Punishment for repairing my own vehicle

Got a vehicle awhile back for a pretty good price, it needed some work....fixed it up mostly myself. Farmed out a few things.
I had plenty of time! Covid. Work from home, etc.
It could still use some attention here and there but overall it's good enough for me.

Got a letter from the state today.
They want me to pay 6% tax based on NADA retail which amounts to well over 3x what I paid for the vehicle.

I called the guy listed on the letter, overall he was a nasty jerk just as expected, and he seemed to really want to give it back
to me, and act like an A Hole when I voiced my frustration that this was unfair. Typical Entitled "I am an authority" attitude.

Letter says they want receipts for every little thing from the "dealership or authorized repair shop who did the work", which I don't have.
I did 99% of it myself at home. I bought things from wherever I could, Facebook marketplace
or wherever. There aren't receipts. I did not pay myself.
(If I did, I'd pay myself the full retail value of the vehicle and make them go away).
The guy says they will consider what I have done to it I just send him a list of the work and what I paid for parts,
based on some sort of fuzzy labor metric that he won't divulge. Personally I think he is FOS/the letter states receipts are required.
I'd prefer not to create a list that doesn't get read and gets thrown away.

So now I have two choices:

1. get appraisal for the vehicle as it sits,
supply those along with statements of the work done and estimates of the work needed
to basically make the vehicle in like new condition.
Basically run around and waste a whole bunch of time trying to prove it's worth less than they
think it is, which I'm sure I can do, but I also have to waste lots of other folks' time getting estimates for things I don't intend to do, but would
be needed to elevate it to a true blue book retail levels. I got a killer deal on the vehicle for several reasons.

2. Just pay the idiotic tax, which I don't want to do not 100% out of being cheap but because the letter says "If you agree with this, then pay up, chump".
.....Because in principle, I definitely don't agree. The thing started off as a turd, and I made it pretty respectable,
I was almost kinda proud of it, sorta, but now I'm being punished for my work.

Honestly I am tempted to call the jerk back again and ask him
"Much as you know I disagree, if I just pay this to save the time and effort, is it considered admission of guilt?"

I was livid for a few minutes and typing this out this helped calm me down. Just a vent.

What would you do?

SMH

Not quite following. How is they're coming back after you for sales tax after the sale? Didn't you pay the tax at the time?

Or.....

3.- use the vehicle to move to a less corrupt state.

This!

I paid sales tax at title transfer time.

Title transfer only requires a stated price paid.

If they don't believe what you paid and decide to question it, they can call you out later and this is how they do it (always wondered how that was done).

Got this stupid letter several months later.

Corruption is the norm rather than the exception, pretty much everywhere.

If I could produce a bill of sale right now, it would put a stop to the inquiry, but I don't have one.
It's no secret such things are easily faked but I would never consider doing that.
The door company I bought the vehicle from went out of business, so there is no getting ahold of anyone.

Sounds like the DMV handed it over to the tax collectors to squeeze more money out of you.
I hate the self-entitled authority-abusers with a passion that requires my vilest profanity.
Couple ways around that:
An appraisal - heck, I'd do it from an info package that would legitimize it - from one of us.
Or you can do it yourself, really all that's needed is a letterhead and different contact info than yours.
Grab a pack of Repair Invoices from Staples, etc and go to town, again different contact info.
You could use me for that but I'm in Idaho, so not very plausible.

How accurate of an appraisal (for value at the time of purchase) can I get, for a vehicle which is no longer in the condition it was when I purchased it?

For Ha-sies, a submitted bill of sale with the overhead door company letterhead from a website and signed Respectively, Hugh Jorgan (if he'll let you) would be pretty clever.

Wish you success in resolving. The build thread you did was a good read.

For an appraisal, you have the "before" pictures.

Had a second, much nicer talk with Mr. DB.
Asked more questions and proposed a few scenarios for future reference/so this doesn't happen again.

Questioned him about the year delay which weirded me out, he said it was a deliberate Covid relief directive to
not chase people, but since January 1st over 2000 letters just like mine have been sent.

My earlier assumption was incorrect.....
Bill of sale from an individual or any non-dealership is meaningless to the state.

If I ever embark on something like that again, turns out the best protection is get an appraisal
and/or take it to a dealership and get a "what would you give me for it today, as it sits" price,
before doing any work. Mr. DB says they would seriously consider that. So, that's the future plan
if I go this route again.

