Stupid question on buying car in Texas | FerrariChat

Stupid question on buying car in Texas

Discussion in 'Texas' started by Face76, Sep 30, 2016.

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  1. Face76

    Face76 F1 World Champ
    Rossa Subscribed

    Aug 21, 2006
    11,600
    The Other Oz
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    M Wilborn
    So, I bought a car from a dealer in Texas but I live in Kansas. I went to pick up the car and drive it home and they wanted the sales tax paid as part of the deal. I thought okay but checked with Kansas DMV anyway and they said fine. The dealer uses an out of town service to calculate and collect the tax which was computed correctly by my calculations.

    So, I drive off and head home. A couple weeks later, I get a call from a Maryland number saying I need to pay the property tax too so that the dealer can issue my Kansas license plate. Now that's really weird to me so I ask him to forward me the property tax calculation to buy time while I call the DMV again. Kansas DMV responds that they didn't need to do this as I would pay the property tax at the time I license the car in my home state. I never got the property tax calculation either.

    Is this standard practice in Texas? The dealer, who has never sent my car's paperwork to me which is going on 30 days now, says they have to do it this way.

    I have a call into the dealer to see what is going but no return call.

    Any ideas?
     
  2. energy88

    energy88 Two Time F1 World Champ
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    Jan 21, 2012
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    Was the dealer brokering the car? How does Maryland personal property tax get into the equation or are they talking about Texas pp tax? I would run a CarFax to see if there are/were any liens on the car, too. Also, be absolutely sure what Kansas DMV requires. Sounds like the transaction hasn't been completed yet and the "dealer" might be trying to nickel-and-dime you for some more profit.
     
  3. Face76

    Face76 F1 World Champ
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    Aug 21, 2006
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    Thanks for the reply.
    Car is new from a Dodge dealer.
    Call from Maryland was the service dealer used to collect taxes.
    KS DMV says Texas should not collect pp taxes
     
  4. ATSAaron

    ATSAaron Formula 3
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    Jun 1, 2004
    1,120
    Shady Shores, TX
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    Aaron Bunch
    Texas does not charge property tax on vehicles and since you are taking the car out of state, I am not sure they should have charged you sales tax on it either.

    Aaron
     
  5. Face76

    Face76 F1 World Champ
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    That is my impression regarding sales tax which caused me to call the KS DMV before I paid it. In the end, I may have to push the dealership harder regarding the property tax issue because I expect that they are holding my title until I pay them the property tax amount. Very frustrating.
     
  6. scowman

    scowman Formula 3

    Mar 25, 2014
    2,479
    Scottsdale AZ
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    Stu Boogie
    Dealer did the right thing. They are selling a car headed for another state. TX says dealer must collect TX tax or the tax for the other state. I think all states have this rule. Otherwise people would buy cars in the cheapest state
     
  7. energy88

    energy88 Two Time F1 World Champ
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    Jan 21, 2012
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    Are you titling the car in the name of a business? If so, a quick google of Texas car taxes indicates that this could open the door to those type taxes but my eye caught a first $20,000 exemption and a Jan 1 trigger date that apply. You might want to check for yourself. My impression is that some clerical person who does not understand Texas vehicle tax law is causing the delay.
     
  8. jimpo1

    jimpo1 Two Time F1 World Champ
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    Jul 30, 2001
    24,510
    Dallas, TX
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    Jim E
    I live in Texas and have bought a few cars out of state, never paid sales tax to the out of state dealership....
     
  9. willrace

    willrace Three Time F1 World Champ
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    Oct 21, 2006
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    North Tay-has
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    2nd - You don't pay the tax to the state it's leaving, but to the state you're registering it, at that state's rate.

    Sounds like they're riding the funds.
     
