The short of it is, the state KNOWS many people avoid the actual sales tax by deliberately cheating on the Bill of Sale. What else would you expect them to do? Wouldn't you be angry at your state bureaucracy for NOT trying to address it, when the only way for them to recover that loss in taxes is to increase taxes on everyone - both cheaters and non-cheaters?
Ct does that. I bought a car with a sales price of $ 7500. When I registered the car they charged me tax based on that amount. About a month later I get a letter from DMV saying that after review using what ever valuation books they use that the car was was worth about double what I listed and wanted me to pay the difference on top of what I already paid..
I remember this insanity after I moved to CT... but it's just "business as usual" for those who live there: First you pay sales tax when you buy and register the car.. THEN you have the privilege of bending over and paying "property tax" EVERY YEAR on the value of your vehicle(s). I moved to MA, then to NY and the total we pay in taxes is higher than CT as an overall %, but somehow it doesn't chafe me when it's only income, school and real estate property tax, and not a perpetual tax on my toys.
NY is reputed to check book value vs Bill of Sale at the time of sales tax/registration.. and also reported to check purchase vs sale price upon RESALE of the car, so the state can possibly track Capital Gains you earn on the re-sale, even private transactions.
So, since the cars I own were all bought far below market value, in distressed condition, and I fix them up, my Bill of Sales always include a written description of their condition: Non-roadworthy, etc, etc. Aaand I keep records of the work I do to the cars, the parts I buy, sales receipts and all.
Fun stuff.
- Art