It's one thing to waste my own time running around getting estimates for stuff I don't really intend to do, to meet retail value....
(I repaired the important stuff), but I can't jump into a time machine and get an appraisal from the past, and I'd feel bad wasting
the time of the businesses I would be visiting to pile up the estimates. Rather not and won't.

So I will just pay the stupid thing and chalk it up to lesson learned.

If I do it again, will get an appraisal to cover my posterior.

Here in South Dakota , they ask for a bill of sale on everything .. on old cars , anything under $1500 no tax ..

Its pretty easy to get most sellers to make you a bill of sale I print one of the net and bring it with, old cars did not used to be tough without titles but, they have closed that loop hole now , the man wants all old cars off the highway's

On older cars here the tax on private sales is inexpensive, unless the car sold for over $15,000.
They used to be pretty loose on these sales, you’d fill out the paperwork and say you paid under $15,000 and all was good.
Now they take any reported sale under $15,000 to be a lie. Even buying a 4 door AMC Ambassador will have you receiving a letter from the state later saying they know you paid over $15,000 and now you owe tax and penalties. So it is very important to document the sale on both ends and have ironclad paperwork to prove you paid less than $15,000 on an older car or the state will screw you.

Last time I checked, here in TX they go by book value now on old(er) cars because too many people had a 10+ yr old car that their friend sold them for $200. Back when I had my Caravan, this kinda sucked because I honestly did pay $200 for the vehicle! Instead they taxed me on book value of $1300. I forget the exact amount out of pocket, but it wasn't too painful.

I always wondered if this would still apply if you had a notarized receipt from a dealer that you paid well under book.

FWIW, in Ontario the tax is based on the book value of the vehicle. If your bill of sale price is close then you pay on that value. Anything else, like buying a wreck or badly damaged vehicle, requires an appraisal - which is about $100 give or take. So do the math whether the appraisal is worth it or not. You really can't blame the government, while the OP may be an honest guy, how many people try to screw the government of vehicle resale tax !!

1976. I bought a brand new price leader el cheepo six stick Chevy C10 pickup for $2010. What a piece. Two months later I sold it and bought a new 1976 Monte Carlo. State of Meechigun sent me a letter alleging that the guy that bought my truck couldn't have paid as little for it as what he told the Secretary of States office when he applied for his Michigan title. He had put down the exact amount I sold it to him for. The state of Michigan is full of these pieces of carp leaches that work for the state. Never did respond to the letter as Michigan had requested. F 'em.

I have found that in ND you have to protect yourself. I bought a 1969 roller Roadrunner for $4K. Went down to get the title transferred and I brought up the topic of price. Told the clerk it may seem low but this is a shell with parts missing. She said "oh" and pulled out this DMV form that documents vehicle condition. So I marked no engine, no transmission, no interior, and no glass (which were all true). I got a copy of the form, paid the fees and haven't heard a word since. I had a total rustbucket of a '67 Barracuda notchback that one of my friends just had to have. Sold it to him for scrap value. The DMV had a kitten over that and my friend surrendered. I told him to fight it, the price was legitimate, but he felt that this was the best way. I guess it was his money.

Own a small business and see these leaches come out of the woodwork. I mean they are just employees but you'd swear they get a commission on what thyey collect they are so aggressive.

Small business owner pay tax on "personal property". So you basically have to pay tax on everything you insure or depreciate. All your vehicles, equipment, computers, etc. About 5%. EVERY EFFING YEAR. THOUSANDS OF DOLLARS JUST FOR THE PLEASURE OF YOUR COMPANY AND EQUIPMENT SITTING IN THIER CITY. They actually want you to pay tax on every pencil and office chair. We already pay 100 other taxes. The government thinks like most employees, "It sold for $100 so they MADE $100" NO!!!!!! Rent, payroll, repairs, roof, pallet racks, parking lot, paint for the building, machine repairs, computers, utilities, and on and on. That $100 is only $20 profit IF YOU ARE DAMN LUCKY.

I always remember the story about John Wayne Gacey, the clown serial killer. He was a government flunky that would patrol neighborhoods and write tickets for lawns being too long. One person said he would bring a phone book of paperwork and pictures if you fought him in court. HE WAS A SERIAL KILLER!!!!

call it in stolen ....and sell it out of state..

I sold my sister a car a few years ago. Gave her a decent deal on the car but didn't give it away and then she had the same problem. Some idiot from the State called her and told here she owed more tax because the car was "worth a lot more than the bill of sale". She told them that the car is worth what I paid for it. I don't recall what happened but I think she had to pay some extra tax.

