New tax scam?

[Beefer]

Re: New tax scam?

Can someone from Florida address this as well? I was wondering about this the other day. I was under the impression that the only tax we pay on a used vehicle/vessel is a titling/registration tax. I've never bought a used vehicle or vessel in the state of Florida, so I am curious.

I just (last week) titled & registered my boat here in Florida. You pay sales tax and registration as follows;

Boat w/OB & trailer - sales tax on the boat's value only (ie., have the bill of sale seperate out the values of each). You can download a State bill of sale for boats that has it all listed.

Boat w/IO or inboard with or without trailer - sales tax on everything, except the trailer.

In my case, I paid $1000 for boat, OB, and trailer. We broke it down to $300 boat, $600 motor, $100 trailer, my sales tax due was $21. . Total including new tag for trailer, title, tax, and registration came to $85 (+/-$4).

Back to the initial question;

When I lived in Washington State, I bought an '85 Corvette for $4400 (in 2004). Nada book was something like $11k. DMV said I had to pay sales/excise tax on the $11k, or I had to provide a professional vehicle appraisal. I went down to my local Chevy dealer, told the guy I wanted an appraisal for somewhere around $5k. He said he could ligitimately get it down to $2k, I walked out of there with a proper appraisal of value of $3500. Accepted by DMV. If you're wondering, it wasn't a rat of a car, but he dinged it for things like paint, as NADA expects basically a perfect paint job on a car like that, and he hit it for a new leather interior, as a 2" seam spilt was happening to the driver's seat.

I'd suggest going to some dealers, and getting 'Professional Appraisals' to determine values, and see if that helps. Ask for the used car managers, as they are usually the appraisers. Good Luck!

 

[jay_merrill]

Re: New tax scam?

It may just sound like semantics, but there is a HUGE difference in a title tax and a sales tax. .

Yup, that's exactly what it sounds like. The simple fact of the matter is that governments do whatever people let them get away with for the purpose of generating revenue. It doesn't matter what the tax is called - its still and tax and it is one that has gotten out of hand.

 

[haskindm]

Re: New tax scam?

Yup, that's exactly what it sounds like. The simple fact of the matter is that governments do whatever people let them get away with for the purpose of generating revenue. It doesn't matter what the tax is called - its still and tax and it is one that has gotten out of hand.

Except this tax has not changed in 50 years. The percentage rate may have changed along with every other tax rate, but vehicles, boats, etc. have always been subject to TITLE taxes based on their values not sales tax. Personally, I would much rather be taxed on what I OWN, since I have control over that, rather than taxed on what I make, which discourages people from trying to excel. The more successful you become the higher percentage of your income is taken in the form of tax. The problem is that taxes are no longer levied just as a way to finance the expenses of government, but as a means of social engineering and redistributing wealth.

 

[reelfishin]

Re: New tax scam?

Except this tax has not changed in 50 years. The percentage rate may have changed along with every other tax rate, but vehicles, boats, etc. have always been subject to TITLE taxes based on their values not sales tax. Personally, I would much rather be taxed on what I OWN, since I have control over that, rather than taxed on what I make, which discourages people from trying to excel. The more successful you become the higher percentage of your income is taken in the form of tax. The problem is that taxes are no longer levied just as a way to finance the expenses of government, but as a means of social engineering and redistributing wealth.

The sales tax law specifically says that sales tax is charged at the rate of 7% on the AMOUNT of the SALE, not the value of the item sold. It has nothing to do with property, income or any other tax, its a simple case of the state not abiding by it's own laws. It's still the equivalent of you going to the store to buy a suit on sale, paying $100 and $7 sales tax, then a year later getting a letter in the mail saying that that suit was worth $500 and that they want the additional $28 tax since you underpaid for the suit when it was on sale.
If they can do that, what's to stop them from putting any value they wish on any item and charging sales tax post sale.

 

[haskindm]

Re: New tax scam?

What you are saying is absolutely true IF you paid sales tax on boats. You don,t - you pay title tax, or some jurisdictions call it an excise tax. The sales tax rate in MD is 6% - the excise tax on boats is 5%, further evidence that it is NOT a sales tax. Here is a quote from Maryland DNR on titling boats in this state and paying the tax:

What fees will be due?
5% VESSEL EXCISE TAX imposed by ?8-710.3(a) of the State Boat Act on the purchase price or fair market value of all vessels used principally in Maryland. Excise tax must be paid within 30 days of Maryland tax liability to avoid assessment of penalty and interest.

When the sale occurs through a licensed boat dealer, ?8-716(a)(3)(i) of Maryland?s State Boat Act allows credit for a traded vessel. Vessel excise tax is assessed against the purchase price less the value of any vessel traded in as part of the consideration for the sale. Credit may not be given for any other trade (e.g. RV, motorcycle). The trade-in value may not exceed the value for the trade-in vessel as shown in the national publication of used vessel values adopted by the Department ? the BUC Book.

When purchased within the last 3 years, the Bill of Sale or reassigned title establishes the purchase price of the vessel (including motors, spars, sails and accessories, but not the trailer). When more than 3 years have elapsed, the Department uses the BUC Book to determine current fair market value, using an average of the low and high retail value.

