Double checking my understanding of sales tax on vehicles

[BehindBlueI's]

I want to make sure I'm correct on this: If you trade straight across, no cash changing hands in either direction, neither of you owes sales tax when it's time to title and register, just the normal title and registration fees. There's no 'minimum tax' or anything on vehicle sales tax.

 

[printcraft]

sale price is zero

 

[femurphy77]

They technically must be of equal value. A buddy of mine traded and the person that waited on him at bmv had a stick up his butt that day. They valued both vehicles and he ended up paying tax on several thousand dollars because "book sez".

 

[Born2vette]

They technically must be of equal value. A buddy of mine traded and the person that waited on him at bmv had a stick up his butt that day. They valued both vehicles and he ended up paying tax on several thousand dollars because "book sez".

Bill of sale signed by both parties should negate whatever the BMV thinks. The BMV even has an official vehicle bill of sale you can download and print.

https://forms.in.gov/Download.aspx?id=5521

 

[CHCRandy]

If you are trading for a new vehicle, just remember they will use the MSRP. When I recently traded, they gave me $21,000 trade in value and new car was negotiated down to $21,000....the sticker was $28K. I ended up paying taxes on $7000 difference, which I thought was bs.

 

[BehindBlueI's]

If you are trading for a new vehicle, just remember they will use the MSRP. When I recently traded, they gave me $21,000 trade in value and new car was negotiated down to $21,000....the sticker was $28K. I ended up paying taxes on $7000 difference, which I thought was bs.

Not a new vehicle and not from a dealer in this case, but that wasn't the way it worked when I bought my truck new. You had to pay taxes on the manufacturer's rebate portion but whatever you negotiated off the MSRP was not taxed.

 

[BehindBlueI's]

They technically must be of equal value. A buddy of mine traded and the person that waited on him at bmv had a stick up his butt that day. They valued both vehicles and he ended up paying tax on several thousand dollars because "book sez".

It'd be equal or slightly less on my end, so if any cash changed hands it would flow out for me. Negative purchase price? Just not sure how I'd fill out the form so the BMV would understand. (Trade + (-$2500)) would probably blow their minds. I do not have a high opinion of their ability or desire to think critically given some of my past interactions with them. Such as not understanding you can't have "Sr." on your birth certificate like you can "Jr." or that my proof of veterans status is good enough for veterans license plates but not good enough for a veteran's driver's license. I'm just afraid this is going to blow their minds and they'll have to call in a special accountant, two engineers, and a surveyor.

 

[DoggyDaddy]

It'd be equal or slightly less on my end, so if any cash changed hands it would flow out for me. Negative purchase price? Just not sure how I'd fill out the form so the BMV would understand. (Trade + (-$2500)) would probably blow their minds. I do not have a high opinion of their ability or desire to think critically given some of my past interactions with them. Such as not understanding you can't have "Sr." on your birth certificate like you can "Jr." or that my proof of veterans status is good enough for veterans license plates but not good enough for a veteran's driver's license. I'm just afraid this is going to blow their minds and they'll have to call in a special accountant, two engineers, and a surveyor.

 

[wcd]

It'd be equal or slightly less on my end, so if any cash changed hands it would flow out for me. Negative purchase price? Just not sure how I'd fill out the form so the BMV would understand. (Trade + (-$2500)) would probably blow their minds. I do not have a high opinion of their ability or desire to think critically given some of my past interactions with them. Such as not understanding you can't have "Sr." on your birth certificate like you can "Jr." or that my proof of veterans status is good enough for veterans license plates but not good enough for a veteran's driver's license. I'm just afraid this is going to blow their minds and they'll have to call in a special accountant, two engineers, and a surveyor.

You are giving the BMV way too much credit, they will not be able to figure it it at all.

when we moved from South Dakota to Boone Grove it took me a total of 3 trips to get an Indiana Drivers License, the astute clerk there insisted that I was a 350 pound African American male that owed back child support.

 

[BehindBlueI's]

You are giving the BMV way too much credit, they will not be able to figure it it at all.

when we moved from South Dakota to Boone Grove it took me a total of 3 trips to get an Indiana Drivers License, the astute clerk there insisted that I was a 350 pound African American male that owed back child support.

I got detained at a US Embassy once over a similar child support issue. Some dude in Illinois with my name except different middle initial. No idea what his identifiers were. Embassy personnel were smart enough to clear it up pretty quickly, though.

Conversation went something like this:

"Sir, do you owe any child support back in the US?"
No.
"How do you know?"
I don't have any children.
"...This is you, though, right?"
(looks at paper): No. Different middle initial. This guy's born in IL, I'm born in IN. Different social, from the last 4 digits you're showing me.
(looks at paper, looks at passport) "Yup, you're right. Let's sign that affidavit you came for."

 

[femurphy77]

It'd be equal or slightly less on my end, so if any cash changed hands it would flow out for me. Negative purchase price? Just not sure how I'd fill out the form so the BMV would understand. (Trade + (-$2500)) would probably blow their minds. I do not have a high opinion of their ability or desire to think critically given some of my past interactions with them. Such as not understanding you can't have "Sr." on your birth certificate like you can "Jr." or that my proof of veterans status is good enough for veterans license plates but not good enough for a veteran's driver's license. I'm just afraid this is going to blow their minds and they'll have to call in a special accountant, two engineers, and a surveyor.

Keep it simple, only tell 'em what they absolutely need to know. C'mon man you know the drill; only answer direct questions with direct answers.

 

[BehindBlueI's]

Keep it simple, only tell 'em what they absolutely need to know. C'mon man you know the drill; only answer direct questions with direct answers.

