Contesting taxes due on purchase of a used motor vehicle

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
panhead
Posts: 160
Joined: Fri Feb 22, 2013 10:53 am

Contesting taxes due on purchase of a used motor vehicle

Post by panhead » Sat Oct 28, 2017 11:08 am

I purchased a used vehicle a couple of years ago and the kbb value was around $11k while my purchase price was around $3k. The kbb appears way off base, the vehicle is a 1986 motorhome. I'm in Massachusetts. It appears I can contest this, though I'm not sure of exactly how, and if the fact that a couple of years has passed makes it impossible at this point. At my purchase price vs kbb, I paid almost $500 more in taxes than I believe I should have, so if I have to spend an hour filling out a form to try and contest it, I consider it worth my while. I planned on contesting this right after I registered it, but the paperwork got put away and I forgot about it until I just came across the paperwork the other day.

Has anyone done this? Any input I would appreciate.

chevca
Posts: 424
Joined: Wed Jul 26, 2017 11:22 am

Re: Contesting taxes due on purchase of a used motor vehicle

Post by chevca » Sat Oct 28, 2017 11:13 am

If you forgot about it, how important is this to you? :happy

Filling out a form could turn into days or weeks of drawn out back and forth. Contesting it may not do any good in the end anyway. They can always say no, right? I guess it depends on if it's worth the potential hassle. It wouldn't be worth it to me.

panhead
Posts: 160
Joined: Fri Feb 22, 2013 10:53 am

Re: Contesting taxes due on purchase of a used motor vehicle

Post by panhead » Sat Oct 28, 2017 11:17 am

chevca wrote:
Sat Oct 28, 2017 11:13 am
If you forgot about it, how important is this to you? :happy

Filling out a form could turn into days or weeks of drawn out back and forth. Contesting it may not do any good in the end anyway. They can always say no, right? I guess it depends on if it's worth the potential hassle. It wouldn't be worth it to me.
Yeah, it's not super important, and its true that they could certainly just say no, but if it's a simple form with required documentation, I'd do that. If it got to be much more of a hassle, I wouldn't....but hey, $500 could be a couple of really nice dinners for two!

123
Posts: 2517
Joined: Fri Oct 12, 2012 3:55 pm

Re: Contesting taxes due on purchase of a used motor vehicle

Post by 123 » Sat Oct 28, 2017 11:20 am

It looks like Mass has time limits on requesting a refund or adjustment on these kinds of taxes:

From http://mass.gov/dor/local-officials ... xcise.html

"Applications for abatement must be filed with the local board of assessors within 3 years after the date the excise was due, or 1 year after the excise was paid, whichever is later. If the taxpayer's application for abatement is denied, there can be an appeal to the Appellate Tax Board (ATB)."
The closest helping hand is at the end of your own arm.

panhead
Posts: 160
Joined: Fri Feb 22, 2013 10:53 am

Re: Contesting taxes due on purchase of a used motor vehicle

Post by panhead » Mon Oct 30, 2017 7:28 am

123 wrote:
Sat Oct 28, 2017 11:20 am
It looks like Mass has time limits on requesting a refund or adjustment on these kinds of taxes:

From http://mass.gov/dor/local-officials ... xcise.html

"Applications for abatement must be filed with the local board of assessors within 3 years after the date the excise was due, or 1 year after the excise was paid, whichever is later. If the taxpayer's application for abatement is denied, there can be an appeal to the Appellate Tax Board (ATB)."
Thanks for the link. I'm not sure it's the same thing though. I would like to contest sales tax, this appears to only apply to excise tax?

sport
Posts: 6071
Joined: Tue Feb 27, 2007 3:26 pm
Location: Cleveland, OH

Re: Contesting taxes due on purchase of a used motor vehicle

Post by sport » Mon Oct 30, 2017 1:05 pm

This seems strange. In my state, sales tax is a percentage of the actual sale price.

