Interesting question.
I guess it depends on how the law looks at the transaction(s).
The feds would say that you are responsible for the profit you made during the deal but is this one deal or two? When I transfer ownership to BJ is that the end of one deal and when I have to "Buy it back" is that a second deal?
An important thing to consider s that it is against federal law for you or your agent to bid on items that you own and are being auctioned. It's called Shill Bidding. The whole purpose of you signing ownership to Barret Jackson is so you can legally bid on it since you do not own it anymore. The fact you get a taste of the profits for Barret Jackson selling THEIR car that YOU USED TO OWN smacks of Shill bidding but apparently isn't considered such or somebody would have pressed charges for it by now. Imagine how you would feel when you offer $50,000 for a car and end up in a two person bidding frenzy and end up paying 100K for that car, only to find out the other person was going to profit off you paying more for the car.
So I figure that
Scenario #1 If I sell a car to an "Other guy" and he titles it and declares he paid $X then I am on the hook for the sales tax. At that point I no longer own the car. If I buy it back and re-title it in my name the "Other Guy" he is on the hook for sales tax also, and I own the car again. We both pay sales tax.
Scenario #2 If I sell a car to an "Other guy" and he returns it to me for a different price, but the title isn't transferred then I could try to squeak by without paying taxes because I never stopped owning the car. (I bet the state/feds would say differently)
Now replace the other guy in the above 2 scenario's with Barret Jackson.
Scenario #1 Sales tax is paid twice.
Scenario #2 Is shill bidding because I own the car I am bidding on.
My guess is that you pay sales tax on when you sell it to Barrett Jackson and they pay sales tax when they sell it to you on the auction block, and then you pay income tax on the amount of profit you made on the whole deal. I'm sure BJ's fees more than cover them paying sales tax and cut into your money accordingly.
Still I am not only speculating.
Except, the buyer is the one that pays the sales tax, not the seller.
I suspect that Barret Jackson isn't buying your car, they are probably selling it for you under an iron clad set of co-selling terms. You sign the title and hand it to them, they sell your car for the pre described fees. They pay no sales tax, you sell for no reserve, you have no recourse. the new buyer gets your signed title.
You bid and buy based on a buyer's number, that may, or my not be in your name. If you are the winning bid, you get to pay Barret Jacksons buyer fees and sales tax based on the final bid. Since you only signed the title, it really never left your name until the new owner was the highest bidder, since that was you, the title itself never left your name, but you will also get to pay the seller's fees. You pay the sellers fees, the buyer's fees, and probably sales tax just to keep your car.
The guy was probably unhappy because he was shilling up the price and the price went higher then the real buyer wanted to pay, or maybe the buyer figured out he was bidding against the car owner and wanted to teach him an expensive lesson.
