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Titling in another state to avoid sales tax

Discussion in 'Ferrari Discussion (not model specific)' started by RAYMAN, Apr 8, 2004.

  1. RAYMAN

    RAYMAN Formula Junior
    BANNED

    Mar 10, 2004
    315
    Oklahoma
    Full Name:
    Raymond Santilli
    With a 100K+ Ferrari/Lamo purchase in consideration, I've heard about titling the car in a state like South Carolina that dosen't have sales tax on auto's.

    Anybody do this. If so how?

    Thanks
     
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  3. Janet

    Janet Karting

    Mar 29, 2004
    99
    Pacific Northwest / Florida
    Full Name:
    Janet
    This subject is huge in the Northwest. I live in Washington State (with high sales tax) which adjoins Oregon State where there is no sales tax. There have been huge "stings" set up to catch high value vehicles of Washington residents with Oregon registration. The fines are preposterous and have resulted in some Washington residents losing their vehicles. Key base factor ... does the address on your driver's license match your vehicle registration and your insurance paper. The subject can certainly go further if they feel you are in violation but that is the basic starting point.

    While I feel your pain in paying the state sales tax, the state officials get up very early to make certain they get every penny that might come their way. They are ready and waiting for those trying to circumvent the system.
     
  4. Mitch Alsup

    Mitch Alsup F1 Veteran

    Nov 4, 2003
    7,004
    Whatever happened to : Give Unto Ceasar that which is Ceasar's.
     
  5. Schatten

    Schatten F1 World Champ
    Rossa Subscribed Owner

    Apr 3, 2001
    11,237
    Austin, TX
    Full Name:
    Randy
    SC doesn't have a salestax on cars, however they do have a property tax on cars each year. And that varies, depending on the car & value.

    Hate to say it, but avoiding the tax man on this type of issue isn't exactly realistic. The car must also be registered and reside in that particular state as well. It might even become a greater issue upon insuring a high dollar car through the insurance agents as well.
     
  6. AnotherDunneDeal

    AnotherDunneDeal F1 Veteran

    Jun 2, 2003
    5,308
    N.Richland Hills, Tx
    Full Name:
    James Dunne
    To register a car in another state, you must be able to prove that you have a residence in that state also and a post office box will not suffice. It will have to be a street address. We do it a lot but the address has to be traceable to the owner of the car being purchased. Otherwise, as stated, the fines and penalties will be more than the tax that you avoid and if you have to pay usage tax or personal property tax on the car each year in the no sales tax state it could also cost more. You need to check that out also. I would avoid it.
     
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  8. Dave

    Dave F1 Rookie

    Apr 15, 2001
    2,722
    Little Rock
    Full Name:
    David Jones
    Rather than trying to figure out how to cheat your way out of paying taxes, why not figure out a way to work a little harder so you can pay the taxes on your 100K+ Ferrari/Lamo purchase...
     
  9. RAYMAN

    RAYMAN Formula Junior
    BANNED

    Mar 10, 2004
    315
    Oklahoma
    Full Name:
    Raymond Santilli
    Hey Dave, I can pay the taxes, but that dosen't mean I want to! In any case I was just inquiring, I've already decided not to even try given the risk.
     
  10. Tyler

    Tyler F1 Rookie

    Dec 19, 2001
    4,274
    dusty old farm town
    Full Name:
    Tyler
    RAYMAN, I here ya. For the life of me I've yet to figure out why someone would title cars in their own name though. If you own a business(assuming it's profitable) put the car in it's name. I'm 31, I've had lots of cars and have yet to have one in my name. Makes more sense to pay the expenses with pre-tax dollars than with personal income dollars. Whatever you do make sure it's legit as many states encourage turning your neighbors in for this by giving the rat part of the fine(KS does this). FWIW my boss has maybe a dozen cars that are all company owned and only 3 are titled in state. His neighbors turned him in four times in a row to no avail as it's legit.

    Also, if you are looking for ways to "cheat" the system one bit of advice is to not post questions and expect answers on a public internet forum.;)
     
  11. Horsefly

    Horsefly F1 Veteran
    Rossa Subscribed

    May 14, 2002
    6,929
    I was discussing this issue with a friend of mine a few days ago. It would seem that with the potential savings of multiple THOUSANDS of dollars on the line, why not spend $500 or so for an acre or two of land in a desirable state so that legally you can establish a residence in that state? Of course you would indeed have to pay personal property tax on the car in the state that you now own property in, which is also the state where your car is now registered. But since you deliberately sought out the cheapest acre of land to buy, it will no doubt be in a totally remote county which will have the lowest property taxes. So I believe that you will come out ahead. Don't alot of wealthy people do this sort of thing every day? If you live in New York and own other homes in Florida or Nevada or Texas, don't they simply register all their cars and property in the most tax advantageous state?
     
