gmodc7

iTrader: (20)

I've been trying to figure out the dynamic of private car sales for a while now. I know that when you register a new vehicle purchase you have to give them the purchase price and pay tax on that. However, I have heard many times of people recording the sales price wayyy below the actual so that they dont have to pay full tax on it. I'm talking $20,000 purchase, recorded at $5,000, netting an over $1200 savings on tax.

My question is this: do these people ever get audited/ is there an audit that goes out on someone if theres an obvious discrepancy in purchase price? Obviously something would look weird if someone bought a 1 year old lexus second hand and said they paid 5 grand for it...but is there a government agency that enforces this? I know this seems sketchy, but I've never bought a used car from a private seller (inhereted the first car, bought the current car from a dealer new) so I wouldnt know.

T_F_E

I know many people who have done this and they have never been audited, im not sure if there is an agency or not

jimmy04wrx

iTrader: (4)

when my buddy bought a 68 mustang fastback, he paid $12K but only reported it sold for $2000. it can work for older cars, but a year old lex is gonna throw some flags, especially if it doesnt have a salvage title.

mcowger

iTrader: (8)

Dunno if they do it here, but in WA if you under report it too much, they will bill you the tax based on the Blue Book value until you provide them some good reason the car was sold so far under market price.

Roo

iTrader: (3)

Well, add the cost of the new engine and transmission, and you've got blue book, right?

tschida

iTrader: (1)

I know that "people" have done this on cars such as a 2004 wrx, not like 15G's less but like 6....

aboothman

iTrader: (8)

Last I checked, a person can sell a car for whatever the **** they want. Did I miss something, and we went full communist overnight?

Last I heard, there is no such agency.

T_F_E

You can also sell the car and mark it as a gift

PikkaGTR

iTrader: (4)

that is true
I can sell aything for any amount of money I want
I sold my ITR for "$7k" to a "friend"
What if i felt like selling it for $3k even though it's worth $14-$15k
last I checked, we still live in a free country

mcowger

iTrader: (8)

Its not about any agency telling you CANT sell it for whatever you want. You can.

What's being discussed is the commision of tax fraud and underreporting the amount of the sale.

Its about the TAXES on it. If they decide that you are underreporting the sale price to avoid taxes (thus commiting fraud), then you may get audited. Not on your sale price per se, but on your reporting of the sale price.

flatline

iTrader: (11)

i know if you mark it as a gift you have to pay blue book price taxes.

personally i think its bs, the car has already had taxes payed on it once, why does a private buyer have to pay taxes again?>

krzyxrevver12

iTrader: (3)

you can sell it for $100 and the person can donate $29900 to you.. there's no way to enforce it, its all in how the seller writes up their income

brucelee

iTrader: (6)

Dude, if it exits, its taxed... pretty simple. Thats how our two party system works...

G_Ride

iTrader: (5)

What I've seen done (when buying a car from a mechanic) is you buy the car for $12k, but $10k of that price was for repair work and such. The purchase price of the car was $2k.

This seem legit enough for me. I don't see what can be done to you.

Lorry

True, but then you would be liable for income tax on the $29900 instead.