Barter for vehicles in a sales tax state?

[Balog]

I live in WA, one of the few states left with no state income tax. Consequently, they take their sales tax very seriously. When you go to the Department of Licensing to transfer the title on a vehicle, they ask how much was paid then charge you sales tax on that amount.

So, if I trade goods or services for a vehicle, what do I answer when asked how much I paid? How does the state determine the amount of sales tax to levy in a pure barter scenario?

[BobR]

At that point they would probably look up fair market value and tax you accordingly. If you do barter for vehicle can you get a reciept from the prior owner stating a dollar amount?

Thw last few guns I bought from private parties and had shipped to WA I explained our tax situation to them and they included a bill of sale for a small amount with the gun. My FFL guy says I got some really good deals on guns! 

bob

[dogmush]

In FL (also no income tax) it's more or less the norm for seller to but a trivial amount on th title for tax purposes.  Some folks have been known to just leave that blank and let the buyer fill it in.  One of my friends who works at the Tag Office told me once that about 50% of used vehicles in FL sell for $1. 

If I had bartered for a vehicle, and cared strongly about making sure the state got their share I would estimate the dollar value of the goods and/or services.  That's probably your best bet, rather then trying to explain a trade, come up with a reasonable $ amount, put it in there and move on.

[MillCreek]

I think they look up the Blue Book value and charge you tax on based on that.  I once sold a car to my son for $ 1 and that is what the title office in Everett did.  This was about five years ago, but I think they still use the same approach.

[Monkeyleg]

In FL (also no income tax) it's more or less the norm for seller to but a trivial amount on th title for tax purposes.  Some folks have been known to just leave that blank and let the buyer fill it in.  One of my friends who works at the Tag Office told me once that about 50% of used vehicles in FL sell for $1

It's that way in Wisconsin, too. However, the revenue department doesn't like that. I've sold a lot of cars, but they only called once to ask the sale price on one of them. The guy had asked me to leave the price field blank. I had no choice but to tell them the real sale price. Don't know what happened to him.

[Hawkmoon]

My state wised up to the phony sales prices years ago. The use Kelly's Blue Book prices and set the sales tax based on the blue book value for that make, model, year and mileage. The only exception is for transfers between close relatives, which they still allow for $1 with no sales tax.

[Balog]

Interesting. So if one gets a genuinely good deal and honestly reports the price paid, they'll still charge you full price on the tax. Lovely...

[InfidelSerf]

I find deals.. every car I've bought used I paid $500 for.  Seems fair to me.

[Jamisjockey]

Interesting. So if one gets a genuinely good deal and honestly reports the price paid, they'll still charge you full price on the tax. Lovely...

Well, take solace in getting the gneuinely good deal at least! 

[geronimotwo]

in NY, the local gunshop tells me there is no tax on the trade in value of a purchase.  so if i were loooking at a $500 purchase but had a gun he would give me $300 for in trade, i would only need to pay tax on the $200 remainder, not the total sale.  call your local dmv.

[sanglant]

in NC if you give someone a car, they have to pay the taxed like they had bought it.

[Declaration Day]

In Michigan it's common to write in a lower price on the title.  Every used car I've sold, I asked the buyer what he wanted me to write for the sale price.

I have bought cars and done the same thing.  Sometimes the DMV clerk questions it, but they have no authority to amend the amount.  I just tell them the car was cheap because the engine is blown.

[cassandra and sara's daddy]

in va there is a 35 buck minimum tax unless they write gift

[erictank]

I think they look up the Blue Book value and charge you tax on based on that.  I once sold a car to my son for $ 1 and that is what the title office in Everett did.  This was about five years ago, but I think they still use the same approach.

Yup - got hit by that one in NY, I think it was, when I was there for Navy training.  Bought a battered old Toyota pickup for like $500, and was taxed on "fair market value", about twice that.  I told the woman at DMV - "You honestly think a rusted-out heap of a light-duty pickup with 150K miles is worth a thousand bucks?  SOLD!  It's out in the parking lot!"

Didn't make a difference.  The state wanted, and got, what THEY defined as their cut.

And my sister wrecked it three months later, while I was at sea on the carrier.

[zahc]

Interesting. So if one gets a genuinely good deal and honestly reports the price paid, they'll still charge you full price on the tax. Lovely...

Yep. I bought a Buick in TX for $4000 and paid tax on $5400. Gotta love it.

[CNYCacher]

in NY, the local gunshop tells me there is no tax on the trade in value of a purchase.  so if i were loooking at a $500 purchase but had a gun he would give me $300 for in trade, i would only need to pay tax on the $200 remainder, not the total sale.  call your local dmv.

Didn't know it worked that way with guns, but it does work that way with cars in NY.

[Firethorn]

In North Dakota I believe they go straight off of blue book.  Though you get to deduct the bluebook of your trade-in.

[tokugawa]

I believe the state of Washington has labeled it an excise tax, not a "sales" tax, so as to divorce the actual dollar amount paid from the tax. That said, I bought a nice van for 6K, it was a stripped out passenger van, no seats-when I went to register it, the lady wanted to charge me tax on a $ 12,000 vehicle. After showing her the actual ad for the van with the price listed , and the bill of sale, I was able to get a reduction to being taxed on a 8k vehicle- the point in this case was that the "blue book" van bore no resemblance to the one in question. All they have to do is get the condition wrong, or the trim level wrong, and it can increase the value hugely.