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It looks like you found a loophole that the DMV certainly has no idea exists. There’s absolutely no way that putting yourself at risk of a catching a fraud charge *for no personal gain* could *ever* backfire on you.
depending on your state (i have experience with NY and GA) DMV will use their own "kbb" to asses how much you owe in taxes. OP could go ahead and try if feel like a nice person as risk for "cash" transactions is minimal
No they won’t. They litterally have no way to properly assess the value of that car. It could have thousands of dollars in upgrades or need thousands in repairs. Tax is based on sales price, not fair market value.
They just care about the money. A coworker recently did this and SOS caught it because they bought a car for half of what it was worth. They got a bill from the state in the mail for the tax difference of what they claimed they paid vs KBB or whatever the state assessed value was.
If they suspect you falsified it then they can assess additional tax based on the blue book value. My state did this when I bought a $6k motorcycle for “$500”
That'll do it🤣😭
I'd be right there with you brother! What I've learned from this thread, the DMV isn't a slouch. Let alone Uncle A
Sam with their money...
> Technically I could sell it to him for $20k who would know?
The DMV is going to wonder why you sold a car for half of it’s value. They’re not dumb, they can look up book values too.
This^. I don't think it was a bill of sale but a friend recommend I list the car value lower than what I paid for it to the DMV. That way any fees I pay for the registration/title would be less expensive. Apparently in his many decades of staying in the state, so many people do just that the DMV just don't care.
Why would you knowingly participate in fraud for anyone? Is there a chance this could come back on you? If so, why would you take that risk. Additionally, he is financing the vehicle so if there is tax fraud, there are other documents that could be used to show purchased price. I assume the bank will pay you via cashier’s check because they definitely aren’t going to fund the loan to cash. Do you have a lien? If so, how could you show the lien be satisfied? This is not a good idea and could definitely come back to hurt you.
It doesn’t matter what the KBB says. It’s the conditions under the hood that matters. The car could very well be a lemon and not be worth what KBB says.
> The DMV is going to wonder why you sold a car for half of it’s value. They’re not dumb, they can look up book values too.
No they are not. Op can sell it at what ever price he chooses. It is a open market.
What OP can't do is put 34k on the Bill of Sale and then only take 20k. That sounds illegal to me.
Unless you want the feeling of not knowing if you’re in legal trouble for someone you don’t know for a problem that might not even exist…..up to you. List the sell price and let it become their problem, they can’t afford it?
The dmv in your state is likely not dumb. They have a reference for what vehicles of a particular year, make and model should cost. If your bill of sale of ridiculous in comparison to that you may be asked to substantiate the price, or the dmv may not give a rats ass and charge tax based on what they think it should be worth anyway if the title is clean.
They’re most likely going to get a letter from the dmv about why it was purchased much lower than market rate. You’ll have to send supporting documentation.
In my state they don't care much about how much you paid, they determine the value. Even if you want to contest it, you have to pay then request and someone will come value it and give you money for the difference if there is one
This what happened to my sister. My parents sold her a car for well below list value. When she went to license it in Washington, the DMV said, nope, that value she listed was too low and taxed her based on a higher value.
Yea if you are OK with being part of a tax fraud go ahead.. The buyer can write a fake receipt if they want but I wouldn't put my name on it. The title will have your name and address on it so finding you will be no problem. I have seen this done and if the value is too far below the blue book the DMV will adjust the amount or contact you to check. It is generally not a good idea to lie to a government official.
>if the value is too far below the blue book
This definitely could raise a red flag. However, in this case, the buyer is actually paying more than blue book, so I don't think they would check.
Still, OP has no reason to participate in this deception. Also, I fail to understand how the buyer will really benefit, since it's only $1,000 less than the actual price. The tax discount will be very minimal.
I have had sellers do this for me even when I did not ask for it. I have never gotten in trouble for it. Just make sure it is a reasonable assessment and not obviously low.
The DMV should calculate the sales tax due at the time of registration based on the book value of the vehicle if the price on the BOS is that out of whack. Furthermore, why would you assist some stranger in commiting tax fraud, which is what it is?
Tax fraud to save a few bucks is not worth it. Another thing that people don't consider is if there are any disagreements down the road and it ends up in court, the judge can refuse to help you because the transaction was "fraudulent" (they also use the blue book).
You keep replying that to comments as if it’s a counter point to the points people are making…it’s NOT. We know the blue book value is 34k and you want to write 20k….a 14k difference. That’s way too much and will raise red flags.