  10. HardTen

    HardTen Formula 3
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    Aug 7, 2011
    2,116
    Ft. Worth, TX
    The Texas dealer should not have collected any sales tax on the vehicle if it was going to be titled in another state. You should have signed a TX DMV form that stated you were taking the car out of state and would pay the appropriate tax in your state when you title/register the car. The only "tax" the dealer should/could have charged you is a VIT (vehicle inventory tax) that is a very small number paid by the dealer to the state based on the value of the inventory held by the dealer.
     
  11. energy88

    energy88 Two Time F1 World Champ
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    Jan 21, 2012
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    Did the Texas dealer charge you a "processing fee?" If so, they are probably obliged to turn over the sales tax to Kansas on your behalf.

    The last car I bought from out of state was from Maryland and they collected sales tax from me, but took care of getting my Virginia plates. I remember driving back a month later and the dealer bolting the Virginia plates to the car. The processing fee was $100 at the time and was performed as a bit of a service by car dealers on both sides of the state line. Virginia and Maryland apparently have tax reciprocity. That factor could be different between Texas and Kansas.
     
  12. M. Brandon Motorcars

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    Sep 4, 2007
    1,759
    Houston, TX
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    Michael Foertsch
    This is correct.

    I am a licensed Texas vehicle dealer. If a car is being sold out of state, I can NOT collect tax on the vehicle, by Texas law. The buyer signs an "Tax Exempt Form for Vehicles Taken Out of State" form, exempting them from paying Texas vehicle sales taxes because the vehicle is going out of state.

    I also specify on the bill of sale that "Buyer is responsible for all taxes, license, registration, titling, and other fees in their home state".

    To the OP: Something is wrong here. I would go back to the Texas dealer that charged you sales tax and ask what is going on. Yes, you may get credit in your state for paying the tax, but the state will want that tax, and there is no mechanism for them to collect that tax from the dealer.

    Personally, it sounds to me like the dealer just wanted to sit on some money for a while. Shady.
     
  13. M. Brandon Motorcars

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    Sep 4, 2007
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    Houston, TX
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    Michael Foertsch
    This is incorrect. Texas dealer law says that the Texas dealer can NOT collect tax if the car is headed out of state.

    The tax will be paid to the buyer's home state when the car is registered and titled by the buyer.
     
  14. M. Brandon Motorcars

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    Sep 4, 2007
    1,759
    Houston, TX
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    Michael Foertsch
    The only "property tax" that a Texas dealer can collect is the Vehicle Inventory Tax, or VIT. This is the tax paid by the dealer based on the sold values of vehicles, sort of like a property tax.

    A Texas dealer can pass this on to the buyer, and most do. It's a fraction of a percentage of the sold value. If a dealer has this on the bill of sale, they are required to have specific wording on the form that this is NOT required to be paid by the buyer.
     
  15. nopiston

    nopiston Formula Junior

    Apr 1, 2004
    273
    Orange County, CA
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    Randy
    If it was financed (I didn't see this mentioned) through the TX dealer where the car was purchased, then depending on the dealer's agreement with the particular bank that was used, the TX dealer may need to handle the registration in your state to satisfy the lien. This is usually done through a 3rd party titling agency which can really be located in any state- not necessarily in your state or the selling dealer's state. This would require them (or the 3rd party titling agency) to calculate your local registration fees and taxes. Aside from TX VIT and probably some sort of documentation fee, all other fees and taxes the dealer would have collected should have been those necessary for your own state.

    If it was a cash deal, then TX does not require them to handle your own registration and taxes. That'd be on you to handle. In either case, they'd deliver the car with a temporary tag to drive on until your plates arrived. TX temp tags are usually good for 60 days.

    I'm not sure why you're getting called (from the titling agency in MD) looking for more money when that should have all been calculated and collected up front- unless they missed it when calculating. If that's the case, I'd ask to see a breakdown of the TT&L fees they collected on your deal to see what's going on.
     
  16. nopiston

    nopiston Formula Junior

    Apr 1, 2004
    273
    Orange County, CA
    Full Name:
    Randy
    Just realized this thread started nearly a month ago. Hopefully you had an answer from them by now!
     

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