Absolutely. But they are going to ask when they see "$0" or "negative 2500 dollars" or "nunya" on the form. If this even happens, I'm just trying to value in the tax savings in my head as far as if I want to pursue or not.

 

[snapping turtle]

I’d family GIFT does well.

 

[woowoo2]

or that my proof of veterans status is good enough for veterans license plates but not good enough for a veteran's driver's license.

Same here.....

 

[russc2542]

Absolutely. But they are going to ask when they see "$0" or "negative 2500 dollars" or "nunya" on the form. If this even happens, I'm just trying to value in the tax savings in my head as far as if I want to pursue or not.

0
Why, you think they'd pay you tax on what you sold? Probably "miss" the - sign and try to charge you tax.


I've had conversations along those lines at work:
"Why were we charged Z?!"
"you weren't, you were charged X"
"But right here it says Z" (on some gobbledegook picture of a report)
"Well, that's about 5 layers of summarization and reports-on-reports from me so send me what you have"
*spends hours digging through their spreadsheets*
"You weren't charged Z, you were charged X and chargeback Y. X-Y=W. Some time between when I sent the information over to finance who sent it to your finance, who sent it to your management, who sent it to you, someone lost the "-" so you're looking at X+Y=Z which happens to be wrong"

 

[Keith_Indy]

I want to make sure I'm correct on this: If you trade straight across, no cash changing hands in either direction, neither of you owes sales tax when it's time to title and register, just the normal title and registration fees. There's no 'minimum tax' or anything on vehicle sales tax.

From what the BMV website states:

You get part of the excise tax back from the vehicle you sold.

Vehicle Registration Fees & Taxes

www.in.gov

If you have sold or destroyed (total loss) a vehicle, you may apply to receive a credit/refund of a portion of the Indiana vehicle excise taxes by submitting Application for Vehicle Excise Tax Credit / Refund – State Form 55296.

You are required to pay tax on the new vehicle.

Buying & Selling

www.in.gov

When you purchase a vehicle in Indiana, you must pay sales tax on the purchase price of the vehicle. If a vehicle is purchased from an Indiana dealership, the dealer will collect the sales tax and provide proof of the sales tax paid on an ST108 – Certificate of Gross Retail or Use Tax Paid – State Form 48842. If a vehicle is purchased privately, the sales tax must be paid at a branch when you apply for the Indiana certificate of title.

Indiana residents who purchased a vehicle from a state other than Indiana, including non-Indiana dealers, will receive credit for the sales tax paid in that state. If you paid less than the amount of sales tax Indiana would have assessed, you must pay the difference to Indiana at the time of the application for the Indiana certificate of title.

New Indiana residents are not charged sales tax when transferring their vehicle’s certificate of title from their prior state of residence to Indiana.

Zero sales amounts are usually a red flag for the clerk to investigate more.

You can always contact them and ask. Customer Contact Center at 888-692-6841

 

[BehindBlueI's]

From what the BMV website states:

You get part of the excise tax back from the vehicle you sold.

Vehicle Registration Fees & Taxes

www.in.gov

You are required to pay tax on the new vehicle.

Buying & Selling

www.in.gov

Zero sales amounts are usually a red flag for the clerk to investigate more.

You can always contact them and ask. Customer Contact Center at 888-692-6841

I get I have to pay tax on a private purchase, but my question is does barter equate to a $0 purchase price if no cash changes hands.

Fun fact of how screwed up/stupid the BMV is, when you call that number it gives you 4 options. Press 1, 2, 3, or 4 for various things. 1-3 are about paying for something or checking the status of your license. 4 is for "any other questions". Pressing 4 results in "you've pressed an unavailable option" and it repeats. Do it 3 times and it hangs up on you.

Not that I trust them to know the answer and stick with it, but they can't even get their phone tree right.

 

[DoggyDaddy]

I get I have to pay tax on a private purchase, but my question is does barter equate to a $0 purchase price if no cash changes hands.

Fun fact of how screwed up/stupid the BMV is, when you call that number it gives you 4 options. Press 1, 2, 3, or 4 for various things. 1-3 are about paying for something or checking the status of your license. 4 is for "any other questions". Pressing 4 results in "you've pressed an unavailable option" and it repeats. Do it 3 times and it hangs up on you.

Not that I trust them to know the answer and stick with it, but they can't even get their phone tree right.

Sounds like the IN Dept of Revenue. Go to the website, it suggests calling the phone number. Call the phone number and it says to use the website.

 

[BehindBlueI's]

I think I figured it out. I found a notice for dealers. You can deduct barter for "like/kind" trades. Car for car or truck, but not trailer for car/truck. Not sure how they'd value it if there is no purchase price.

Also confirmed: Rebates are subject to sales tax because the dealer is getting that money from the manufacturer so it's part of the sales price, just not coming from you. Price adjustments are not, so if they knock $4k off MSRP you should not be paying sales tax on that $4k.

 

[CHCRandy]

I think I figured it out. I found a notice for dealers. You can deduct barter for "like/kind" trades. Car for car or truck, but not trailer for car/truck. Not sure how they'd value it if there is no purchase price.

Also confirmed: Rebates are subject to sales tax because the dealer is getting that money from the manufacturer so it's part of the sales price, just not coming from you. Price adjustments are not, so if they knock $4k off MSRP you should not be paying sales tax on that $4k.

Man, they ripped me off then. Both of my last 2 cars. I bought my wife a Malibu using employee price discount and rebates....got it for $21,000 but they charged me tax on the MSRP which was 27K. That's $420 they ripped me off for. Then when I traded the Malibu for her a new Hyundai, they did same thing. I am gonna call them out on that next time.......