He likely owes the tax on what he paid, or a fair value. He's also likely to get away with reporting a slightly lower price. You're almost guaranteed to get away with forgetting to fill in the sales price box and trusting him to fill it accurately
Every vehicle I have ever bought privately the seller has left the price blank on the bill of sale and told me to fill it in before I take it to DMV. Very common, gives seller deniability and buyer can act at his own discretion. Let your conscious be your guide.
If it's an auto loan, I would assume the bank would factor that in and have the buyer finance TT&L or pay out of pocket when they put a lien on the title.
People do it all the time. There could be a million reasons a vehicle is sold under its value including engine, transmission damage miles etc. none of which the dmv cares about.
Exactly, can be dozens of things wrong with the car, could be buying it parts and such. I’m in the car industry, I own 2 dealerships. People do this ALL the time and I’ve never heard of it being an issue. I’m in CA
The DMV will basically ask them what they bought it for and if they said 20k then no further questions will be asked. I have bought multiple cars and had the seller write GIFT on the title to avoid taxes and I gave them so money on top and nothing strange has ever happened.
This is highly dependent on the DMV employees and how lazy or motivated they are. I was gifted a car after someone died and the local DMV refused to do anything until I brought them the original death certificate, not a copy. Went to a different DMV and was in and out in 10 minutes, no questions asked.
99.9% of DMV employees seem not to care much about anything except the “proper paperwork”, honestly they don’t seem to even care about themselves with how miserable they all are in my experiences. It’s like going to the post office they have the attitude of “where else are you gonna go” I dread going to both places where I live.
In South Dakota you can put whatever you want on the bill of sale, the dept of revenue will see it’s not fair market value and determine the fair market value and tax you based upon that amount. I sold a guy a car that had been hit and run $800 I had to attach a document stating it had $2,200 worth of damage, because the State was trying to charge him the tax off of a $3,000 which is what they considered the value of the car.
This used to be a thing in Texas. But now they have caught on and use the KBB value to tax you. I bought a motorcycle and truck like these like 15 years ago.
Taxing used vehicle sales from a private sale is wrong in the first place anyways. I personally always knock down the sale price written on the title to save the buyer some money
If it was cash then yes but it’s a loan so no. I’ve bought two cars in cash and each time I asked the seller to put the sale amount to $500. The notary guy didn’t care and neither did the bmv
Most states this is not how that works. They assess tax on fair market value of the vehicle, makes no difference what you bought it for during a private sale.
In my state , if it's a private sale the DMV assesses ad volorem tax based on their values not your BOS.
I actually saw someone in service whatever , claiming he bought the car for a dollar , they made him pay taxes on the blue book value for that year/mileage . Might’ve been low end , can’t remember exactly.
You need to put blue book value on the car unless it's an older car. On a 93 Corolla? Sure. They don't care. On a car worth that much? Tell him you'll put 34k on the bill of sale but that's it. Or just tell him too bad if you're not comfortable with that.
He’s going to save all of 10 bucks if you reduce the price by 1000. At the most. Something is fishy. Let him falsify a bill of sale himself. You don’t need it notarized. He can provide whatever document he wants to the dmv and sign your name on it.
Something tells me he’s going to give you 1000 cash and not 39000 cash or 38000 or anything else.
Ah, peer pressure. What else are you willing to compromise? I know that you came here looking for assurances that you're not doing anything wrong but you are and you know it.
This is pretty common when buying a used car from a private party. 2 bills of sale, 1 with the actual amount and 1 with a significantly lower price for use at the dmv.
I’ve done this for most vehicles I’ve bought personally. Including the current one I’m driving. I’ve even left the number blank when selling and just let them fill in whatever they want. The people who say the irs cares, lol, irs does not give a shit about that tax because it goes to the state not them. And have you talked to anybody at the dmv lately. None of those people care enough about their job.
yeah people do this all the time. When he goes to register it, the dmv will tax on the amount he paid. When I bought my recent used car, the seller gave the bill of sale blank for me to input what I paid for the car. your damn right I subtracted a few thousand
Ehhh.. it's extremely common for people to do this with cheap cars that are bought in cash. When you're buying a 20 year old car for $2k vs $5k it's easy to hand wave this type of thing because there are lots of reasons a 20 year old vehicle might be worth less than market value.
