, I will know when I see the title, I believe. Anybody know this?
(you can tell I am new at buying cars...youngin' =) )
It won't be legal since we both won't be able to sign it (it will be electronic) but assuming he hasn't transferred the title, it shouldn't be an issue.
When the dealer transfers the title at the DMV/County they put the sale price (and thus applicable tax) on the title, correct? So to verify that he did change everything, I will know when I see the title, I believe. Anybody know this?
(you can tell I am new at buying cars...youngin' =) )
#11
Driver Mod
I walked on 2 TL's because the sales person was either unwilling or unable to negotiate.
The tax thing is a new new issue on top of that.
BTW; I love this forum, You all are hilarious !
#12
2007 TL Type-S NBP
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nfnsquared: Are you gonna tell everyone on the forum that has tampered with emissions equipment or has darker than legal tint that they've shown a lack of integrity? Save your morality judgements for church.
#13
Moderator
iTrader: (7)
i dont think u should be worried about reporting the car as a lower value...you will be fine, theres always that 0.01% that gets caught but i will still say that you will be fine because i will be right 9999 out of 10000. i know of "friends" who have done this and trust me, they saved A LOT more than $500, and they are all fine.
#14
Head a da Family
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You just admitted to tax fraud in a public forum. It's now public record and any tax authority who happens to read your post could subpoena your records (name/address/IP address) from the website owners (InternetBrands).
Personally, I think your actions show a lack of integrity and apparently only the possibility of being caught is now giving you second thoughts.
BTW, welcome to Azine...
Personally, I think your actions show a lack of integrity and apparently only the possibility of being caught is now giving you second thoughts.
BTW, welcome to Azine...
Though unlikely, you never know who's monitoring these boards. It's not like the pre-security camera days where the guys in Goodfellas robbed JFK airport all the time. And speaking of Goodfellas, remember what Jimmy said to young Henry, "Never Rat On Your Friends and ALWAYS Keep Your Mouth Shut". Today, that includes not posting your involvement in any potentially illegal activities ANYWHERE on the net.
Big brother IS WATCHING !
Good luck...........
.
.
#15
Safety Car
iTrader: (4)
It's pretty funny that a couple people above say go to an accountant about this LOL. Ummm oook, go to an accountant and ask them if they recommend you perform tax fraud? Haha have fun with that. You guys must not have really known what he was speaking of.
As people have said yes chances are you would get away with it just fine. However is $500 worth the risk of getting in trouble? That's not that significant of an amount of money.
As far as everything else it doesn't even really matter about what he signs or fills out. When you go to the DMV atleast in IL they don't even keep the bill of sale. I guess they just want you to be honest when filling out the forms that you put the true vehicle sale price. So what I'm saying is I don't think you really need to have anything re-filled out just be honest at the DMV and tell them the full sale price and you'll be good.
I know paying used car sales tax is a crock, but we really don't have a choice in the matter.
As people have said yes chances are you would get away with it just fine. However is $500 worth the risk of getting in trouble? That's not that significant of an amount of money.
As far as everything else it doesn't even really matter about what he signs or fills out. When you go to the DMV atleast in IL they don't even keep the bill of sale. I guess they just want you to be honest when filling out the forms that you put the true vehicle sale price. So what I'm saying is I don't think you really need to have anything re-filled out just be honest at the DMV and tell them the full sale price and you'll be good.
I know paying used car sales tax is a crock, but we really don't have a choice in the matter.
#16
Cruisin'
You might need to find another dealer. I have yet to meet one that won't negiotiate if you tell him you're paying cash and walk. Granted, we don't know the details on the car, maybe it's a hell of a deal already Either way, you say you are saving ~$500 on taxes. IMHO, saving a little over 2% of the sticker price isn't worth the extra stress and worry you're talking about.
Btw, is saving $500 a little bit of an exaggeration? I just did the math and that would require a 12.5% sales tax In Texas, it's only 6.25% (if I remember right) and even Los Angeles County's rate is 9.25% which is still pretty damn high.
#17
Racer
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What you do is pay with a check for the " lower balance" and pay with cash for the difference. The difference is what your saving in taxes. So the car is for sale for 20,000. The is selling it" 15,000" wink wink. You pay 15k with a check and 5000 cash. That how you roll.
#18
Suzuka Master
My take on this ...
Forget all the scamming ... based on the assumption the car is $25000 ( mid 20s ) $500 is 2% of the price ..