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  13. Dave

    Dave F1 Rookie

    Apr 15, 2001
    2,722
    Little Rock
    Full Name:
    David Jones
    Then call the politician responsible...

    Don't cheat em'... beat em' at their own game.
     
  14. Horsefly

    Horsefly F1 Veteran
    Rossa Subscribed

    May 14, 2002
    6,929
    I heard that Dave Jones has declared his house and land a "free and independant state" and has requested soverign nation status from the United Nations, all in an attempt to escape the totalitarian tax system. But his solution backfired. Being an independant nation, he forgot about his own national security defense. His wife orchestrated a governmental overthrow and Dave was deposed of power. She now controls the 308GTB but to her own surprise, she is now responsible for rebuilding the brakes and the entire front end suspension.
     
  15. gabriel

    gabriel Formula 3

    Money chases return. Period.

    I don't believe that finding ways within the law to pay the least amount of tax is "cheating."

    Heck, there are millions that pay no tax at all that get good money back!
    -How fair is that system?

    That being said, I do own real property in two states, and I keep almost all properties in whichever beings me the least loss to the tax man.

    Since my aircraft are company owned, I see no conflict in doing the same with any other big ticket item.

    I also incorporate in a state that offers the best combination of tax incentives for whatever I'm doing at that time.

    Talk to a good corporate and/or tax attorney who is also a CPA.
    BTW, that helps ensure client privilege, if the need should arise...
     
  16. ScreaminRevs

    ScreaminRevs Formula Junior

    Apr 4, 2004
    346
    Chicago
    Agree with Horsefly. But why not just "move" (car and yourself) back to the state you currently reside in after say, 6 or 12 months. Then further property taxes on the cars can be avoided and all that would have to be paid is tags and title transfer to your true state of residence. These tax minimization ideas are good stuff :)
     
  17. beast

    beast F1 Veteran

    May 31, 2003
    8,965
    Lewisville, TX
    Full Name:
    Rob Guess
    This has been a subject that i have looked very hard at. in my situation i live in AZ but i also have a house in NM. I have been looking at getting a muscle car and a early 70 to early 80's Ferrari. Now here is the catch.

    If i title and regester the cars in NM i pay 3% sales tax on the bill of sale price of the vehicle. Most of the time the price is left blank on the BOS and the new owners fill in the price. before they go to the DMV. Also my location in NM is not under EPA emission testing laws, so i do not need to smog test the vehicle. Auto insurance is also 25-40% less than in AZ also.

    AZ on the other hand the sales tax is the prevailing retail sales tax for the city you live in 8.875%. Then the Vehicle license tax is a % of the market value on the car. For example about $400 a year on my current daily driver 03 Chevy S10. The nice thing is i can deduct this from my federal income tax at the end of the year. Also i will have to run these cars through a smog test every 2 years at the cost of $35. Now the worse part of the deal is if you have an out of state vehicle at your house in AZ and you drive it to work you are in violation of the law and can be fined up to $10,000.

    In my situation it is a catch 22 with the NM regestration being the less costly option. When i do make the step to purchase a few of these cars i will make sure that I keep the car out there and make several trips so that i can go and blow the cobwebs out of the car. NM backroads are a Sportscar owners dream blasting up and down twisting mountain roads, this is one more added plus.
     
  18. Wildwarrior

    Wildwarrior Formula Junior

    Mar 26, 2003
    280
    PA
    Full Name:
    Glen Winters
    Several years back prior to my yellow 94 512 purchase, I had sent a $20,000 down payment check to a private owner in CA towards a red 92 512TR with 3000 miles on her. To make a long story long, the owner had never titled this car in any state, he would just put a plate on her and drive. He also had a house in Arizona where he had planned on registering her to save on CA tax, so after screwing around for a month or so with no car on the horizon, I was reinbursed my 20 gs. I found out later that this is quite common with these sunny day drivers. To avoid tax, they just dont register them at all and drive them illegally, it seems to be more of a hassle skeeming of ways to save a couple of dollars then its worth. In this case the owner could'nt sell his car, and it was a 10. (Just food for thought!)
     