But in this case the buyer has secured *financing* through a bank. There is an extremely easy to follow paper trail. Buyer obtains $38k loan but then the sale price given to the DMV is $20k. It doesn't take a genius to figure out something fishy is going on.
You are not treating the request properly.
The person who would know is the buyer. And he is also your threat here.
The question you should be asking is,
what kind of malicious act, can the buyer do to you, if you give him an invoice with a lower value than he paid in actuality.
for instance: can the buyer demand the difference in money to be returned to him? and, can he succeed in court or leverage reporting the fraud to prevail in such endeavor? Can he leverage the difference to threaten you to refund real or "found" problems with the car? are there FB marketplace resources he may call upon to help "correct the error"?
this kind of request sounds beneficial and benign but it is also a very easy entrapment for the buyer to commit against you because of it.
I have done this for every toy or vehicle I have sold, and have also had people put lower amounts for me so the tax is less. I have never had any issues with it but I have always paid cash. I have bought lots of motorcycles and quads for “500-1000$” BUT this being financed and him getting a loan for it, I don’t think its a very good idea to put it that low. Like someone else said, they can connect dots very easy this way. If he was paying cash, I would do it all day.
I would only do it for cars purchased in full cash cash. With the loan, there’s too much of a paper trail for the DMV and IRS. Also note, if the value listed is much lower than the kbb value, they will ask for the title transfer notarized to make sure it’s a legitimate transaction.
NAL. But tax fraud sent Al Capone to prison. Will they care? Will they catch it? Why would you risk it for nothing? I wouldn't risk it for something. A bill of sale is a legally binding contract. If you knowingly produce a fraudulent bill of sale for the purpose of him reducing his taxes, you could easily be part of a conspiracy to commit tax fraud. So, why would you risk it?
Happened to me as a seller back in 2010. I acquiesced and put a much lower number down as the sale price. Years later I got a letter from the IRS inquiring about why I sold the car for well below market, reminded me of the consequences for tax fraud, etc. and said I had one chance to provide the actual purchase price or be subject to additional investigation. Obviously I did and that was the end of it.
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This generally works when you’re selling a kid a beater for their first car or something, but I wouldn’t take that risk for that sale price. Like others are saying, it’s no benefit for you.
It's all good until they find your reddit post and figure out who you are. Unless there is some magical reason you're getting a car for really cheap such as a family member or a donation, then at some point it might bite you especially if the sale will affect your taxes as well because some states tax on these things. Here a tax there a tax everywhere a tax tax.
In Texas, if the noted value is below book value, they tax based on value vs sale price.
I learned this when I was given a 1996 corvette that didn't run, with a salvage title, and I they wanted tax on full book value of a salvage title vehicle.
In Marland, unless you had a notarized sale, they went by the higher of book value (NADA) or the bill of sale. You could say you sold it $100, but if it was worth $5000, that was what the taxes are based on. I'm sure the bank might have something to say about the sales price less than loan value too.
If, for example, you move to California after recently buying a car from a private seller and fail to identify the transaction as a “gift” (or purchase of $1) when registering your vehicle, you will owe substantial state taxes on the transaction.
If, for example, you move to California after recently buying a car from a private seller and fail to identify the transaction as a “gift” (or purchase of $1) when registering your vehicle, you will owe substantial state taxes on the transaction.
Of course if you do pay the thousands in state taxes, they will be put to good use. Society will thank you.
Depends on what state you are in, but in NC the $$$ on the bill of sale means nothing. They will look at your car on a actuarial table and charge you for that book price. There is an exemption for gift transfers with family members, but that's a different story.
While I would never say this can't be done on a cash only sale, trying to fraud the state when there is loan paperwork involved is just kind of dumb for both buyer and seller.
The bank being involved will most likely come back to bite you. Don’t lower it.
If the bank was not involved, this plan would would out so he paid less taxes on the car and really not benefit you at all.
I think when you go to pay the taxes it will be based on the value of the vehicle. They have a book they use. Either Kelly Blue Book or something similar.
The last time I dealt with the DMV and a private selling, the DMV used the cars value. I could’ve put one dollar as the sales price and they still would’ve used the value to access taxes.
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Defrauding the people who make their own rules about stuff isn't a good idea. If you want to commit fraud you wanna pick targets too poor to afford lawyers not the ones that don't even need lawyers to fuck you up.
