Auto Sales less than 80% of book value
I recently purchased a vehicle which had been wrecked, and needed extensive body/mechanical repairs- for considerably less than book value. The seller was moving away -wanted to get rid of the vehicle quickly, but did not want to fight with the parents over the selling price. The parents wanted more out of the vehicle. The bill of sale was not notorized and the seller is not available to confirm the selling price. The taxing agency has sent me a bill for additional taxes based on the book value, which is four times the purchase price-an unfair amount. Will the taxing agency help me locate the seller? What if the seller reports an amount that is different from what I paid (to prevent the parents from knowing the vehicle was sold for less?) I don't want to cause the seller problems with the parents, but also do not want the taxing agency to assume anything from my actions. If the taxing agency locates the parents or seller and they report a sales price higher than I paid...obviously the taxing agency will believe the seller over the buyer. How can I straighten this out? What are the implications if I just pay the demanded, unfair amount to be done with the whole thing? Would I be admitting any inherent wrong doing?
1 Answer from Attorneys
Re: Auto Sales less than 80% of book value
Your sales tax liability is based on the amount paid for the vehicle. Prove the amount of the transaction through a copy of your canceled check, cashier's check, etc. Surely you did not pay cash? The state revenue department often questions the amount of taxes paid on transactions, but you have a right to appeal and to explain why the amount of sales tax was less. This is not an unusual transaction. Vehicles, boats, houses, etc. often sell for less than fair market value. The agency will not likely assist you in finding the seller, but you shouldn't have to, but you should prepare an affidavit summarizing the transaction. Yes, you could pay the tax which resolves the issue, but there may be a penalty for your "underpayment."
Related Questions & Answers
Reported business profits My husband is 33% vested in an s-corp business. His... Asked 6/07/02, 2:15 pm in United States Florida Tax and Taxation Law
Tax basis of stock held in joint tenancy I am trying to establish the tax basis of... Asked 6/02/02, 2:40 pm in United States Florida Tax and Taxation Law
IRS Tax Lien How long does an IRS tax lien remain on file and remain collectible... Asked 5/30/02, 12:31 pm in United States Florida Tax and Taxation Law
Question on finding HJR192 of June 5,1933 I am unable to find anything relevant... Asked 5/19/02, 2:35 am in United States Florida Tax and Taxation Law
Taxable pensions I am a disabled police officer retired since 1986 at age 56 with a... Asked 4/29/02, 1:54 pm in United States Florida Tax and Taxation Law