All vessel excise tax is deposited into the Waterway Improvement Fund, dedicated to improving Maryland?s waterways through dredging, the placement of navigational aids, the construction of boating access facilities, boater safety education and law enforcement.

?8-716(f) of the State Boat Act allows reciprocity credit for excise or sales tax previously paid to another jurisdiction if:

The vessel was formerly titled or numbered in another jurisdiction; or
The vessel was formerly federally documented and principally used in another jurisdiction; and
The present owner paid a sales or excise tax on the vessel to the other jurisdiction (proof required ? validated receipt, etc.); and
The jurisdiction to which the tax was paid would allow an equivalent exemption or credit for vessel excise tax formerly paid to the State of Maryland.
A member of the armed services serving on active duty in the State is exempt for one year.

A vessel transfer between immediate family members is exempt from vessel excise tax so long as the vessel is registered in the State of Maryland and the transferor(s) previously paid Maryland vessel excise tax on the transferred vessel. Complete DNR Form B-105

A vessel placed with a Maryland licensed dealer or broker for resale is exempt from vessel excise tax provided (a) the vessel is titled or numbered in another state or is federally documented, and (b) the owner signs an affidavit that there will be no use of the vessel on the waters of the State other than for a sea trial.

 

[reelfishin]

Re: New tax scam?

What you are saying is absolutely true IF you paid sales tax on boats. You don,t - you pay title tax, or some jurisdictions call it an excise tax. The sales tax rate in MD is 6% - the excise tax on boats is 5%, further evidence that it is NOT a sales tax. Here is a quote from Maryland DNR on titling boats in this state and paying the tax:

In NJ it is just that, a sales tax and nothing more. There is no excise tax or other fees, just sales tax and boat registration for a boat this size. There maybe be a luxury tax or other for higher dollar value boats.

A boat here is treated the same as any other motor vehicle when it comes to sales tax.

 

[haskindm]

Re: New tax scam?

You are lucky in New Jersey then. Since this is a "sales" tax, if I am not a resident of NJ and then move to NJ and wish to title my boat there, I will not be charged tax, since no sale has taken place. In most states (like Maryland) where you are charged a title or excise tax, you will be charged the tax whenever you title the boat in the state. You could end up paying "tax" on the same boat several times if you move from state to state. The words make all the difference. You need to find out if it is a sales tax or a title tax. It looks like if you are a resident of New Jersey and buy a boat from out of state, you will need to pay sales tax to title it even though the sale did not take place in NJ. This all gets very confusing.....

 

[jbjennings]

Re: New tax scam?

I wonder how we let this happen? Apathy?
I had an incident similar to this lately and I live in Louisiana. Bought a '78 model pontoon and trailer. The trailer was bought in Texas and never registered in LA because the fellow I bought the boat from lived on the lake and never used it. I had the Sheriff inspect the trailer, had a notarized bill of sale, had the local Justice of the Peace issue a court order to the DMV telling them to issue me a title. When I went to the DMV, they said they talked to the DMV's district manager and he said they wouldn't. WHAT??? I thought I had a "court order" like the Sheriff told me I should get......If I defied a court order they'd put me in jail but the DMV can just say "......".
Anyway, after presenting the owner's receipt from where he bought it in Texas the "manager" said they could give me a title but I had to pay taxes for what I purchased it for AND the previous owner's taxes on the amount he purchased it for that he DIDN't pay! How can they get away with collecting someone else's taxes from ME????? Why didn't they send HIM the bill for the taxes he didn't pay!!!
Needless to say I was furious but accepted the shaft that I'm accustomed to receiving from the DMV in LA and went my merry way.
HOWEVER, after reading some of this stuff I guess I should count myself lucky!
Seems like since this is something everyone in a state has to deal with, that folks would pitch a fit and have something done about it.
Sad situation but a VERY interesting thread!
JBJ

 

[cbear34]

Re: New tax scam?

In IL the tax is paid on the approximate value of the boat. I received a boat from a relative as a gift and she gave me a receipt saying the price was one dollar. Even though she gave me the boat for free. When I went to title the boat I also received a tax form for the "boat value" to be taxed. Based on my value I ended up paying $250.00 for the tax. There is a note saying if they feel the boat is undervalued to pay a lower tax they will have someone come out and give it a "true value". They probably figured I priced it right for an 18yo boat.
As far as vehicles, when you title it you pay a tax based on the book value. I bought an 05 Grand Caravan and the value was below $15,000 you pay a flat tax. Above that you pay a percentage of the value. So it doesn't matter what you pay the state is going to get more than their fair share.
They also know people will do what ever they can to avoid paying taxes. You figure, everyone who works for the government does whatever they can to avoid paying taxes.

 

[mthieme]

Re: New tax scam?

geez. I hope Maryland doesn't get wind of this.
They're experts and milking $$$ out of the citizenry.
Personally, I don;t see how states can collect sales tax on anything used.
Yeah, it's been sold, but they've already collected taxes on that item when it was new. And I thought it was just a Maryland thing.
Everytime we get a Democratic Governor, the first thing they do is institute a slew of new taxes. They've taxed everything except sex. They've even retaxed stuff that was already texed.
We need a good tea party!!!

 

[JB]

Re: New tax scam?

Politics is not an allowed topic.

End of story.