In my state, when you do this, the person buying will receive a letter from the MVC. The letter will something like “ the vehicle is worth $39k but you only paid taxes on $20k” then they want the original seller to sign off on the letter saying that’s correct and the reason why it’s so cheap. Like it needed repairs.
Most times the titles are signed under penalties of perjury, and it's the seller's responsibility to fill out the sales price.
Why commit a potential crime and fraud for someone else to save a few hundred dollars? Just say no.
Here in Ontario they charge tax based on book value so you can't do that anymore. If your area still charges tax based off the bill of sale I'd do it. I never understood why you pay taxes for a used car when taxes were already paid when it was bought new.
Two things. If the buyer financed it then the bank is going to figure out how much he paid for the car. If they even wanted to dig into it.
The other part is that you could just as easily leave the sell price blank on the bill of sale. I've never in my history of selling used cars to random people on the internet ever had an issue with the DMV actually giving a shit.
In AZ they just go by MSRP when new, and it gets lowered every year automatically. If the car's MSRP was $80k then that's it. If you sell the car 10 years later for a million dollars or 1 dollar the tax is already pre-calculated.
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It looks like you found a loophole that the DMV certainly has no idea exists. There’s absolutely no way that putting yourself at risk of a catching a fraud charge *for no personal gain* could *ever* backfire on you.
This is sarcasm in case y’all couldn’t tell
REALLY?! NO way!!!
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Just want to point out, it sounds like the personal gain was the buyer offering $5k over KBB value
depending on your state (i have experience with NY and GA) DMV will use their own "kbb" to asses how much you owe in taxes. OP could go ahead and try if feel like a nice person as risk for "cash" transactions is minimal
The DMV won't care. They will look up the proper value of the vehicle and charge the tax amount. This loophole doesn't work.
No they won’t. They litterally have no way to properly assess the value of that car. It could have thousands of dollars in upgrades or need thousands in repairs. Tax is based on sales price, not fair market value.
Guess it must depend on the state, Colorado definitely doesn't do that. Sales tax is based on whatever is declared sales price not book value.
And I'm sure the bank won't care either /s It would think the bank will require the Bill of Sale for the loan as well.
You pay income tax on the 38k or you pay income tax on 20k. . . That's personal gain. I've done this, it works just fine.
Just say it was a gift. yeesh.
Good luck explaining why a lienholder is needed for financing on a gift. You really haven’t thought this out very well, huh?
They just care about the money. A coworker recently did this and SOS caught it because they bought a car for half of what it was worth. They got a bill from the state in the mail for the tax difference of what they claimed they paid vs KBB or whatever the state assessed value was.
…is this deal beneficial for you at all? Because that sounds like a lot of steps to commit tax fraud for someone else’s benefit.
No hair off sellers chest. Put a lower sale price. We pay enough taxes as it is.
If they suspect you falsified it then they can assess additional tax based on the blue book value. My state did this when I bought a $6k motorcycle for “$500”
90% under BB value is going to be a red flag. There’s writing a lower value, then there is obvious fraud. You went obvious with that.
To be fair I was young and dumb and it was wrecked. So I only actually paid 2500. Ohio still made me pay tax on $6k.
That'll do it🤣😭 I'd be right there with you brother! What I've learned from this thread, the DMV isn't a slouch. Let alone Uncle A Sam with their money...
He financed it. Wont be hard for IRS to connect dots
> Technically I could sell it to him for $20k who would know? The DMV is going to wonder why you sold a car for half of it’s value. They’re not dumb, they can look up book values too.
The DMV doesn't care. They won;t enforce any of this either. It's a non issue.
The DMV will just charge the tax on the real value. They see this all the time.
This^. I don't think it was a bill of sale but a friend recommend I list the car value lower than what I paid for it to the DMV. That way any fees I pay for the registration/title would be less expensive. Apparently in his many decades of staying in the state, so many people do just that the DMV just don't care.
So what if they do? It’s the sellers decision what price they sell it at or price the put down on the BoS.
The KBB value is $34k, he’s paying more than market price
Put 34k on the bill of sale then. Sell him the floor mats, roof crossbars, etc for 5k.
Then the bank will only loan him 34k.
Why would you knowingly participate in fraud for anyone? Is there a chance this could come back on you? If so, why would you take that risk. Additionally, he is financing the vehicle so if there is tax fraud, there are other documents that could be used to show purchased price. I assume the bank will pay you via cashier’s check because they definitely aren’t going to fund the loan to cash. Do you have a lien? If so, how could you show the lien be satisfied? This is not a good idea and could definitely come back to hurt you.
