Vehicle Transfer - Sales Tax/Gift

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has anyone bought a car private party and used the gift option to avoid sales tax on the vehicle? will the DMV investigate? what if it becomes a shady deal? I'm looking to buy a $9000 car and the sales tax for CA is like $700. Plus the car has a broken oxygen sensor so it can't pass the required smog check to transfer the vehicle? Any advice?

I know the simple answer is just to pay the sales tax and fix the oxygen sensor after I purchase it but I am just trying to SAVE money. Just curious if people do get away with it.

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That's something I like to call Tax evasion...

In my state, you can only give a gift to an family member in order to avoid the auto transfer/sale tax (ie. parent to child). For someone else, even if you sold your car for $1; RMV will base the tax on the full value of the vehicle.

Anarchist said: has anyone bought a car private party and used the gift option to avoid sales tax on the vehicle? will the DMV investigate? what if it becomes a shady deal? I'm looking to buy a $9000 car and the sales tax for CA is like $700. Plus the car has a broken oxygen sensor so it can't pass the required smog check to transfer the vehicle? Any advice?

I know the simple answer is just to pay the sales tax and fix the oxygen sensor after I purchase it but I am just trying to SAVE money. Just curious if people do get away with it.



In CA, the seller is responsible for the car passing Smog Check before title is transferred.

From CA DMV...


Smog Information

Currently, smog inspections are required for all vehicles except diesel powered vehicles, electric, natural gas powered vehicles over 14,000 lbs, hybrids, motorcycles, trailers, or vehicles 1975 and older.

Vehicles registered in areas subject to the biennial smog certification program are required to submit evidence of a smog certification every other renewal period. Owners of vehicles six or less model years old will pay an annual smog abatement fee for the first six registration years instead of being required to provide a biennial smog certification. The registration renewal notice mailed to you by the department will indicate if a smog certification is required. If a smog certification is required and you have not had a smog inspection, you may still pay your registration fees to avoid any late fees. However, you will not receive your new registration or year sticker until the smog information has been received by DMV.

NOTE: Upon initial registration, nonresident and specially constructed vehicles 1976 and newer require smog certification. The six or less model years old rule does not apply to these vehicles.

When you transfer a vehicle that is four or less model years old a smog certification is not required. A smog transfer fee will be collected from the new owner. When a vehicle is more than four model years old, a seller must provide evidence of a current smog certification except when one of the following occurs:

1. The transfer occurs between a spouse, sibling, child, parent, grandparent, or grandchild.
2. A biennial smog certification was submitted to DMV within 90 days prior to the vehicle transfer date (a vehicle inspection report may be required for proof of certification).
Smog certifications are good for 90 days from the date of issuance.

I wouldn't think it's tax evasion. You could say he gifted me a car and in return I gifted him $9grand. The problem is if one party decides not to gift and it becomes a scandal.

I just don't undestand how were are taxed for some trade/barter yet not for others. If I were to buy the car and pay the sales tax. Then decide its not right for me I sell it and buy another car and get taxed again. That's going to be alot of money for someone who changes their mind.

What about a girl who sells girl scout cookies door to door. She doesn't pay taxes on her sold items and neither does someone who holds a garage sale. People who hire babysitters and kids to mow their lawns do not get taxed, they probably aren't even legally able to hire minors either because that would constitute as child labor.

I am not a believer in taxes. We get taxed so much from everything to fund government and create bigger government to make sure we are taxed even more.

I know the socialists will say, duh taxes pay for the roads your drive on and fund transportation projects. To that I say, would there be no roads if there were no taxes for them? Don't you think there would be companies that would buy roads and make people pay tolls. There would be better response time and fixing potholes and services. If the conpany didn't do well, another company would find a better way and create a better road and put that bad company out of business.

I just feel trades between private parties shouldn't necessarily be taxed. I am not for big government. I think it has gotten way out of hand. I mean income tax, sure..but every single transaction, no.

Anarchist said: I wouldn't think it's tax evasion. You could say he gifted me a car and in return I gifted him $9grand. The problem is if one party decides not to gift and it becomes a scandal.Eh? Eh? I repeat... Eh?

Maybe I should convince my boss to gift me an amount equal to my salary... I just show up cause I love this place so much... eh?

I don't think your employer would do that, since it does not guarantee you coming to work. And they probably would get checked on and their business could be shutdown. So they have alot more to lose than a simple trade of goods. But you know it happens all the time with day laborers and people getting paid under the table.

"I wouldn't think it's tax evasion. You could say he gifted me a car and in return I gifted him $9grand."

"But you know it happens all the time with day laborers and people getting paid under the table."

WOW!

Give it a try. There shouldn't be a problem. (Sarcasm intended!)

Anarchist said:
What about a girl who sells girl scout cookies door to door. She doesn't pay taxes on her sold items and neither does someone who holds a garage sale. People who hire babysitters and kids to mow their lawns do not get taxed, they probably aren't even legally able to hire minors either because that would constitute as child labor.


It's not that the government wouldn't like to tax babysitters or yard salers. It's just that it's not worth the effort for them to track down everyone who sold $43 worth of old clothing on their front yard last saturday.

On the other hand, vehicles already are tracked, because they have to be registered, licensed, and insured, so it's easy for them to track ownership changes and tax them.

Thing is, when you bring the forms to them they bring out their KBB & look at how much the car is worth & tax it appropiately (Looked that way last time I register a gift). Btw, there was a section of the Calif DMV website that lets you complete a form to calculate what it costs to register a car.

Plus, you must have the smog completed & working right & also, insurance.

Anarchist said: I wouldn't think it's tax evasion. You could say he gifted me a car and in return I gifted him $9grand. The problem is if one party decides not to gift and it becomes a scandal.
I would suggest you try your logic on the your state's tax collectors...

An o2 sensor is easy to replace, it has a 1 or 3 wire plug and usually threads into the exhaust just aft of the Y pipe, where the exhaust banks meet. Mine costs $60 and is an expensive one (Chevy Blazer).

Another thing you might consider is that if you list it as a gift & you want to sue for a refund on it, you're entitled to $0.

Some people just list a sales price of $500. But then the above would also apply.

a) You wouldn't consider it tax evasion because you're the one doing it. Nobody ever thinks that what they are doing is wrong.

b) "Gift" is not a verb. You could say he "gifted" you the car, but you'd be an idiot. He gave you the car, as a gift, as a promotion of tax evasion.

c) The fact that the car won't pass smog is his problem, not yours. As joejoesan said, the seller is responsible for providing a copy of the smog certification when selling the car.

'As joejoesan said, the seller is responsible for providing a copy of the smog certification when selling the car. '

There are a few exceptions, probbaly don't apply though. For example, if you buy from a family member, it's not required. So, like do they have the same name as you? lol

Anarchist said: I wouldn't think... I just feel..
The government doesn't care what you think or feel. You're signing a legal document, not holding hands with a support group.

Put a buck on the transfer form and you're stating that's what you paid for the car. If there's a problem, that's all you can expect to get back. You can't reject the system and then expect it to help you.

I'm sorry I lied, Judge, help me! See, it's like girl scout cookies..



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