Basically it is the curse of the small time tyrant. Some people in small jobs try to inflict as much pain as possible.

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..

Know anyone that holds a state license to sell cars? Here in IL, any licensed dealer can give you a current wholesale value of the vehicle in question. If the state licensed dealer signs the paper stating the car has $$$ value wholesale, the state has to accept that value. That value has to be within reason of the average similar vehicle value (or the paper states why it is low), but that number could be considerably less then the states numbers. You probably end up paying more money for tax, but it may be far less then the State is demanding.

I've arrived at the point where I get that wholesale value from my friend that owns a used car dealership here in town every time I buy an old car. I pay the tax due on that amount right up front, but its always before I invest much money, or done any work. I figure that wholesale value tax is part of the purchase price. If I got a great deal on the vehicle, even with the higher taxes, its still a great price. The state is happy, and I don't have any problems.

Get a wholesale value from a dealer on the car as it sits now, and pay the taxes. You have just paid for your education, buy the next one with more knowledge.

The days of buying (and selling) parts on line without paying sales tax are about over. The states want the money they think they should have coming. You may get by with a few small parts here or there, but any big ticket items are now pretty questionable. If you tell the state the car you bought cheap doesn't have a motor, and suddenly your driving the car around, the states wants to be sure you paid them tax on that motor you bought, and they want to be sure the guy you paid the tax to, sent the money to the state. Its only going to get worse. Gene

Arlington, Va. did that to me back in the mid-80's (among many other less-than-ethical behaviors I won't go into right now because it's bad for my blood pressure). I bought a good-running '82 Mercedes 300SD, although with faded paint and 180k miles, for $7500. Went to the tax office to get my county sticker, and lo and behold my "new" car is now worth $12,200, full retail with no allowance for condition, so that's what I paid property tax on

I told the woman that she could give me $11K, I'd hand her the keys and walk home. Didn't help. Crooks.

Check what they want for the appraisal. Here it's a form that you can get a used car lot to fill in it's not the in depth kind that you usually think about when you hear that word.

The fact is that the DMV can flag a deal for more tax at the time the vehicle is being registered. They wait several months before demanding more tax because they figure people won't be able to provide as much documentation because it gets thrown out or you can't find the seller. This happened to me twice in the last few years. Both were State surplus auction vehicles that were a pretty good deal. Luckily I had documentation so I sent it in and the tax collector went away.

I've NEVER heard of this happening in Michigan in my 63 years. What BS!

Do they try & tax people having garage sales???

Just keep in mind:

https://www.google.com/maps/dir/Michigan/Florida+Panhandle,+Florida/@37.0264341,-94.604734,5z/data=!3m1!4b1!4m14!4m13!1m5!1m1!1s0x4d4caa3dc7ca0411:0x97dd48597a62c9b3!2m2!1d-85.6023643!2d44.3148443!1m5!1m1!1s0x88914188ccd376ab:0x7660c78d509ff7e7!2m2!1d-87.2168913!2d30.4212643!3e0

It's only 16 hours away...

I kind of get hung up on the entire concept. Why is the government entitled to review and tax a transaction between two private parties? I'm happy to report that is not the case here in Arizona.

Every state has laws like this on the books. Some states probably enforce more than others.

Gacey owned a small construction company, you are thinking of the BTK killer, Dennis Rader.

Zippy was this letter sent to you by registered or certified mail where it had to be signed for? This sounds like the guy or company you bought it from is under some sort of review or audit.

Are we talking property tax or sales tax?? I'm confused

here, you have to get a permit to have a garage sale. when this was first brought about, the city said it was to combat a few persons that had been doing ongoing garage sales for weeks and months at a time. to fix this problem, the permit would be for three days, and would be a tool to be used to shut down the permanently run sales. the permit was free. it wasn't long before that "free" permit was $5.00. i think it's $10.00 now.
if a way to collect sales tax were to be figured out when you sell your buddy a wrench you never use anymore, or a tire and wheel that doesn't fit your current ride, they would be all over it !

Knowing the actual dollar amount of the tax would be nice. Sometimes it's wiser to pay than to be in the government's sights. Petty bureaucrats often wield enough power to make your life miserable.

Long ago I did something and the irs hit me with a 13k back tax request. Either I or they missed something but I sent a bank check that week and never heard back from them.