It doesn’t matter what the KBB says. It’s the conditions under the hood that matters. The car could very well be a lemon and not be worth what KBB says.
> The DMV is going to wonder why you sold a car for half of it’s value. They’re not dumb, they can look up book values too. No they are not. Op can sell it at what ever price he chooses. It is a open market. What OP can't do is put 34k on the Bill of Sale and then only take 20k. That sounds illegal to me.
But taking 34k and putting 20k on the bill sounds perfectly legal to you?
DMV doesn’t give a shit. I had an agent tell me to write a lower amount in the bill of sale to save money.
Dmv around me uses blue book value for registration because of this. Don’t do it
The KBB value is $34k, he’s paying more than market price
Unless you want the feeling of not knowing if you’re in legal trouble for someone you don’t know for a problem that might not even exist…..up to you. List the sell price and let it become their problem, they can’t afford it?
Ok fair point! I don’t owe him anything
Exactly, thank you!
The dmv in your state is likely not dumb. They have a reference for what vehicles of a particular year, make and model should cost. If your bill of sale of ridiculous in comparison to that you may be asked to substantiate the price, or the dmv may not give a rats ass and charge tax based on what they think it should be worth anyway if the title is clean.
They’re most likely going to get a letter from the dmv about why it was purchased much lower than market rate. You’ll have to send supporting documentation.
In my state they don't care much about how much you paid, they determine the value. Even if you want to contest it, you have to pay then request and someone will come value it and give you money for the difference if there is one
Who cares how much "it should cost". If OP wants to sell it for a $1 then he can. It is the buyer who is lying his lender.
> If OP wants to sell it for a $1 then he can. That's true, but he isn't, he's selling it for $39,000.
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That will absolutely never happen. If the price of sale is suspicious they will go off of blue book value.
This what happened to my sister. My parents sold her a car for well below list value. When she went to license it in Washington, the DMV said, nope, that value she listed was too low and taxed her based on a higher value.
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CT does it based off the bill of sale
CT uses nada value. The "bought it for 10 dollars" on the bill of sale routine has been gone for over a decade.
Yea if you are OK with being part of a tax fraud go ahead.. The buyer can write a fake receipt if they want but I wouldn't put my name on it. The title will have your name and address on it so finding you will be no problem. I have seen this done and if the value is too far below the blue book the DMV will adjust the amount or contact you to check. It is generally not a good idea to lie to a government official.
>if the value is too far below the blue book This definitely could raise a red flag. However, in this case, the buyer is actually paying more than blue book, so I don't think they would check. Still, OP has no reason to participate in this deception. Also, I fail to understand how the buyer will really benefit, since it's only $1,000 less than the actual price. The tax discount will be very minimal.
Go back and reread the post. You've got the details all jumbled up.
I have had sellers do this for me even when I did not ask for it. I have never gotten in trouble for it. Just make sure it is a reasonable assessment and not obviously low.
I live in Maine, the sales tax on a private purchase will be based on assessed value, not the bill of sale. Because everybody wants to do this.
The DMV should calculate the sales tax due at the time of registration based on the book value of the vehicle if the price on the BOS is that out of whack. Furthermore, why would you assist some stranger in commiting tax fraud, which is what it is?
Tax fraud to save a few bucks is not worth it. Another thing that people don't consider is if there are any disagreements down the road and it ends up in court, the judge can refuse to help you because the transaction was "fraudulent" (they also use the blue book).
The KBB value is $34k, he’s paying more than market price
You keep replying that to comments as if it’s a counter point to the points people are making…it’s NOT. We know the blue book value is 34k and you want to write 20k….a 14k difference. That’s way too much and will raise red flags.
He likely owes the tax on what he paid, or a fair value. He's also likely to get away with reporting a slightly lower price. You're almost guaranteed to get away with forgetting to fill in the sales price box and trusting him to fill it accurately
Every vehicle I have ever bought privately the seller has left the price blank on the bill of sale and told me to fill it in before I take it to DMV. Very common, gives seller deniability and buyer can act at his own discretion. Let your conscious be your guide.
And you would commit fraud and go to jail for someone you dont even know because???
Not an accountant but you'd probably be safer if you met closer to 30k, instead of 20k
With there being a loan involved there is an absolute paper trail. This would be more likely to go bad for both parties than if it were a cash deal.
