Help....New Purchase + DMV Issues

SchnellBoy · 01-04-2002, 09:15 PM

Can someone give me some advice on this situation?

I bought a car from a dealer in Houston, TX. The car is a 1997 993 C2S, silver, 16k miles. I had everything checked on it (PPI), and I was happy with the final price of $56k.

Everything is fine with the car. I received the title yesterday from the dealer and I went to the DMV to register the car. I live in the Bay Area in California. At the DMV, I was kindly notified that I owed about $4500 in California SALES TAX for this car. Is this right??? I thought I was to pay the registeration fees and stuff like that, but not the SALES TAX. I almost had a heartattack right there, and I think I'll have another one until I find out what the policy/law/process is.

I was always under the impression that if I bought a car out of state, I wouldn't have to pay CA sales tax. Thus, I was always looking for "that great deal" in states like Oregon or Nevada. If I knew I had to pay sales tax, I would have looked closer to home. Thinking about it now, what's the point in buying a car out-of-state for a cheaper price, when I still have to pay that 8% sales tax PLUS the $1000 shipping costs? I had several friends in college back in the good ol' days who bought cars in Delaware, specifically to take advantage of the lack of sales tax.

What's going on? Remember, I bought the car from a respectable dealer. Is the sales tax issue the same if I bought from a private seller? I'm confused and miserable right now, and I may be out another $4.5k, money I was going to spend on the car!

hermzz911 · hermzz911's Garage

Check out your California DMV website. I think it varies by state, but what you describe is how it works here in Minnesota. Here, the DMV calculates the tax based on the purchase price, then deducts what you already paid (if any) in the state where you purchased the car.

Sounds like a great car!

steve911 · steve911's Garage

Afraid to tell you that yes, you do have to pay sales tax on the purchase. I did the same thing, but having just sold a car, knew what I was in for.
sorry that it was a surprise, but enjoy the new wheels!

SchnellBoy · 01-04-2002, 09:51 PM

Thanks for your reply. The car is beautiful and I spent about an year researching, looking around, running around, and going through magazines, ads, newspapers, Excellence, websites, etc. I first wanted a Boxster, and then a 911 Carrera, and then a SC, and finally a 993.

I was very happy with the amount I paid, but if I take into consideration the final purchase price, the CA sales tax, and the shipping costs, I think I was better off buying a car in California. I'm still happy with the car, and I've actually taken the last 2 days off from work just to drive this thing, and the weekend's coming up. But that sales tax issue was something I did not expect (maybe I should have), so I have to do some quick math in my mind and cross out some of the mods/upgrades from my 993 checklist until next year. In addition, if I knew that they were going to calculate the sales tax from the purchase price, I was better off telling them that the car cost $40-$45k or something like that (instead of $55k)

Again, thanks for the message.

nostatic · nostatic's Garage

There is no hidin' from the CA DMV. You gotta pay sales tax no matter where you bought the car, and they get you when you register it. The time-honored tradition when buying a used car is to get the previous owner to write 2 different bills of sale: one for the actual purchase price, and one for a lowball figure. The lowbal number is then used when you register. Works great unless you get caught. If you are buying from a dealer, or financing the car, there is the very real possibility that you will be found out, as those agencies also report to DMV (but I'm not sure how rigorous they match numbers). Even a private party purchase is risky, as the seller is supposed to report the selling price on the liability release form.

Best bet is to just accept it, tell the truth, and drive happy...

Eric H · Eric H's Garage

When I moved to CA in the mid-80s I believe there was a 90 day limit on paying sales tax. I had owned my 280z 91 days

so check into the time limit......

Kevin Reilly · 01-04-2002, 11:25 PM

I think the $4,500 you owe is actually a "use tax" instead of a sales tax. They are charging you for "using" the car that you bought out of state. Pretty common among states because otherwise people would always shop out of state and then import the car.

Sorry for your bad news, but glad to hear you like your car.

campbellcj · 01-05-2002, 12:21 AM

You would have had to pay the sales/use tax had you bought the car in California anyway. I just forked over $2800 to the DMV the other day...

The time limit is now 30 days to pay although you're supposed to file the paperwork including a smog check (but you knew that) within 10 days.

The cops WILL ticket you if you leave out-of-state tags on the car for a long time. Tried that once.

Just be grateful the infamous "smog impact fee" was abolished. It was an extra $800-ish tax that was assessed on everyone bringing out-of-state cars to Calif until a couple years ago.

ebradway · ebradway's Garage

In Tennessee it's a 'sales tax' - at the same rate as everything else - 8.75%. Plus, if you paid less that 95% of their 'average retail price' you have to ge an affadavit from the seller stating the price and the reason it was so cheap.

I originally gave $9000 for my '86. The DMV wanted tax on $21000! That's almost another $1000!