You are correct in your serial killer trivia

I bought a 2009Accent several years ago for $300. Engine was trashed and it was wrecked in the left front. I transferred the title, paying the tax on the $300. Several months later I get a letter from the state of FL stating the sale price was less than the average value of the vehicle. They wanted signed letters from the seller and the buyer that the stated sale price was correct. Well I couldn't do that since the sale was facilitated through a third party, a service advisor that no longer worked at the dealership so I had no way to contact the seller since I didn't have their contact info. I called the FL DMV and explained the situation and why the car was so cheap. They told me to just send a letter explaining the cars condition and how I bought it. No problems after that.
Not every state is corrupt.

I know my serial killers.

Hey, what about that $50K I let you borrow? I guess you missed paying me also, just send me a check and I let those hard feelings go....buddy



Seriously though, you should have questioned that IRS bullchit, I got hit by an IRS "letter" saying I owed them $40K....dammed if I was going to pay that!, funny thing is they wouldn't give me a local office that I could visit to show my displeasure, they just wanted a check, in full!, after several months and talking to IRS individuals in almost every State, funny my State didn't have IRS employees or offices, who would have thunk? and with every argument with a new agent the amount slowly went down review after review....eventually we settled on $11K due to a filling "error"....

similar experiences here.

last fall i bought a 2009 VW Jetta so i could do a smyth ute project .i only paid $200 for the car. i also got a letter from the DMV saying i owed more taxes on my purchase a couple of months later.
the car was rusty as hell, covered under VW rust warranty and repaired for free. ( i did the repair work and have invoices billing VW $12K for rust repairs) it also didn't run. i had to put $2500 in parts to get it daily driver reliable. i still have to figure out a ECM check engine light so i still might have to buy a $1K factory ECM, now my cheap car might not be so cheap.
i took pics of the car when i bought it. i also sent copies of the parts invoices of everything i bought. i sent everything to the DMV and to my surprise about 1 month later i got a letter back stating i didn't owe anything for taxes.

Nope. Not true. No sales tax on private vehicle translations in Arizona. A very quick web search indicates that is the case in New Hampshire, Delaware, Montana, Oregon, and Alaska, and Washington, DC also.

Wow. That seems crazy. People in California seem to never pay more than “$500” for any car and it’s against DMV policy to even ask them about it.

I realize the government can be pretty thorough in the way they write the laws. But I would have to think the burden of proof indicating the value you listed was false would fall on them. Furthermore THEY would need to provide documentation of the condition the vehicle was in. As far as I’m concerned you did your part and are innocent of any falsification unless they can prove otherwise which is impossible because it’s not true. What a money grab 🙄

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?



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

Here is what happens. You only have to say I paid what it was worth. They baited you with a non registered letter and you bit.

Ummm how much tax should I of paid on 360k stock sale profit? Someone missed something and it was not me. So much for trying to be cryptic. My point was to pay the man and move on is a smart thing to do at times.

I know you said you were going to pay it, but it may not hurt to go to a dealer and explain situation.

More than once I have had to deal with similar situations and you would be surprised how many businesses are tired of being ripped off by the government and are more than willing to tell the truth on the original value of the car. I have had a few tell me they will put whatever I want but I stick to the truth.

Just a thought.

Kudo's for being the honest type.

Be happy that you're not in ILL-inois. The state is so hungry for money that they now have a tax on cars being traded in.
I have nothing to trade in, but have been wanting to purchase a new vehicle for at least 3 years. I refuse to do that while living in Illinois. I will buy a new vehicle once i leave the state (just retired and working on that now)




They're working on that. A cashless society is their goal...EVERY private transaction will one day be recorded, monitored, and taxed accordingly.
No more paying $20K for a classic car and reporting it as $500. They will know what you paid.

What are the actual repercussions of telling them to pound sand? If it is indeed a SALES tax you owe some percentage of that nothing more. If they charge you more, it is not a sales tax but and transaction fee.

I wouldn't pay it and I wouldn't phone them again. I would send them a letter, certified, return receipt requested. The letter would state what I paid for the car, That it was an arm's length transaction at fair market value, that I paid the appropriate tax, And that there is nothing further to discuss. I would inform them that if they disagree, that the burden of proof is on them and to submit their evidence to you for consideration, and that all correspondence must be by mail. Doubtful you would ever hear back. I have been in business for 40 years, and have been constantly harassed by petty, small minded, power hungry bureaucrats. Local, state, county, federal, IRS, EPA, Dept of Labor and industry, etc. One thing I have learned is to never, ever, communicate verbally or via email. Always and only via certified mail. It diffuses their ability to enjoy the power trip, raises concern that they could be held accountable for mistakes, and all but the most hard-core will close the file and move on to an easier mark.