User avatar
oldcomputerguy
Posts: 1973
Joined: Sun Nov 22, 2015 6:50 am
Location: In the middle of five acres of woods

Re: Contesting taxes due on purchase of a used motor vehicle

Post by oldcomputerguy » Mon Oct 30, 2017 1:23 pm

I guess I'm confused... did you pay taxes on the KBB number, or on the number you actually paid? Why would you have to pay taxes on a fictitious number out of a book rather than on the actual sale price as noted on the sales contract?

Edit: okay, answered my own question.

Massachusetts Department of Revenue, "General Rules and Calculation of Tax":
The sales tax rate is 6.25% of the sales price if the sale is made by a motor vehicle dealer or lessor registered with the Department of Revenue. If the motor vehicle is sold in a casual and isolated sales transaction, however, the use tax rate is 6.25% of the actual amount paid for the vehicle or the clean trade-in value (book value) of the vehicle, whichever is greater.
Did you buy the vehicle from a dealership, or from the previous owner? If the latter, it looks like you're stuck.
Last edited by oldcomputerguy on Mon Oct 30, 2017 1:27 pm, edited 1 time in total.
Anybody know why there's a 20-pound frozen turkey up in the light grid?

SteveKL
Posts: 498
Joined: Mon Sep 03, 2012 8:13 pm

Re: Contesting taxes due on purchase of a used motor vehicle

Post by SteveKL » Mon Oct 30, 2017 1:26 pm

sport wrote:
Mon Oct 30, 2017 1:05 pm
This seems strange. In my state, sales tax is a percentage of the actual sale price.
In my state (Washington) the DMV uses a proprietary value guide similar in scope to Kelley Blue Book. What someone actually paid is of no consequence to the value assigned for purposes of assessing sale tax or use tax.

User avatar
alpenglow
Posts: 460
Joined: Tue May 31, 2011 12:02 pm

Re: Contesting taxes due on purchase of a used motor vehicle

Post by alpenglow » Mon Oct 30, 2017 1:29 pm

sport wrote:
Mon Oct 30, 2017 1:05 pm
This seems strange. In my state, sales tax is a percentage of the actual sale price.
Unfortunately, I think there is a lot of dishonesty with regard to vehicle bills of sale to avoid sales/excise tax. I can see why they might use another pricing source for excise tax.

fantasytensai
Posts: 343
Joined: Fri Sep 30, 2016 3:30 pm

Re: Contesting taxes due on purchase of a used motor vehicle

Post by fantasytensai » Tue Oct 31, 2017 11:34 am

I fought like hell to try to get $600 back from USCIS, and I'm a lawyer (related advice, don't fight the USCIS). I probably spent 3-4 hours writing letters, when I realized that I charge $300/hour and I was throwing good money after the bad. So I gave up and went on with my life. A pretty good decision in hindsight.

runner3081
Posts: 768
Joined: Mon Aug 22, 2016 3:22 pm

Re: Contesting taxes due on purchase of a used motor vehicle

Post by runner3081 » Tue Oct 31, 2017 4:49 pm

SteveKL wrote:
Mon Oct 30, 2017 1:26 pm
sport wrote:
Mon Oct 30, 2017 1:05 pm
This seems strange. In my state, sales tax is a percentage of the actual sale price.
In my state (Washington) the DMV uses a proprietary value guide similar in scope to Kelley Blue Book. What someone actually paid is of no consequence to the value assigned for purposes of assessing sale tax or use tax.
I remember when they made that change and we were living up there.

