Anybody know if I can title a new car without paying taxes?

[Cop Magnet]

I bought my car out of state new from a dealer, did not register it with the DMV, and thus did not pay sales tax. However, now my lender wants the title as collateral (even though they are listed as lienholder on the bill of sale). So if I register the car (title only, no plates), will I be asked to pay sales tax?

 

[TAXIMAN1]

Yes, you will. probably around $6,000 tax liability right there. Just pay off the note... If not, the lender will change the note, to the default rate. Probably in the 20% range

So you have MSO still? How is it tagged now?

 

[AviP]

As far as I know, registering a car is the same as getting a license plate and that means you will pay taxes. But it's a simple enough question to head to your local DMV and ask an office manager.

As to your lender, ask them if they will accept the MSO instead.

 

[SmoknTires]

Yep.

Gotta pay the piper.

 

[George Farris]

The piper is getting FAT!!!!!

 

[Cop Magnet]

Let's say it is a track only car. For arguments sake. If it were another item, not a car, and I bought it out of state, I would not be paying taxes on it. Seems to me the taxes are part of the ability to drive on the street. All I want is a title to satisfy the lender. I don't want to "register" it, or whatever the distinction is between title only and plates. If I could pay off the loan, I would. I have thought about that.What about you guys with CC's or other "race cars"? Or did you all pay cashola?

The piper is a biotch! More like $11k at 10% sales tax plus county tax!

 

[Paul Hawker]

If you wish to drive it on the streets you gotta register it.

Track only cars do not have VIN's and may neigher be registered nor driven on the streets.

 

[CCBrian]

Let's say it is a track only car. For arguments sake. If it were another item, not a car, and I bought it out of state, I would not be paying taxes on it. Seems to me the taxes are part of the ability to drive on the street. All I want is a title to satisfy the lender. I don't want to "register" it, or whatever the distinction is between title only and plates. If I could pay off the loan, I would. I have thought about that.What about you guys with CC's or other "race cars"? Or did you all pay cashola?

The piper is a biotch! More like $11k at 10% sales tax plus county tax!

Paid cash for my Comp Coup-lenders also require insurance and you cannot get insurance if not registered. I think you will be paying taxes...

 

[Chrissss]

If you want plates to legally drive it on the street, you will pay the sales tax to register the car.

 

[Cop Magnet]

I don't want plates and already have insurance (all they require is a VIN). I do not need plates, let's say it is a collectors car and won't be driven on the street. Can I title the car, not plate or register it, and thus avoid sales tax?

 

[past ohio]

Cop Magnet....you keep asking a lot of questions and want-to-be's...IF you owe to a lienholder for the purchase, they will also require full insurance for the vehicle to protect their interests....IF you only want to drive it on a track, I think insurance is next to impossible to get ( I know you can get anything IF you pay enough) but I find it hard to believe that a lienholder would allow you to track the car and not have it fully insured one way or the other....I think every state requires you to pay sales tax ...good luck but get the checkbook out !!!

 

[mbccenter]

The plate fee is for driving on the street. The tax is just like anything else you purchase. It is called sales tax. You have to pay it unless you are a dealer reselling the car.

 

[djj68]

Say you never pay taxes on the car and then sell it. When the new owner goes to transfer the title, the new owner will have to pay the taxes on the original selling price of the car. Even if it's 10 years from now.

 

[Cop Magnet]

Thanks for all the replies. I think I might have come off in an unclear way, based on some of the answers (aside from the obvious desire to not pay sales tax, which I hope all can understand in this day and age...and on April 14th).

I think we are swayed by the fact that this is a car, and the assumption that sales tax is therefore unavoidable. My question is, is this true? If I bought any other item out of state, I would NOT pay sales tax, and no one would assume that I would.

So what makes sales tax applicable to a car? I believe it is the concept of registering it for the street. If I don't DO that, do I have to pay the sales tax?

If this car is bought out of state, and not registered for the street, does it not become like any "object" I bought out of state, i.e., tax exempt? Thus far, it has been, and the DMV does not even know about the car. When I go to get a title (only needed due to the lien), do I have to register the car for the street, or can I just ask for a title? If I just ask for the title, will they make me pay sales taxes?

I understand the likelihood is yes, and will pay if I have to. But hell if I am not gonna ask around first!

 

[rudedawg]

No question about it, you will need to pay the taxes.I know paying that amount just plain *****.

 

[Martin]

I don't know the specifics of IL taxation laws, but in most states that have a sales tax, you owe it (or use tax) on ANYTHING you buy out of state. An out of state seller is not required to collect the sales tax from you if they don't have a physical presence in your state, but you are required to pay it in the form of Use Tax. Most people who buy something from Amazon (for example) just blow it off because it's hard to keep track of those things when it comes time to declare them, but when you buy a big item like a car, it's hard to 'forget' about it.

You should look into the sales tax and use tax laws for your state. Also look at use tax laws for bringing out-of-state cars into IL. In California, for example, the law was recently changed so that you are on the hook for CA sales tax if you bring a car into the state within 12 months of buying it out of state. If you were to store the car out of state for a full year, the state doesn't collect the use tax. That may or may not be a factor for you - and I believe you will still need to show that the car was registered and stored in another state for the previous year (you might be able to make the argument that the car wasn't required to be registered because it was never used on the street - but that's unusual and DMV personnel have a hard time dealing with the unusual...).

 

[Camfab]

Here's the thing, when you make an out of state purchase you don't pay sales tax, however I believe it's technically your responsibillity to pay that tax in your state. Ask your CPA, he or she should have your best answer.

Ah, I see Martin has a much better answer than I do!

