Sales tax on automotive purchase

Wengr · #1 07-26-2017, 07:32 AM

Yesterday, I purchased a new car in Maryland. I am not a Maryland resident. Apparently, you are required to pay sales tax based on the "full price" of the car. In other words, the multiple rebates that are always available, and deducted up front are not counted, and you pay tax calculated on a fake price that you are not actually paying.
I also understand that in some states, the trade in is not even deducted from the "price" used to calculate the sales tax.
Imo, it's outright theft.

MikeBmusic · #2 07-26-2017, 07:45 AM

In Massachusetts, you have to pay the sales tax (at the RMV) to get the car registered. If you're from New Hampshire (no sales tax) and you buy in Mass, you don't have to pay the tax, because you are obviously not registering it in Mass.
Trade-in value is not deducted from the taxable sales amount (this is no different than if you traded in a used guitar to GC when buying a new one) - if you sold the car to a person (in-state), they would need to pay the sales tax to register the car. A car dealer (trade in) has a tax re-sale certificate so doesn't have to pay the tax on that trade-in value.

Otterhound · #3 07-26-2017, 07:50 AM

Many travel to Delaware to purchase things because of the lack of a sales tax . If you are in northeast PA , why would you go to Maryland to buy a car ?

PorkPieGuy · #4 07-26-2017, 07:57 AM

Quote:

Originally Posted by Wengr

Imo, it's outright theft.

Yup, but it's a necessary evil.

Wengr · #5 07-26-2017, 08:10 AM

Quote:

Originally Posted by Otterhound

Many travel to Delaware to purchase things because of the lack of a sales tax . If you are in northeast PA , why would you go to Maryland to buy a car ?

Price.
And then after negotiating a very good price, you have to pay tax on an imaginary transaction.
In the end, taxing authorities are using the same deceptive swindles as lenders and car dealers

imwjl · #6 07-26-2017, 08:13 AM

Quote:

Originally Posted by Wengr

Yesterday, I purchased a new car in Maryland. I am not a Maryland resident. Apparently, you are required to pay sales tax based on the "full price" of the car. In other words, the multiple rebates that are always available, and deducted up front are not counted, and you pay tax calculated on a fake price that you are not actually paying.
I also understand that in some states, the trade in is not even deducted from the "price" used to calculate the sales tax.
Imo, it's outright theft.

I only know about the details in my home state, states near, and buying a car in CO that was registered in WI. In each case the temp license and title for other states were allowed and I ultimately had to pay or go by the rules for my own state. The last time was in essence a temporary title and license where I bought the vehicle and paying the sales tax when I registered it at home.

It might not make you happy but it's not outright theft. At root level taxation and fees are how we finance infrastructure and public goods. I've travelled in different countries, have relatives in different countries, friends, and once worked in a different country for a short period. Seeing the different ways, different levels of service, and corruption gave me better understanding and appreciation for how infrastructure and public goods happen.

Wengr · #7 07-26-2017, 08:14 AM

Quote:

Originally Posted by Otterhound

Many travel to Delaware to purchase things because of the lack of a sales tax .

True, however many of those purchases are supposed to be reported on your tax return, and certainly sales tax on an out of state vehicle purchase will be collected upon registration/titling in Pa.

gjd100 · #8 07-26-2017, 08:21 AM

I bought my truck in 2013. I'm not sure if my trade was deducted from the purchase price on which I paid the sales tax, but I know for sure I did not pay tax on the MSRP price. My dealer at the time had a "$11,000 off MSRP sale"..... That is what I paid the tax on. MSRP less the 11 K discount.

Wengr · #9 07-26-2017, 08:22 AM

Quote:

Originally Posted by imwjl

It might not make you happy but it's not outright theft. At root level taxation and fees are how we finance infrastructure and public goods.