Realistically if the car is of honest value ( not under priced ) and given todays economy all I would do is advise the dealer that your not willing to get involved with tax evasion and your final offer is what he wants less $500.
I doubt he is moving a lot of cars with the economy the way it is .. the ball should be in your court. Right now your willing to pay the full sticker price .. nothing to loose ...
Where you might get bit is you already put money down that might no be refundable so he may have you by the short ones.
Forget all the scamming ... based on the assumption the car is $25000 ( mid 20s ) $500 is 2% of the price ..
Realistically if the car is of honest value ( not under priced ) and given todays economy all I would do is advise the dealer that your not willing to get involved with tax evasion and your final offer is what he wants less $500.
I doubt he is moving a lot of cars with the economy the way it is .. the ball should be in your court. Right now your willing to pay the full sticker price .. nothing to loose ...
Where you might get bit is you already put money down that might no be refundable so he may have you by the short ones.
#21
Suzuka Master
#22
Suzuka Master
Good math and good catch .. I think the OP needs to tread softly with this dealer no matter which way he goes ..
#23
Safety Car
iTrader: (4)
Also im pretty sure its not a dealer. No dealership would EVER recommend doing this. However private sellers do this or recommend to do this all the time that way its incentive for the purchaser to say oh ok I can save on taxes so I will just pay the full asking price. Its just a way for the seller to get more money and YOU take all the risk. He wont get in trouble you will.
#24
Suzuka Master
Also im pretty sure its not a dealer. No dealership would EVER recommend doing this. However private sellers do this or recommend to do this all the time that way its incentive for the purchaser to say oh ok I can save on taxes so I will just pay the full asking price. Its just a way for the seller to get more money and YOU take all the risk. He wont get in trouble you will.
#25
Safety Car
iTrader: (4)
When the dealer transfers the title at the DMV/County they put the sale price (and thus applicable tax) on the title, correct? So to verify that he did change everything, I will know when I see the title, I believe. Anybody know this?
(you can tell I am new at buying cars...youngin' =) )
(you can tell I am new at buying cars...youngin' =) )
In some cases buying at an out of state dealership like I just did last month they did not collect taxes. When I got back home I had to go to my states DMV to register and pay the taxes. I had to wait for the title to arrive before I was able to do that.
James
#26
Thanks for your advice guys. I appreciate it.
Like I said I still have time before I pay the balance in full.
Basically, now I am stuck with two options (keep in mind, I already put down deposit and signed bill of sale).
1) Go along with the "evasion" and hope nothing happens
2) Call him up, try to negotiate him to take $500 off sticker price, and I'll pay the tax on the sticker less $500 (thus making the situation legal and not changing economically for me).
3) Call him up and tell him to change the bill of sale to the proper amount and I'll foot the extra +$500 tax difference and pay the sticker price.
Keep in mind: A) He doesn't legally have to change anything, but at the same time, he is evading taxes so I do have something on him, even though I already signed B) I am paying cash.
Should I just be stern with him on the phone and tell him to go down $500 but report this amount on bill of sale to DMV?
I really appreciate your advice
Like I said I still have time before I pay the balance in full.
Basically, now I am stuck with two options (keep in mind, I already put down deposit and signed bill of sale).
1) Go along with the "evasion" and hope nothing happens
2) Call him up, try to negotiate him to take $500 off sticker price, and I'll pay the tax on the sticker less $500 (thus making the situation legal and not changing economically for me).
3) Call him up and tell him to change the bill of sale to the proper amount and I'll foot the extra +$500 tax difference and pay the sticker price.
Keep in mind: A) He doesn't legally have to change anything, but at the same time, he is evading taxes so I do have something on him, even though I already signed B) I am paying cash.
Should I just be stern with him on the phone and tell him to go down $500 but report this amount on bill of sale to DMV?
I really appreciate your advice
#27
Also, the suggested retail price on the car was $28,000 (per kbb) and sticker $22,495 (not including taxes). So I think even paying sticker I am getting a pretty good deal, but for a piece of mind I would like to play below sticker.
17,000 08' nav, 10 months remaining bumper to bumper, and had checked by mechanic, cleared OK.
17,000 08' nav, 10 months remaining bumper to bumper, and had checked by mechanic, cleared OK.