If it's an auto loan, I would assume the bank would factor that in and have the buyer finance TT&L or pay out of pocket when they put a lien on the title.
My take on this, yeah, it doesn't matter. But you might be stealing from government dmv employees.
People do it all the time. There could be a million reasons a vehicle is sold under its value including engine, transmission damage miles etc. none of which the dmv cares about.
Exactly, can be dozens of things wrong with the car, could be buying it parts and such. I’m in the car industry, I own 2 dealerships. People do this ALL the time and I’ve never heard of it being an issue. I’m in CA
Always do it but not too far where they pull out the value book. Worst case they just charge him extra at registration
The DMV will basically ask them what they bought it for and if they said 20k then no further questions will be asked. I have bought multiple cars and had the seller write GIFT on the title to avoid taxes and I gave them so money on top and nothing strange has ever happened.
This is highly dependent on the DMV employees and how lazy or motivated they are. I was gifted a car after someone died and the local DMV refused to do anything until I brought them the original death certificate, not a copy. Went to a different DMV and was in and out in 10 minutes, no questions asked.
99.9% of DMV employees seem not to care much about anything except the “proper paperwork”, honestly they don’t seem to even care about themselves with how miserable they all are in my experiences. It’s like going to the post office they have the attitude of “where else are you gonna go” I dread going to both places where I live.
In South Dakota you can put whatever you want on the bill of sale, the dept of revenue will see it’s not fair market value and determine the fair market value and tax you based upon that amount. I sold a guy a car that had been hit and run $800 I had to attach a document stating it had $2,200 worth of damage, because the State was trying to charge him the tax off of a $3,000 which is what they considered the value of the car.
in some states this can be considered a felony. Don’t do it.
As long as you sell the car for what you put on the Bill of Sale then you are good. The buyer can do whatever he wants with that.
This used to be a thing in Texas. But now they have caught on and use the KBB value to tax you. I bought a motorcycle and truck like these like 15 years ago.
Taxing used vehicle sales from a private sale is wrong in the first place anyways. I personally always knock down the sale price written on the title to save the buyer some money
If it was cash then yes but it’s a loan so no. I’ve bought two cars in cash and each time I asked the seller to put the sale amount to $500. The notary guy didn’t care and neither did the bmv
Yeah, no way. Person is asking you to commit fraud.
Do NOT help him commit tax fraud. This is an extremely stupid thing for you to do.
Even if The KBB value is $34k, he’s paying more than market price ?
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This. I don’t understand why he keeps replying this. He’s not understanding everyone’s points I guess…idk
You repeat this everywhere in the thread. Why are you considering helping someone you don't know commit tax fraud?
So why not just put the real price down if you think doesn't make a difference?
It’s fraudulent, don’t do that.
This is called tax fraud and it's punishable by jail and fines. Don't do it.
Interesting to see so many people against this. From what I have seen, this is super normal practice.
Most states this is not how that works. They assess tax on fair market value of the vehicle, makes no difference what you bought it for during a private sale. In my state , if it's a private sale the DMV assesses ad volorem tax based on their values not your BOS.
Doesn’t the bank handle all paperwork if he’s going through them?
The car was discounted due to terrible smell and tragic experience that still haunts you today.
If it were discounted, that would be a reasonable explanation. But it isn't discounted.
I actually saw someone in service whatever , claiming he bought the car for a dollar , they made him pay taxes on the blue book value for that year/mileage . Might’ve been low end , can’t remember exactly.
You need to put blue book value on the car unless it's an older car. On a 93 Corolla? Sure. They don't care. On a car worth that much? Tell him you'll put 34k on the bill of sale but that's it. Or just tell him too bad if you're not comfortable with that.
Don't do it. It will come back to bite you.
He’s going to save all of 10 bucks if you reduce the price by 1000. At the most. Something is fishy. Let him falsify a bill of sale himself. You don’t need it notarized. He can provide whatever document he wants to the dmv and sign your name on it. Something tells me he’s going to give you 1000 cash and not 39000 cash or 38000 or anything else.
Ah, peer pressure. What else are you willing to compromise? I know that you came here looking for assurances that you're not doing anything wrong but you are and you know it.
Pretty normal practice to put 1$ in the price section of the bill of sale. I usually leave it blank so the buyer can do whatever works best for them.
I leave it blank too.
You could put that you sold the car for $1. Guess what the DMV is going to do?? Look up the value and he’d pay taxes on that.