 

[Cop Magnet]

I don't know the specifics of IL taxation laws, but in most states that have a sales tax, you owe it (or use tax) on ANYTHING you buy out of state. An out of state seller is not required to collect the sales tax from you if they don't have a physical presence in your state, but you are required to pay it in the form of Use Tax. Most people who buy something from Amazon (for example) just blow it off because it's hard to keep track of those things when it comes time to declare them, but when you buy a big item like a car, it's hard to 'forget' about it.

Ah, this I did not know. Looks like I am stuck.

Thanks for all your help, everyone!

 

[Bill Pemberton Woodhouse]

This has nothing to do with buying out of State as you still have your State's tax obligation. I would get this accomplished quickly as it is quite possible the insurance company will be notified, and you are already likely building up penalties in Illinois for not paying within a timely manner. You could have the insurance dropped, which will be doubly problematic if the car is not registered and the title sent to the Bank.

You can not sell the car to anyone in the future, as virtually all States are now requiring a title, and will not accept an MSO ( skipping a title not only can carry fines , the taxes would still need to be paid and some additional interest charges are being tacked on in some locales ).

Keep in mind if the insurance company drops you because you have not perfected the title, then you have other issues and the Bank in many cases could force their own coverage on the vehicle at a very high price. This can become pertinent knowledge for the future when applying for coverage elsewhere, so best to just avoid a myriad of problems, pay your taxes as we all have to, and move on.

Best of luck.

Sincerely,
Bill Pemberton

 

[WOT!]

Too bad you don't live in NH. No tax, not even on cars! I think you can even get a title w/o registering a car.

 

[Cop Magnet]

Keep in mind if the insurance company drops you because you have not perfected the title, then you have other issues and the Bank in many cases could force their own coverage on the vehicle at a very high price. This can become pertinent knowledge for the future when applying for coverage elsewhere, so best to just avoid a myriad of problems, pay your taxes as we all have to, and move on.

Thanks, Bill, a recent hostile letter from the bank is exactly what prompted this discussion. But it's the bank, not the insurance company. The bank needs insurance, and a perfected lien. The insurance company could care less how the car is titled. The car is insured appropriately.

 

[Bill Pemberton Woodhouse]

Actually if the Insurance Company finds out from the Bank that the car is not registered it can cause you more than a few issues .

Banks are under tighter guidelines than in the past and the last thing you want is for them to notify the Insurance Company and in some cases the State Tax Dept. We have seen this happen in some States , so just trying to let you know it is best to get things done, as the hassles later may be really problematic.

Just trying to let you know that none of us enjoy paying taxes , but buying in another State will not give you any recourse. Hope you get thing worked out.

 

[Martin]

One thing that's scary about Sales Tax and Use Tax in many states is that there's no built-in statute of limitations on them. A lot of people out there who do all their buying online are really worried that one day, their state might find a way to dig into those customer databases, figure out who bought what, check that against what they declared on their income tax returns, and go after them for the underpayment. For small items, it wouldn't make much sense for the state to get its ******* in a bunch, but for big ticket items, it is definitely worth their while. Best thing to do is make sure you follow the law to the letter. Easiest thing to do (from an execution standpoint at least) is to just pay it and forget about it. On the bright side, if you bought the car in 2009, you 'might' be able to deduct the state sales tax on up to $50k of the car on your income taxe return - but again, talk to a tax pro. I think you might have had to actually pay the sales tax in 2009 to take advantage of that - but there's a small chance that you might still be able to deduct it if you purchased the car in 2009. A pro would know...

 

[Martin]

One thing that's scary about Sales Tax and Use Tax in many states is that there's no built-in statute of limitations on them. A lot of people out there who do all their buying online are really worried that one day, their state might find a way to dig into those customer databases, figure out who bought what, check that against what they declared on their income tax returns, and go after them for the underpayment. For small items, it wouldn't make much sense for the state to get its ******* in a bunch, but for big ticket items, it is definitely worth their while. Best thing to do is make sure you follow the law to the letter. Easiest thing to do (from an execution standpoint at least) is to just pay it and forget about it. On the bright side, if you bought the car in 2009, you 'might' be able to deduct the state sales tax on up to $50k of the car on your income taxe return - but again, talk to a tax pro. I think you might have had to actually pay the sales tax in 2009 to take advantage of that - but there's a small chance that you might still be able to deduct it if you purchased the car in 2009. A pro would know...

 

[past ohio]

I think Bill P. hit it right on the mark....in some states when you would try to sell the vehicle and you only have MSO....they could maybe get you for taxes as well as past year's registrations as well !!?? I earlier brought up the insurance issue and IF you drove it once on the street, MY LUCK IS, I would get pulled over immediately by a cop for no plate and once I didn't have registration and other documents, they would gladly let "Larry, Larry and Paul" tow truck company to put a sharp hook under the front facia to impound it....I have seen some dealers over the years selling "MSO'ed" cars that have thousand of miles on them and the new buyer has to pay back taxes and registrations !! Some states used to let people buy a "dealer's package" to not have to do this BUT I think most states now have cleaned up this big loop-hole !!

 

[AFL in NJ]

Why don't you legally lease a room in a New Hampshire members home, register the car there and pay no tax. For that member forwarding your mail you send him a restaurant gift card on a bi-monthly basis (*******,Dave's BBQ, Shula's, Tony Roma's, etc)?

That covers all the bases.

Regards,
Aaron

 

[Cop Magnet]

FYI, registered and titled the car with no hassles. Had to pay the tax, as expected, but no late penalties or other harrassment. I was not trying to do anything shady, just wanted to make sure I HAD to do it at all. The concept of use tax is new to me. On a bigger note, when and if the government decides they need more money, I imagine they will come after us ALL for all the smaller ticket items we bought off Amazon "tax free". So you all better get your checkbooks out, not just me.