Question about Tax - going to buy VFR extras and throw in a VFR800fi

Hello everyone!

A few months ago I posted her asking about opinions on the SV650 vs VFR800 while trying to decide on what to buy. I finally came to the conclusion that I needed to buy.... a Honda s2000 convertible! It has been keeping me happy, but come December I think I am going to buy a VFR800 I've spied on craigslist.

Details on the bike:
1998 Honda VFR800 - color red, price $2800 total
upgrades/details: stainless muffler, Corbin seat, ugraded rear shock(CBR 929), new fork springs, new tires (about 1000 miles on them - Continental tires). Recent oil change, chain, sprockets and brakes last summer, adjustable levers, new grips, zero gravity screen, billet foot pegs, and a Givi luggage rack (the wing rack).

So two questions:
1. What do you think of the bike/options for the price.

2. I considering making him the following offer. I want to offer him $2500 for the Givi Luggage rack and extras and then "throw in" the VFR itself for $300. My question is do I have any obligation to pay sales tax to the state for the $2500 I am paying for the Givi luggage rack?
(I don't think the government requires sales tax on most items sold on craigslist like music instruments that are 3,000+)
Obviously I will pay sales tax on the $300 when I register the bike.

 

You could certainly try but I'm not sure that it matters since they may try to assess the tax based on the "fair market value" which is calculated using the original MSRP minus the depreciation over the years.


Rollin

 

I don't know about Florida but in California the buyer or seller decides what "purchase price" to put on the title form given to the DMV, usually the buyer. Report what you want and just pay tax on that. $500 sounds like a reasonable price on a 14 year old motorcycle.

 

Here in Georgia we don't pay a sales tax on used private sale vehicles but we do pay an annual "ad-valorum" tax on every vehicle. It is based on the fair market value and we pay it every single year of ownership. It really sux getting bent over like that annually.


Rollin

 

Yeah I know a lot of people do the deal and then write "gift" as the sale, but my conscience keeps me doing everything legally right save for going over the speed limit a little here and there.

However if I proposition the seller like that and he accepts the deal without any further explanation then I have really bought the bike for $300 and the Givi rack for $2500. I can legitimately go into court and honestly say that is how it was and nothing can be said against me especially. I think our tax system is seriously broken, but I still want to adhere to it and any truly legal loopholes are fine by me.

The question is simply do you have to pay tax on private sale items that are not motor vehicles. Specifically higher cost items like musical instruments, furniture, and in this case the Givi Rack

 

I doubt you would ever go to court over sales tax fraud but if you did, do you think any reasonable judge or jury would buy the argument that you spent $2500 on a $100 luggage rack attached to a bike you paid $300 for but was worth about 10x that?

If your conscience is bugging you, deduct fair market value for the extras and report the true purchase price of the bike, and avoid the mental gymnastics to validate an erroneous logic.

 

Here's how I see it, a seller has the right to sell anything he wants for any price he chooses, as long as it's not contraband, however he is obligated to report that income and the buyer needs to report the amount paid to the DMV/state (in the case of a vehicle sale). The DMV/state has a right/obligation to question or accept the amount as shown of bill of sale. The DMV can say that the amount you paid is below the minimum fair market value of the motorcycle and if you wish to register it for riding on public highways you need to pay the tax on the fair market value. They can also just say, congratulations you got a really good deal on this vehicle here's your registration, now go and enjoy.

If there were two transactions and one bill of sale says that you paid $300.00 for a used vehicle, there is no reason that the DMV/state needs to see or even know about an invoice for $2500.00 for accessories. All they care about is the taxes owed for the sale and registration of the vehicle, again it is their right/obligation to question this and adjust your taxes/registration accordingly. If you paid cash for the vehicle transaction all they have to prove what you paid, is what is on the bill of sale. However, if there is any evidence that shows the actual price asked for the vehicle and that proves to be dramitaclly different than what you paid (i.e. $2800.00 vs. $300.00), that could possibly be considered as fraud or that the seller had a big change of heart! For this to even be an issue, someone at the DMV would have to be suspicious of the amount you paid or that some random auditing system in place chooses your transaction to investigate.

That being said, by "adjusting" the amount you paid on the bill of sale, you're basically taking money out of the pocket of the department(s) that are responsible for the roads in your state (in most cases), and possibly some dirty politician skimming money for his hooker and blow addiction, so all I can say is let your conscience be your guide. Just know that you would not be the only one to want to or have done this.

To answer your other question as to sales tax on non vehicle items, I am not aware of any state that requires you pay taxes on private sale items. That would be very difficult to track and enforce. However businesses are required to pay taxes on items sold unless the buyer has a resale license, which needs to be recorded on the sales invoice. (edit)

Cheers

 

"To answer your other question as to sales tax on non vehicle items, I am not aware of any state that requires you pay taxes on private sale items. That would be very difficult to track and enforce. However businesses are required to pay taxes on items sold unless the buyer has a resale license, which needs to be recorded on the sales invoice."