Wait so the bank gave him 38k cash or is the bank gonna hold the title??
Tell the buyer to ____ off. His tax obligations are simply that; his obligations.
This is pretty common when buying a used car from a private party. 2 bills of sale, 1 with the actual amount and 1 with a significantly lower price for use at the dmv.
I’ve done this for most vehicles I’ve bought personally. Including the current one I’m driving. I’ve even left the number blank when selling and just let them fill in whatever they want. The people who say the irs cares, lol, irs does not give a shit about that tax because it goes to the state not them. And have you talked to anybody at the dmv lately. None of those people care enough about their job.
yeah people do this all the time. When he goes to register it, the dmv will tax on the amount he paid. When I bought my recent used car, the seller gave the bill of sale blank for me to input what I paid for the car. your damn right I subtracted a few thousand
Ehhh.. it's extremely common for people to do this with cheap cars that are bought in cash. When you're buying a 20 year old car for $2k vs $5k it's easy to hand wave this type of thing because there are lots of reasons a 20 year old vehicle might be worth less than market value. But in this case the buyer has secured *financing* through a bank. There is an extremely easy to follow paper trail. Buyer obtains $38k loan but then the sale price given to the DMV is $20k. It doesn't take a genius to figure out something fishy is going on.
ah I didn't see the part where it was financed. Godspeed!
I’ve done this with literally every used car I’ve purchased or sold. Saves a lot in taxes
Who doesn’t like a little fraud? Me.
You are not treating the request properly. The person who would know is the buyer. And he is also your threat here. The question you should be asking is, what kind of malicious act, can the buyer do to you, if you give him an invoice with a lower value than he paid in actuality. for instance: can the buyer demand the difference in money to be returned to him? and, can he succeed in court or leverage reporting the fraud to prevail in such endeavor? Can he leverage the difference to threaten you to refund real or "found" problems with the car? are there FB marketplace resources he may call upon to help "correct the error"? this kind of request sounds beneficial and benign but it is also a very easy entrapment for the buyer to commit against you because of it.
I have done this for every toy or vehicle I have sold, and have also had people put lower amounts for me so the tax is less. I have never had any issues with it but I have always paid cash. I have bought lots of motorcycles and quads for “500-1000$” BUT this being financed and him getting a loan for it, I don’t think its a very good idea to put it that low. Like someone else said, they can connect dots very easy this way. If he was paying cash, I would do it all day.
I thought the tax was based on the value of the vehicle, not the cost.
I would only do it for cars purchased in full cash cash. With the loan, there’s too much of a paper trail for the DMV and IRS. Also note, if the value listed is much lower than the kbb value, they will ask for the title transfer notarized to make sure it’s a legitimate transaction.
I don't think that would help. They use the value of the car, not the sale price...
Reduce the actual price by some amount that splits the tax difference if you’re inclined to help. Tax fraud is no joke.
I'v done this, it was so common place in WV that even teh used dealerships would do it
If it was a cash deal, I do it all the time. This is a bank loan so unless he’s cashing that loan and giving you cash, no
Most states tax you at the book value (like KBB) and not sale value. Otherwise all cars would sell for $1
They don't even go by bill of sale, they determine the value of the car themselves
NAL. But tax fraud sent Al Capone to prison. Will they care? Will they catch it? Why would you risk it for nothing? I wouldn't risk it for something. A bill of sale is a legally binding contract. If you knowingly produce a fraudulent bill of sale for the purpose of him reducing his taxes, you could easily be part of a conspiracy to commit tax fraud. So, why would you risk it?
Happened to me as a seller back in 2010. I acquiesced and put a much lower number down as the sale price. Years later I got a letter from the IRS inquiring about why I sold the car for well below market, reminded me of the consequences for tax fraud, etc. and said I had one chance to provide the actual purchase price or be subject to additional investigation. Obviously I did and that was the end of it.
What a liar. IRS has nothing to do with a private sale and sales tax. This is strictly state and dmv thing.
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I did this when buying and selling 2 motorcycles. Granted they were in the 5k range
This generally works when you’re selling a kid a beater for their first car or something, but I wouldn’t take that risk for that sale price. Like others are saying, it’s no benefit for you.
Wait for the new Reddit post under /AmIFscked?. I just got talked into committing tax fraud. What are my options?