Brilliantly stated...

they have been doing that here for years now.. too many people over the years claimed they paid 100 bucks for a car worth 20k..lol all it takes here is a signed form from the seller saying that they sold it for what you claimed when titling it..

Couldn't more!

I've got something similar going on here in WV. The witch at the DMV wouldn't let me transfer a signed WV title, and told me that i had to have the VIN verified by LEO. I looked up there rules and there's nothing about that in there, and verification is only needed if you don't have a title or the VIN tag is missing. There's a fee involved and I need to take time off work because they're only open during business hours.

I'm pretty sure their point is to squeeze me on sales tax, like they're doing to Zippy, or maybe it's a ploy to get a cop on my property to nose around. Either way I wish I would've known this was coming before I fixed most of what was wrong with it.

just don't title it in your name.. sell it and move along..you never owned it..

LIKE

several years back, my cousin charlie had a pretty nice 55 chevy.
he traded it even, with a guy that had a 34 ford coupe with, what was thought to be, a blown engine. [that turned out to be only a couple of bent pushrods.]
both cars were about equal in value, with charlie's 55 being a nicer car overall.
the guys went to the notary to change titles, pictures were taken to prove each car's condition, and each guy signed affidavits saying this was a straight across even trade with no money changing hands.
well, a few months go by, and charlie gets a letter from PENNDOT saying in effect, we want tax money.
so just to respond to the letter, he went to the notary used in the original transaction. that guy came up with a couple of forms to sign, and charlie then declared he paid $100.00 for the 34. he sent in $6.00 tax along with a copy of the original PENNDOT letter and the forms the notary came up with, and never heard another peep from harrisburg.
like the famous movie quote : "it's all about the benjamin's !"...............

So what do you do when you buy something and want to keep it?

It's bad enough that they charge me a tax every year on things I already own and paid sales tax on. Making up the rules as they go is what has me spun up about the whole thing.

When I bought my 49, I had pictures of it in as bought condition. Then I transferred the title into my name and paid the tax due on the $600 purchase. After I received the title to the 49 with my name on it, I started working on it. If the State come back with wanting more money, I still have the picture proof of the as bought condition. I've played in this movie before.

I have to wonder if some of this additional revenue they want may be based on what we buy the insurance coverage for. IL is a required insurance state. I'm pretty sure my insurance sends them info on my coverage. If I have a Hagerty coverage on that 49 I say I paid $600 for with a value of $20,000, some bureaucrat might say, look, this guy has this vehicle covered for 20 G and he said he paid $600 for it 2 years ago, He must have underpaid the tax on it...

I had the same experience. My notice came, several months after purchasing in 2018, from a government official noting that "Michigan State law states the tax owed is on the amount paid or actual value, which ever is greater"

SOS stated the vehicle was worth more than double what I paid.

I was able to get an actual receipt as I purchased it from my employer. I also was able to get a written appraisal from a dealer noting what it would have been worth pre-repair without to much hassle.

I ended up owing a bit more tax, but not what they initially requested

As far as repercussions, your dealing with the Secretary of State (DMV) they can void your registration, suspend your license, garnish your tax return...

Agreed 100% Jon, Secretary of State is nothing to mess with.

In times like these sometimes it's best to make it go away as easily as possible, drop it, get on with life, and call it a lesson learned.

....being me, I did write "THEFT" in the memo area of the check, and sent a letter explaining
this did not constitute an admission of guilt, but only a lack of desire to waste time on the issue.

Take care.

if people wernt putting down they paid 500 for 5000 plus veh\icles we wouldnt be here

Well, if we're going to go down that path, if the greedy government workers and politicians weren't fleecing the citizens every time they buy and sell a vehicle, people wouldn't be understating the value.

I don't know where Ted got that. Zippy explained the situation in his OP just fine. He didn't undervalue his car, he got taxed on the improvements he made to the car. Maybe if the government didn't think it was entitled to vigorish every time money changed hands?

At this point I am just glad to make it go away and be done with the whole thing.

They can have it.

As upset as I initially was, it's to the point now where the loss isn't really noticeable anymore.

A little time can make a big, big difference.

being a small business owner, last year I was notified that I had to pay an additional "personal property tax" on business equipment, HUH ??? I gave it my tax guy, his bill was more that theirs Anybody up for a tea party