Department of revenue wants to tax value of car, not what I sold it for.

[Augenauf]

Was wondering if anyone here has any experience with this... About a month ago, I sold my LX hatch to my dad who really needed an upgrade from his beat to crap '07 accord. I wanted a reason to upgrade to an Si and it was an opportunity to help out my old man, so we transferred the title to his name and I listed the sale price as $500. Fast forward to today and the state wants a cut of something the really has nothing to do with them. The department of revenue wants him to "verify" that $500 was actually the amount paid, or they're threatening to charge him $2200+ tax/penalties. Really, the only verification I could provide would be a written statement + signature. What's my best course of action here? He honestly did only pay $500 cash.

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[hobby-man]

Here in Ontario it doesn't matter how little you paid. You're taxed on the wholesale value or actual purchase price, whichever is higher.

The only way around that is to transfer the title tax free to your immediate family. You should see if that provision exists. You gifted the car to him and at another time he gave you $500 in an unrelated transaction.

 

[Augenauf]

Here in Ontario it doesn't matter how little you paid. You're taxed on the wholesale value or actual purchase price, whichever is higher.

The only way around that is to transfer the title tax free to your immediate family. You should see if that provision exists. You gifted the car to him and at another time he gave you $500 in an unrelated transaction.

Yeah we have some states that do that here in the US, but not FL afaik. Doesn't mean they're not gonna try though lol. Some guy at the tag agency talked my old man out of listing the car as a gift on the title, for some reason or another. I didn't ask why, I just said f-it and put down $500 (which he later insisted on giving me). I figured that would be the end of it.

 

[Litfuse]

Yes, this is becoming a practice in Illinois. I bought a new truck with a heavy discount. They wanted to charge me tax on the MSRP. I lost my mind in the DMV and they backed off.

 

[xcoreflyup]

Accountant here. look up the tax rule from your state department website. Our rule is written with very specific wording. If the rule is like what hobby-man listed such as "whichever is higher", you may have to pay. Im sure some accountant just found it odd that a newer 2016+ car got sold for $500 bucks.

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