DFW Buying a car from out of state…

I put a deposit on a used car today and I’m working through the final numbers. They’re throwing in TX state sales tax. My comment was that I’ll pay them locally when I go to get the car registered. They’re insisting that they’ll take care of all of that for me and I should pay them as part of the deal. It’s a high-end dealership and I’m guessing that they sell many cars out of state. When I’ve done this previously, I simply took all the paperwork to the DMV along with the title and inspection report and managed it myself.

Would appreciate your thoughts and experience.

No, I’m not going to tell you what it is.

 

25 Years here and 24K messages? I feel like you should have every answer to every question.

I assume it’s due to the amount of people buying exotics and registering them out of state where there is no state tax on cars like in Montana. I know it’s become a huge issue in California and they are cracking down hard. Many many reputable dealerships will not let you ship cars out of state anymore and they’re being extra protective regarding taxes. A lot of dealerships have been busted recently. Can’t speak for Texas but this would be my best guess. Could be way off the mark….

 

It will depend on the state law where you are buying, many states make dealerships collect the tax for that state unless the car is shipped out of state. Not sure if any state demands tax is collected regardless if vehicle is shipped.
Note that any extra paid sales tax is lost if buying in a higher tax state.

 

And chat GPT says:

Yes — in Texas, licensed dealerships are required by law to collect the 6.25% motor vehicle sales tax on most car and light truck sales and remit it to the county tax assessor‑collector (CTAC) within 30 days (or 60 days for active-duty military) .





When a Dealer Must Collect Tax

• Licensed Texas motor vehicle dealers must collect the 6.25% tax on retail sales of vehicles with a gross weight of 11,000 pounds or less (covering most passenger cars) .
• Tax is based on the sales price minus any trade-in value or dealer discount .

When Tax Collection Doesn’t Apply

• If the vehicle weighs over 11,000 pounds, the dealer is not required to collect the tax. Instead, the purchaser must pay the tax directly when registering the vehicle, and the dealer provides Form 130‑U to document the transaction .
• Non-titled trailers are treated similarly: no tax collection obligation for the dealer, and the buyer handles tax payment upon registration .

 

Dealer is in NJ and is wanting to charge me TX 6.25% rates….

 

I believe it has something to do with people buying and registering in 0% tax states but again, I could be wrong. Hopefully someone way more knowledgeable than me chimes in….

 

This. It depends on the state.

 

If NJ/TX have that agreement in place, that’s the deal.

 

Pay them, but more importantly, is it a 2 or 4 seater and when are we leaving to drive it back????

S

 

How's your calendar next week?

 

I’d be a little Leary of this. How are they issuing you a temp TX tag and registration? They aren’t, and as such, can’t collect taxes. So you buy this car and have it shipped here. You take your paperwork to the DMV and try and get your registration and sticker. They say, “Ok, that’ll be $XXXXX.xx for taxes.” You casually explain you already paid the dealer in New Jersey these supposed Texas taxes. They laugh, tell you they have no record of this, then you show them the receipt. After they are done laughing, they tell you to step aside. Not saying this is how it will go, but it’s the DMV and there are certain days they don’t let the line move at all. They call those “weekdays”.

I’ve bought over 20+ cars out of state. Never once have any state collect Texas taxes. I’d look into this a little more. The references posted are for in state applications, not out of state sales.

 

In addition, Texas has eliminated temporary paper tags, so unless they are able to issue a Texas temporary metal tag, I would be extremely concerned about paying taxes to them.

 

Would kinda like @SAFE4NOW opinion on all that because it mirrors what I was thinking. But S has significant experience with such things…..

 

They can then do a couple different things:
A. They can send the documents w/ payment directly to the State of Texas, who will then issue you Texas plates and registration.
B. They can send you with the documents and a check made out to the State of Texas for you to do the leg work, then Texas will issue you plates and registration.
Most selling, out of state dealerships, will choose option A, as they control the transaction, and a buyer does not forget to do it, which leaves the vehicle in the selling dealerships name and possible liability.

Selling dealer provides temporary plate from their state at time of sale which should cover the days it takes for Texas to get you plates/registration.

The following is not directed at Jim, just generally to any buyer:
If you are that concerned, why are you buying from this seller in the first place?
Ask for copies of all documents, check numbers when possible, tracking numbers for overnight FedEx etc.

Can things go wrong, yes. But it's something that the selling dealer could lose their license over, and most are not willing to risk it over a few thousand in sales tax... oh, plus risk a state government coming after them for tax fraud...

Steve

 

Thank you Steve!

 

Interesting, Steve. I’ve never run into this ever buying cars out of state. Guess I’ve been lucky. But I can see why they would want to do this. Good info!

 

I have to be here Friday morning for payroll, but can be at DFW by 9am!

https://maps.app.goo.gl/eT2BoKd8HFFLNMbq7

We can make Deals Gap, Titan Ranch, Queen Wilhelmina State Park, and be back in Dallas by Sunday Night!

Steve

 

Don’t think I haven’t mapped it!

I have Grandpa duty this weekend or it would’ve happened that way! No car is more important though. I’ll pick you up for lunch one day next month instead

 

I haven't read through every post carefully, but if you're financing the car the standard operating procedure is for the out-of-state selling dealer to collect your local taxes and fees and enlist the services of a title company to handle the registration and correctly record the lien for the lienholder. If the lien isn't recorded correctly, the selling dealer is on the hook for the entire amount of your loan and subject to being charged back. If you are paying cash for the car, there really isn't any reason for the selling dealer to collect TX taxes and fees. Regarding a temporary tag, they should supply whatever temporary tag their state provides for out-of-state buyers. The chances of having an issue with TX law enforcement while driving on their plate until you get it registered in TX is virtually non-existent as long as you keep a copy of your purchase agreement and receipt for their temporary tag in your car.