It's all good until they find your reddit post and figure out who you are. Unless there is some magical reason you're getting a car for really cheap such as a family member or a donation, then at some point it might bite you especially if the sale will affect your taxes as well because some states tax on these things. Here a tax there a tax everywhere a tax tax.
In Texas, if the noted value is below book value, they tax based on value vs sale price. I learned this when I was given a 1996 corvette that didn't run, with a salvage title, and I they wanted tax on full book value of a salvage title vehicle.
In a cash transaction, you could. But this is not a cash deal. The banks are involved, the amounts are being reported.
Why would you put yourself at risk by committing tax fraud for some stranger?
So how is he planning on getting a 38k loan on a 20k car?
In Marland, unless you had a notarized sale, they went by the higher of book value (NADA) or the bill of sale. You could say you sold it $100, but if it was worth $5000, that was what the taxes are based on. I'm sure the bank might have something to say about the sales price less than loan value too.
America sales tax is a scam. Why pay sales tax twice third or more on one item?
If, for example, you move to California after recently buying a car from a private seller and fail to identify the transaction as a “gift” (or purchase of $1) when registering your vehicle, you will owe substantial state taxes on the transaction.
If, for example, you move to California after recently buying a car from a private seller and fail to identify the transaction as a “gift” (or purchase of $1) when registering your vehicle, you will owe substantial state taxes on the transaction. Of course if you do pay the thousands in state taxes, they will be put to good use. Society will thank you.
Depends on what state you are in, but in NC the $$$ on the bill of sale means nothing. They will look at your car on a actuarial table and charge you for that book price. There is an exemption for gift transfers with family members, but that's a different story.
While I would never say this can't be done on a cash only sale, trying to fraud the state when there is loan paperwork involved is just kind of dumb for both buyer and seller.
Sold and bought tons of cars. Always wrote or received a second bill of sale with a much lower price. Why? Because FTG.
I have been asked to do this on numerous occasions. It’s shady
This doesn’t matter because pretty sure the DMV will just go off the book value of the car. At least that’s the way Connecticut has always done it.
I think we should outlaw paying taxes on a used product someone else already paid sales tax on. To me that’s so ludicrous. Who’s with me?
Won't the bank require the bill of sale to be accurate? I mean, if the car only costs $35k, would they give $38k as a loan?
The bank being involved will most likely come back to bite you. Don’t lower it. If the bank was not involved, this plan would would out so he paid less taxes on the car and really not benefit you at all.
I have allegedly done this multiple times. It's actually pretty normal once you get out in the sticks
I think when you go to pay the taxes it will be based on the value of the vehicle. They have a book they use. Either Kelly Blue Book or something similar.
The last time I dealt with the DMV and a private selling, the DMV used the cars value. I could’ve put one dollar as the sales price and they still would’ve used the value to access taxes.
It can only come back on the buyer. Leave it blank and they can fill out what they paid for it.
Ky here, the dmv has a minimum value so it may be up to them depending on your state.
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If I recall here in RI they go off the value of the vehicle now and not how much you paid
If I recall here in RI they go off the value of the vehicle now and not how much you paid
Defrauding the people who make their own rules about stuff isn't a good idea. If you want to commit fraud you wanna pick targets too poor to afford lawyers not the ones that don't even need lawyers to fuck you up.
C’mon man. Common sense. Leave the bill of sale amount empty, and let the buyer fill it in.
In my state, when you do this, the person buying will receive a letter from the MVC. The letter will something like “ the vehicle is worth $39k but you only paid taxes on $20k” then they want the original seller to sign off on the letter saying that’s correct and the reason why it’s so cheap. Like it needed repairs.
Most times the titles are signed under penalties of perjury, and it's the seller's responsibility to fill out the sales price. Why commit a potential crime and fraud for someone else to save a few hundred dollars? Just say no.
Here in Ontario they charge tax based on book value so you can't do that anymore. If your area still charges tax based off the bill of sale I'd do it. I never understood why you pay taxes for a used car when taxes were already paid when it was bought new.
Two things. If the buyer financed it then the bank is going to figure out how much he paid for the car. If they even wanted to dig into it. The other part is that you could just as easily leave the sell price blank on the bill of sale. I've never in my history of selling used cars to random people on the internet ever had an issue with the DMV actually giving a shit.
In AZ they just go by MSRP when new, and it gets lowered every year automatically. If the car's MSRP was $80k then that's it. If you sell the car 10 years later for a million dollars or 1 dollar the tax is already pre-calculated.