#28
choice two would be ur best bet so everything stays legal ... if he duznt agree to 500 off the asking price i would go ahead and just pay the extra tax of 500 rather than try to evade 500 bux worth of tax ... the gain is not worth the risk
#29
Cruisin'
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I'm think you should just tell him to knock some money off the car or your walking. He has done the illegal part as of right now by saying that he would do this, so you definitly should have the upper hand now.
#30
Another thing I have thought of is...even if he knocks the money off the "sticker" and says he will change the bill of sale electronically and email it to me, how do I know that when he goes to the county to register the car in my name that he is not going to just pay the same (lower) taxes despite me telling him to change it around?
It is somewhat of a win/lose situation, but I am leaning towards just going with it because my research online tells me it is pretty common, plus he could just change around the bill of sale to make me sleep better yet still lowball the gov. on the taxes despite me thinking hes not. Does that make sense?
It is somewhat of a win/lose situation, but I am leaning towards just going with it because my research online tells me it is pretty common, plus he could just change around the bill of sale to make me sleep better yet still lowball the gov. on the taxes despite me thinking hes not. Does that make sense?
#31
I'm not sure where you're at but it Utah it doesn't work like that at all. If I sell you a car, you pay me and I give you a signed bill of sale. That's as far as I go in the transaction. I take my plates off the car and you drive away. You take the title and bill of sale into the DMV and get the car registered.
#32
Well it's from a dealer. I assume the title/documentation fee is what covers him titling the car to me, so that when I go to pick up the car he has a title already in my name ready for me. I will be talking to him soon.
#33
Instructor
I would say that you talked to your accountant and he advised that you don't do anything in regard to fudging the price of the car. Tell him that unless he takes $500 off the total price and reports the full price on the bill of sale, that you will walk away from it and report him to the local authorities
#35
Yeah, it's a dealer. It does seem shady; I kind of feel like I'm stuck in the hole now but just want to get the car asap. I know the car is fine, it still has bumper to bumper and I had it checked by my mechanic.
It doesn't really make any difference if its a dealer or private seller, though, when you think about it, right?
It doesn't really make any difference if its a dealer or private seller, though, when you think about it, right?
#37
AZ Community Team
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I love NC. 3% "use" tax (i.e. sales tax) on car sales. That's it. 3%.
#38
Safety Car
iTrader: (4)
^^^ Dang 3% is nice!!! 6.25% where I live near Chicago. Some areas are 7.25% and I think even higher in the city. Guess it could be worse like the guy above saying almost 10% in LA....F that!
James
James
#39
TL-S
iTrader: (4)
I've seen this done several times, and had several people ask me to lower the price on the paperwork when I've sold cars, but I wasn't willing to do it as a seller.
Also, though, here in VA, there have been several occasions when I bought cars for VERY cheap, with bad engines, body damage, or something like that. When I've gotten to DMV, they would sometimes not believe the sales price and try to charge me the KBB value, and not believing my description of damages/work needed on the car. SO that is another thing you might want to think about. Here in VA we have a form on the DMV website that says something like "used for vehicles with a questionable sales price..." so i've used that and shut the old hags at the DMV up.
I find it HIGHLY unlikely that you'll get into any trouble....thats not saying you should do it though.
Also, though, here in VA, there have been several occasions when I bought cars for VERY cheap, with bad engines, body damage, or something like that. When I've gotten to DMV, they would sometimes not believe the sales price and try to charge me the KBB value, and not believing my description of damages/work needed on the car. SO that is another thing you might want to think about. Here in VA we have a form on the DMV website that says something like "used for vehicles with a questionable sales price..." so i've used that and shut the old hags at the DMV up.
I find it HIGHLY unlikely that you'll get into any trouble....thats not saying you should do it though.
Last edited by quanaman; 04-26-2011 at 10:40 PM.
#40
Yeah, it's a dealer. It does seem shady; I kind of feel like I'm stuck in the hole now but just want to get the car asap. I know the car is fine, it still has bumper to bumper and I had it checked by my mechanic.
It doesn't really make any difference if its a dealer or private seller, though, when you think about it, right?
It doesn't really make any difference if its a dealer or private seller, though, when you think about it, right?
Are you dealing with a used car dealer ? No Acura dealer will do this.
Check for liberal use of glaze to hide marring...You might end up with a need for paint correction. How good was your PPI ? Me thinks the shady used car dealer may be hiding issues from you.
KBB retail means NOTHING. Accurate estimates are latest auction prices for similar cars plus dealer mark-up of @13-18% for TL's these days