This is imho, not really about the necessary evil of taxation, but more about the distribution of tax burden.
People spending more are taxed more. that is why there is a percentage used as opposed to a flat tax applied. However this cannot really be achieved unless they use the true price.
I say portions of the "price" that are not actually paid should not be taxable. Seems like a scam to me.
And to charge tax on a trade in allowance is even worse. Again, that is tax on money that is not transacting, and therefore imo theft. To add insult to injury, tax was most likely paid on the full value of that car when purchased previously.

cattzap · #10 07-26-2017, 09:51 AM

There's also the states that do not require vehicle inspections. Those are the ones that you'll see rental trucks registered in. Especially the not so well maintained rental trucks.

Wengr · #11 07-26-2017, 10:15 AM

Quote:

Originally Posted by cattzap

There's also the states that do not require vehicle inspections. Those are the ones that you'll see rental trucks registered in. Especially the not so well maintained rental trucks.

Yes. in my state that does have mandatory inspection, it does not matter anyway because it is so easy to find a place which will sell the sticker after just a cursory glance at the vehicle. Around here, the more the actual inspection approaches the legal requirements, the less likely people are to go there because they wish to avoid the wait and the increased chance of failure. It really is a lot of money and grief for nothing. As a matter of fact, on this new vehicle, it was purchased out of state, so I have X amount of days to obtain a Pa. inspection sticker. The car will be in service for a few days with about 250 miles accumulated, and they will charge about $50 and literally do nothing but apply the stickers.

Otterhound · #12 07-26-2017, 10:33 AM

Quote:

Originally Posted by Wengr

Yes. in my state that does have mandatory inspection, it does not matter anyway because it is so easy to find a place which will sell the sticker after just a cursory glance at the vehicle. Around here, the more the actual inspection approaches the legal requirements, the less likely people are to go there because they wish to avoid the wait and the increased chance of failure. It really is a lot of money and grief for nothing. As a matter of fact, on this new vehicle, it was purchased out of state, so I have X amount of days to obtain a Pa. inspection sticker. The car will be in service for a few days with about 250 miles accumulated, and they will charge about $50 and literally do nothing but apply the stickers.

Sour grapes because you wrongly thought that you were pulling off some kind of grand scheme that simply ended up costing you more down the road . Should have done some research before acting . It would be ironic if the Pa inspection were to uncover some manufacturing issue that may have cost you your life in the end . While we are at this , I wouldn't want to be in your shoes when you take it to a local dealer for anything . Somehow , I am guessing that your vehicle will not be a priority item .

Wengr · #13 07-26-2017, 10:37 AM

Quote:

Originally Posted by Otterhound

Sour grapes because you wrongly thought that you were pulling off some kind of grand scheme that simply ended up costing you more down the road . Should have done some research before acting . It would be ironic if the Pa inspection were to uncover some manufacturing issue that may have cost you your life in the end . While we are at this , I wouldn't want to be in your shoes when you take it to a local dealer for anything . Somehow , I am guessing that your vehicle will not be a priority item .

I must admit I don't know what you are talking about. I suspect that's something we have in common. People often choose a deal based on price. The fact that it may be across state lines is really not relevant.

Steve DeRosa · #14 07-26-2017, 10:46 AM

Last time this happened to the same extent, a bunch of Bostonians donned buckskins and war paint and dumped a couple tons of tea in the Charles River...

Just might be tea-time again...

imwjl · #15 07-26-2017, 11:10 AM

Quote:

Originally Posted by Wengr

This is imho, not really about the necessary evil of taxation, but more about the distribution of tax burden.
People spending more are taxed more. that is why there is a percentage used as opposed to a flat tax applied. However this cannot really be achieved unless they use the true price.
I say portions of the "price" that are not actually paid should not be taxable. Seems like a scam to me.
And to charge tax on a trade in allowance is even worse. Again, that is tax on money that is not transacting, and therefore imo theft. To add insult to injury, tax was most likely paid on the full value of that car when purchased previously.

In my state regulations favor what auto dealers association wants - the trade vs no trade taxation. I'm not a fan of how much power some groups have, where they can be influential in that way. I don't want this to be something that stresses the moderators so will be done with this.

One way or another good luck getting it straightened out so you don't have any problems with title or tax in the future.