Need Help With Sales Tax - Ford Mustang Forum
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post #1 of 18 (permalink) Old 11-16-2012 Thread Starter
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Need Help With Sales Tax

Hey guys, I know this isn't quite the right place for this but I need some help, desperately. My mother and I don't understand this at all and don't know where else to ask. Just got a letter from the NJ Treasury stating we didn't fully pay the sales tax on my Mustang.

According to the N.A.D.A published value:
NADA Value : $17,725
Tax Based on NADA Value: $1,240.75
Less:Tax Paid: $826
Balance Due: $414.75

In the itemized written documents from the dealer, it shows the breakdown of sales tax which is $1,034.95 in the total cost of financing the vehicle.
So basically the car was listed at $14,785 + $1,034.95(7% TAX) = 15,819.95 (Total Amount financed).

We are from NJ and bought the car from a used car dealer in Queens, NY. We are so lost and any ideas about what all this is will be greatly appreciated. What is this NADA value? And why are they going off that if I the car was listed as a cheaper price?
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post #2 of 18 (permalink) Old 11-16-2012
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It probably has nothing to do with the NADA value.

NY probably has a lower tax rate than NJ. You paid the NY tax rate but when the car got registered in NJ it wasnít enough. Now NJ wants the difference.

This is easy to figure out:

What is the vehicle tax rate (plus fees) in NY?

What is the vehicle tax rate (plus fees) in NJ?

You owe the difference.

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post #3 of 18 (permalink) Old 11-16-2012 Thread Starter
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Quote:
Originally Posted by sqidd View Post
It probably has nothing to do with the NADA value.

NY probably has a lower tax rate than NJ. You paid the NY tax rate but when the car got registered in NJ it wasnít enough. Now NJ wants the difference.

This is easy to figure out:

What is the vehicle tax rate (plus fees) in NY?

What is the vehicle tax rate (plus fees) in NJ?

You owe the difference.
Well I believe NJ has a 7% sales tax rate. And if the car was listed at $14,785....then sales tax would be $1,034.95...which is what we paid even though we bought it in NY. It just doesn't make sense to me....

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post #4 of 18 (permalink) Old 11-16-2012
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Here in Calif if you buy a used car the DMV figures the sales/use tax based on it's book value. They could care less if you only paid $50 for a car. If it's book value is $1000, then you are taxed on the $1000.

This is probably what is going on.

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post #5 of 18 (permalink) Old 11-16-2012
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hmm, here in Missouri you pay what ever price the previous owner or dealer says you paid for the car, then you pay that tax amount. Either live out of city limits, or say you live at a relatives house out of city limits and you only have to pay county sales tax. When i bought my car, I gave $17,095 for it new at the dealership, and then since i don't live in a city was only charged like 3.6% sales tax

Maybe you could go to your local DMV and ask them why and whats the problem?

My 99 mustang, I paid $3500 for it, but the previous owner didn't fill out the title only signed it, so we wrote in $1,000 (im sure this is illegal and im not suggesting it) but it worked, only had to pay sales tax on $1,000

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post #6 of 18 (permalink) Old 11-16-2012 Thread Starter
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Quote:
Originally Posted by stevegt2012 View Post
Here in Calif if you buy a used car the DMV figures the sales/use tax based on it's book value. They could care less if you only paid $50 for a car. If it's book value is $1000, then you are taxed on the $1000.

This is probably what is going on.
At first I thought that too. But if in my Dealership papers I'm paying $1,034.95(7%) for tax purposes....why does the treasury only account for $826....

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post #7 of 18 (permalink) Old 11-16-2012 Thread Starter
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Quote:
Originally Posted by ShortySmalls View Post

My 99 mustang, I paid $3500 for it, but the previous owner didn't fill out the title only signed it, so we wrote in $1,000 (im sure this is illegal and im not suggesting it) but it worked, only had to pay sales tax on $1,000
haha I've heard of people doing this too.

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post #8 of 18 (permalink) Old 11-16-2012
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Quote:
Originally Posted by Brianwu View Post
So basically the car was listed at $14,785 + $1,034.95(7% TAX) = 15,819.95 (Total Amount financed).
re-read your documents, most or all dealers charge administration fees, document fees, etc. that add up to usually around 200-250 dollars. This is probably what your missing and that would be about right based on the letter your got from NJ

you payed 800+ in sales tax
200+ in fees

now NJ is requesting the defficiency in the sales tax you paid.
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post #9 of 18 (permalink) Old 11-16-2012 Thread Starter
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I took a picture of the itemization. It shows the "inclusion" of sales tax of $1,034.95. Later down the document it shows all the fees and what not added on to the very total at the bottom.
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You pay vehicle taxes based on where you live and where you registered the car. Not where you bought it. There must be an appeals process.


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I agree with GTBob985, however there are some quirks of how states handle it.

In most states they collect their sales tax at the prevailing rate in your state when you register the car. If you have a bill of sale showing you already paid the tax in another state they will give you credit for taxes already paid in that state. If your state tax rate is higher, you will pay the difference between the two states; if its lower you don't get any back.

Why don't you just call or visit DMV and let them help you figure it out? We can all guess how your state works, but that does not help you resolve it. Based on what you have provided, I think they just misread the form and gave you the wrong credit for the tax paid in the other state.

By the way, some states may use NADA value instead of actual price paid, but this is usually when the sales price is way out of whack compared to NADA. Many folks used to try creating a dummy bill of sale for a lower price to save taxes, and DMV caught on to that scam a long time ago.

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No matter what the reasoning itís a safe bet that you will be paying the bill NJ sent you. The chances of it being a mistake a slim to none.

You donít have to understand something for it to be true.

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post #13 of 18 (permalink) Old 11-17-2012 Thread Starter
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Quote:
Originally Posted by mustang78248 View Post
In most states they collect their sales tax at the prevailing rate in your state when you register the car. If you have a bill of sale showing you already paid the tax in another state they will give you credit for taxes already paid in that state. If your state tax rate is higher, you will pay the difference between the two states; if its lower you don't get any back.

Why don't you just call or visit DMV and let them help you figure it out? We can all guess how your state works, but that does not help you resolve it. Based on what you have provided, I think they just misread the form and gave you the wrong credit for the tax paid in the other state.

By the way, some states may use NADA value instead of actual price paid, but this is usually when the sales price is way out of whack compared to NADA. Many folks used to try creating a dummy bill of sale for a lower price to save taxes, and DMV caught on to that scam a long time ago.

Bruce
Yeah I'm going to go to the DMV this week to ask around. I just want to see where the Treasury got their numbers saying I only paid $826 when on my dealer document it says it inclusively added $1,034.95 because of sales tax.

Quote:
Originally Posted by sqidd View Post
No matter what the reasoning itís a safe bet that you will be paying the bill NJ sent you. The chances of it being a mistake a slim to none.

You donít have to understand something for it to be true.
Haha that's true. With some relief, my uncle stopped by today and we explained it to him and he said this has happened to him once before. He bought a car from out of state and NJ wanted some balance for taxes. He did pay the full tax and he had to contact the seller of the car to fill out an affidavit or something stating he did pay it and the balance was drop/adjusted. Hopefully this is the same case.

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I just went thru something like this I live in Ohio and drove
to Indiana to buy my car. The way Indiana does sales tax
is they take the 10 k they gave me for my trade before sales
tax and Ohio dont give a tax credit for trade so when i went
to get my plates I had to Pay tax on the 10k before i could get my plates.
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I have to agree with the others here. Take your paperwork to the DMV and get it sorted. That will work better. In the meantime enjoy your ride

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