The moral of the story: move to New Hampshire! At least Tennessee doesn't have income tax. Too bad I don't have an income...

mwbaum · mwbaum's Garage

When I bought my cars in Denver and San Fran and brought them home to WA, I had to pay state sales tax when I registered them here.....I did not have to pay sales tax in the states where I bought the cars. Hopefully you did not pay any tax to the dealer. One advantage of private sales is the "official" price can be a little grey.

orbmedia · 01-05-2002, 07:59 AM

Same in NY. You pay sales tax when you register it based on the value of the car. If you buy from a dealer in NY you pay the sales tax to the dealer but it doesn't change the amount or save you anything.

Best part about it is if you sell the car in 2 months the next guy will pay the sales tax *again*. And over, and over, and over taxing every time the car switches hands. Yup, that's right...

Jim T · 01-05-2002, 08:13 AM

You are stuck with paying the tax.

In California, its a sales tax, not a "use tax" (other states have use taxes on cars, Cal. is not one of them).

In Cal, it doesn't matter where you bought the car, you pay the sales tax when you register it.

If that were not the case, Northern California car dealerships would have a hard time, esp. those that deal in expensive cars. Most areas of California have a 7.75-8% sales tax rate. Oregon isn't that far away, and has no sales tax. If you could buy a car in Oregon, drive it across the border and register it California, and avoid paying the sales tax, everyone in No. Cal. would spend a day driving across the border to buy their car in Oregon. On a $50,000 car, that would save $4000 right off the bat.

Jim T · 01-05-2002, 08:16 AM

BTW, congrats on the purchase, that sounds like an AWESOME car, low miles, at a very nice price. Don't be too bummed about the sales tax, that's just a fact of life, it still sounds like a great deal.

The C2S is a really cool car, and will be my next 911!

addictionMS · addictionMS's Garage

There is actually a 90 day limit on the tax, if you can somehow figure out a way to own the car for 91 days before you bring it to CA, the you are tax free. I have done this wiht a truck, and I did not pay tax.

ohecht · 01-05-2002, 08:39 AM

I got a lot of experience with this moving around between states when in the military and afterwards. The good news was most states exempt military members from registering their cars in the state in which they are stationed.

Most states make you pay sales tax on any car you buy out of state and bring into the state as a resident to register. One exception most states make is if you had the car registered in another state for a certain minimum amount of time, usually 6 months or a year. Some people use this by registering the car with relatives, etc. Besides the risk of getting caught and the ethics of tax evasion, many states also base the taxe amount off of some sort of Blue Book value, so getting a bogus Bill of Sale will not always help. Especially if it shows a $50k+ Porsche that was sold for $2,500 or something.

Olivier

tmctguer · tmctguer's Garage

you owe the tax, sorry ! the same thing happened to me when i bought an '89 speedster. i paid a whopping tax bill that still pisses me off.

not that i would recommend this, or anything...........your sales tax is based on the sales price of the car. if the sales prices is lowered on the claim forms to the DMV, your tax will be lowered. you will be asked for a sales receipt, so unless the seller is in cahoots with you, you will be screwed paying the tax based upon the sales receipt price.

not that i would recommend this either, but if you were skilled with photoshop, or similar graphics design programs, it would be possible to scan the reciepts, and alter the sales price yourself. i'm not sure what the DMV does with the paperwork, but unless it went back to the dealer, the dealer would never know you submitted an altered copy.

again, there is no way to avoid paying the CA sales tax.

Jim T · 01-05-2002, 03:18 PM

you might want to check on the 90 day rule. That may be true, but I *think* the period is much longer.

I know some people in California who have had Oregon plates on their cars for years . . .

If it is only 90 days, someone could make a nice business for themselves arranging for sales in Oregon, and storage of the car for 90 days. Someone buying a new 911 or S Class, etc. would save $6-$7,000 right off the top. Many people would wait that time to save that kind of money.

Or you could just buy the car yourself and keep it in your garage in California for 90 days. How would the DMV know where the car is physically located?

That's why I wonder if the 90 day rule is really true. If someone has a cite to that DMV rule, that would be great. It would definately change the way I buy and register a car in the future.

J Richard · 01-05-2002, 04:46 PM

Hmmm,
Tax man always knows how to get every last drop of blood...

I bought a car in Houston as well, I knew I was going to have to deal with the MVD in Arizona. Same story, they hit me with sales tax based on the ORIGINAL cost of the car. So I paid. Then a few months later I got hit with an additional USE TAX from the state. Well F%*#!. that was a suprise. MVD never mentioned it. You may want to make sure CA dosen't have one.

Anyway you have to pay to play....

Regards

jperry · 01-05-2002, 09:36 PM

The California 90 day rule is correct. My boss just bought a 360 Spider in Oregon. He registered to a house in Portland that he owns, and in 90 days he can bring it into California and re-register it with no sales tax due. Just another unfair loophole "some" people can take advantage of. With the sales tax he saved I could've bought a.....................

Kevin Reilly · 01-06-2002, 12:34 AM

Here is the discussion of the 90 day rule. Note that the DMV refers to the tax on the purchase of the vehicle as a "use" tax, but for all intents and purposes it is the same as a sales tax.

Out of State Vehicle Registration