Gone were the days of writing out a bill of sale for $1,500 on every sale/purchase :)

panhead
Posts: 160
Joined: Fri Feb 22, 2013 10:53 am

Re: Contesting taxes due on purchase of a used motor vehicle

Post by panhead » Wed Nov 01, 2017 8:12 am

sport wrote:
Mon Oct 30, 2017 1:05 pm
This seems strange. In my state, sales tax is a percentage of the actual sale price.
Yeah, that's the way they do it here. You pay the higher of actual price paid vs kbb wholesale value. It appears that with older vehicles the prices can be what I would consider way off of actual value. There is no way I could sell this vehicle for the amount I paid tax on.

panhead
Posts: 160
Joined: Fri Feb 22, 2013 10:53 am

Re: Contesting taxes due on purchase of a used motor vehicle

Post by panhead » Wed Nov 01, 2017 8:13 am

alpenglow wrote:
Mon Oct 30, 2017 1:29 pm
sport wrote:
Mon Oct 30, 2017 1:05 pm
This seems strange. In my state, sales tax is a percentage of the actual sale price.
Unfortunately, I think there is a lot of dishonesty with regard to vehicle bills of sale to avoid sales/excise tax. I can see why they might use another pricing source for excise tax.
Yes, this is why they went to this sytem I'm sure. Now, of course, you are at the mercy of a company (kbb/nada) which may or may not reflect the actual value of the vehicle.

panhead
Posts: 160
Joined: Fri Feb 22, 2013 10:53 am

Re: Contesting taxes due on purchase of a used motor vehicle

Post by panhead » Wed Nov 01, 2017 8:15 am

runner3081 wrote:
Tue Oct 31, 2017 4:49 pm
SteveKL wrote:
Mon Oct 30, 2017 1:26 pm
sport wrote:
Mon Oct 30, 2017 1:05 pm
This seems strange. In my state, sales tax is a percentage of the actual sale price.
In my state (Washington) the DMV uses a proprietary value guide similar in scope to Kelley Blue Book. What someone actually paid is of no consequence to the value assigned for purposes of assessing sale tax or use tax.
I remember when they made that change and we were living up there.

Gone were the days of writing out a bill of sale for $1,500 on every sale/purchase :)
LOL, yes, I remember when they made the change as well. I'm sure the fraud is why they changed the rules, but older vehicles can have a huge range of actual values and now it appears there is not much recourse in contesting the value.

panhead
Posts: 160
Joined: Fri Feb 22, 2013 10:53 am

Re: Contesting taxes due on purchase of a used motor vehicle

Post by panhead » Wed Nov 01, 2017 8:16 am

fantasytensai wrote:
Tue Oct 31, 2017 11:34 am
I fought like hell to try to get $600 back from USCIS, and I'm a lawyer (related advice, don't fight the USCIS). I probably spent 3-4 hours writing letters, when I realized that I charge $300/hour and I was throwing good money after the bad. So I gave up and went on with my life. A pretty good decision in hindsight.
Heh heh! Yeah, I have no plans to fight like hell, but if I can figure out how to contest it I will spend an hour or so filling out a form (plus asking questions here I guess :happy ) to see if I can recoup some of the $$.
I hear you loud and clear though, getting any money back from the state seems incredibly unlikely.

panhead
Posts: 160
Joined: Fri Feb 22, 2013 10:53 am

Re: Contesting taxes due on purchase of a used motor vehicle

Post by panhead » Wed Nov 01, 2017 8:18 am

oldcomputerguy wrote:
Mon Oct 30, 2017 1:23 pm
I guess I'm confused... did you pay taxes on the KBB number, or on the number you actually paid? Why would you have to pay taxes on a fictitious number out of a book rather than on the actual sale price as noted on the sales contract?

Edit: okay, answered my own question.

Massachusetts Department of Revenue, "General Rules and Calculation of Tax":
The sales tax rate is 6.25% of the sales price if the sale is made by a motor vehicle dealer or lessor registered with the Department of Revenue. If the motor vehicle is sold in a casual and isolated sales transaction, however, the use tax rate is 6.25% of the actual amount paid for the vehicle or the clean trade-in value (book value) of the vehicle, whichever is greater.
Did you buy the vehicle from a dealership, or from the previous owner? If the latter, it looks like you're stuck.
Hey, I bought the vehicle in a private sale. Yeah, I hear you, looks like a case of SOL.....

Post Reply