  19. racerx

    racerx Guest

    Nov 23, 2003
    879
    Does anyone know whether your property in the cheap state can be "just" land or do you need a structure on that land to register your vehicle?
    T
     
  20. Steve

    Steve Formula Junior

    Nov 1, 2003
    901
    Seattle, WA
    Full Name:
    Steve Jenkins
    I just wrote a $24K+ check yesterday to register my F40 in Washington State. So this subject is fresh in my mind. :)

    I've heard of people setting up residence in non-tax States, and if you want to jump through the hoops to do this LEGALLY, then more power to you. For me, it wasn't worth the effort, nor the nagging feeling that I would have that the WA State Dept. of Revenue (who are SHARKS when it comes to audits) is constantly on the prowl for me. I just wrote the check and now I can sleep without nightmares a WA State DOR Audit Agent summoning me to his cubicle.

    My businesses have been audited by the WA State DOR in the past (both times they owed me money :)) but I still don't wanna go through the experience if I can avoid it.
     
  21. miked

    miked Formula Junior

    Feb 7, 2001
    640
    Cincinnati, Ohio
    Full Name:
    Mike Dawson
    $24,000 to register a car!!! I pay about $50 per year/per vehicle and thought that I was getting ripped off.
    I live in Cincinnati, the metro area covers 3 states, Ind, Ky and Ohio. There are several small towns here that stradle the Ohio/Ind. border and vehicle tax is always an issue. For instance the town of College Corner is split in half by the state line, everyones address is Ohio because the post office that serves them is in Ohio. Many Ind. (high tax) residents registered their cars in Ohio (low tax) until the Ind. government figured it out (hey, they have to keep those lucrative careers going).

    The Ohio/Ky border is a little different as it is in the Ohio River but the registration fight is over boats. The actual state line is the north edge of the river 200 years ago which is about 100 ft out into today's river. Ky use to extract fees and fines from Ohio boaters once they left the security of an Ohio marina. After years of legal fighting the situation has changed a lot but it still is KY's river.

    The fight extends to alcohol/tobacco where KY/IND businesses, just across the border, cater to the Ohio buyer. Ky/Ind are very low tax in this area while Ohio is very high.
     
  22. scott61

    scott61 F1 Rookie

    Feb 11, 2004
    2,562
    North of Boston
     
  23. Rennphile

    Rennphile Rookie

    Nov 24, 2003
    32
    Colorado
    I'm not sure I understand this statement. Seems like a pretty reasonable amount to me.
     
  24. arkferrari

    arkferrari Karting

    Feb 9, 2004
    186
    Hot Springs, AR
    Full Name:
    B.F. Mitchell
    Dave: Look forward to meeting you in LR. I'll be in a fly yellow 355F1.
     
  25. gabriel

    gabriel Formula 3

    just wrote a $24K+ check yesterday to register my F40

    Holy crap! Thats another whole car! Or a down payment on a house!
    Thanks for the heads up -I'll be sure to never title anything in that country!!

    But if I ever drive through, I'll be smiling. :)
    Ah, how great Florida is...
     
  26. AMA328

    AMA328 F1 Rookie

    Nov 12, 2002
    2,518
    ABQ-67me68-OKC :)
    1) Go rent a cheap apartment in the low cost state. Rent it before you buy the car.
    ** Note: get a phone for the apartment, too...

    2) Get a new driver's license in the other state, list the apartment as your new address.

    3) buy the car, title it in the new state, listing apartment address, etc.

    4) continue to rent the apt., put some miles on your new wheels.

    5) after a few months and 1-2k miles, move 'back' to your current state. Transfer the car and you should be good to go.

    Total time renting 'new' apartment - 6 months or so.
    Not much else in the way of other costs.

    No law says you have to spend a specific amount of time in your new state/residence.

    No law says you can't buy a car & title it in another state if you have a valid residence in that state.
     
  27. Racerfred

    Racerfred Karting

    Mar 6, 2004
    110
    Long Island, NY
    In almost all states that have a sales tax when you register a car in the state you will be charged sales tax at the time of registration (private sale cars). If you can prove that you bought the car in another state and imported it to the state that you are registering it in you can claim a credit for the taxes that you paid in the other state.

    In NYS if you move into the state and you register a car that you have owned you will be charged sales tax. If you look at a lot of the state individual income tax returns there is a line for sales and use tax.

    Every state (that has a sales tax) requires you pay a use tax on property purchased out of state and brought into your home state. As with big dollar cars and boats most states have a special division to catch the people who have not legally paid the sales tax. It is set up to really hurt the person. This has really come to the forefront since the Dennis Koslosky (sp) Tyco issue.
     
  28. ART360

    ART360 Guest

    I'm not so sure that you have to be a resident to register your car in a "tax haven". If you have an office there, have business there, have a mailing address there, and plan on using the car there, you should be able to register it there. I'm planning on doing that, and it should be totally legal, I'll have complied with the law on that issue, but I'd make sure that you look at the applicable law, follow it, if you want to avoid this form of taxation.

    Art
     

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