Oklahoma and Colorada are the only states that I am aware of that 'require' you to pay sales tax on private sale items and online purchases. This is done by the honor system by reporting them on state income taxes every year. There is no practical way for the state to monitor this. My opinion on the matter is that it's already been taxed once when first purchased so why report the sale and pay tax on it again. It seems ridicules that everytime something changes hands that uncle sam charges you a tax!

 

With that being said, it may actually be ALL states require you to acquire and pay the sales tax for any items you sell and that they all use the honor system for this! I completely agree that you would be paying taxes twice on an item but it would also mean that it is the sellers obligation to charge and submit the sales tax as part of their income, just as it would be for a retailer. Again, this would be very hard to enforce and to prove one way or the other that you received money for items that you have sold, especially if the items do not have serial/VIN numbers that can be traced and also if the transaction is done in cash, there is really no paper trail at that point other than a bill of sale. We've all heard the expression "My dog ate my homework", what's to prevent someones dog from "eating" the bill of sale and swallowing the cash? Don't get me wrong I'm not trying to promote dishonesty, I'm just pointing out that without a way for the government to reliably and accurately track your private sales, I would find it hard to believe that they could enforce paying sales tax. How many tax collectors would we need to follow up and collect on all of the private sales going on day to day? Think about all of the garage/yard sales that happen every weekend. Knock, Knock, "We heard that you just sold that old dusty lamp you had in the corner...pay up buddy!"

I can say this though, one time I bought a new vehicle from a dealer in a different county and was charged the sales tax for that county rather than the one I lived in and a few weeks after the sale, L.A. County sent me a bill for the difference, as I was registering the vehicle in L.A. County they wanted their taxes collected. I had to send L.A. County a check for the difference! Since the dealer has to submit paper work for every vehicle sale to the DMV, local governments now have access to these sales records. Since there is no government entity that tracks the sales of "accessories", like the DMV does for vehicles, where will the sale be reported to?

NOTE: This post is not an endorsement for deceiving the government, state or federal, nor should it be taken as instructions for any illegal activity.otstir:

 

I believe that if you buy the bike and ask the seller to give you two reciepts for a split sale that when you go to register it you will pay whatever tax the sale amount on the bike owes. Truth is most DMV's do not bother to haggle over book value, all they see is a 14 year old bike. Add "As Is" to the sales reciept and it will come across as a fixer upper. I try to pay my fair share and know that as a tax paying worker do that and more, but I find it abusive how sometimes the gouging of us in taxes to pay for the waste, theft and mismanagement of our contributions gets to the point where we need a little bump to ourselves now and then. You will probably spend whatever money you save in mods or gas anyway, so you are just delaying forking it back over in one way or another.

 

This is actually exactly what I plan on doing.

The final point is I would want to be able to stand up in court if I needed to and say "I paid $300 for this motorcycle" and it be completely true. Based on my plan I could even say in court "The guy wanted $2800 for the bike + mods, but I wanted to do two separate sales one for the bike and one for the mods. As the bill of sale and receipts clearly state the deal we worked out was $300 for the bike and $2500 for the mods". I am not doing anything illegal and in court if I have proof they can not say "Yeah but you were really buying the bike for $2800 and just saying $300" because nobody can testify to what I am or was thinking. And I am thinking that I am HONESTLY saying that I am going to buy the mods for $2500. I can tell the seller "If you give me the bike for $300 I'll buy the mods you have for $2500". That will stand up in court and it's not unethical at all. What two parties agree upon for the sale of an item is completely up to them, it's part of capitalism.

Now if the seller says "No, I want you to buy everything for $2800" then the discussion will be over. I won't say anything further to him accept "Okay, let's do it".

 

Meh... I am just going to pay for the bike. I think he values the goodies at $300 and the bike at $2500 so I'll see if he will put down $2500 as the bike price.

 

Here in Texas they tax what is written down. DO NOT leave the sale price empty because THEY will figure out what to tax you.

 

Walk in to the DMV with a bike at that price and you may as well be wearing Superman spandex with the fly open.

 

I don't pretend to have any idea just what your tax paws are, but I can assure you this. You don not want to be convicted of tax fraud. You would be fuckt as far as bonding goes or anything else financially for a long time. Will they look into it? Who knows. But I suggest you stay under their radar and declair something reasonable. Your values as stated are not only unreasonable, they are laughable. I would think that if the tax man was the slightest bit interested in his work, he would take a far closer look at that.

How much are we talking here? Is your savings worth the risk? If you tax rate is 5%, the total taxes on $2800.00 is only $140.00. If my finances were that tight, I probably would not buy the bike.

Besides. You need to pay your taxes so us pensioners can get a raise.

 

Let's say the combo package was a Harley and some harleyfarkles.. or there were some OEM parts bought at retail at some local friendly Honda shop tossed in to sweeten the deal would that count as taxable total value?

Best way to buy a bike IMO is to bring cash to the table. The transaction amount between is the domain of the buyer and seller not the taxman. With the data and sheer numbers of bikes being bought and sold real or imagined ie scams, as long as the deal is in the ballpark, the taxman ain't gonna get ya. The OP's little proposed scam is so transparent that he sounds like some Republicans I know who consider the right thing, anything they can get away with.

How many of us have sold a bike in prime condition with a comensurate asking price and dropped the price when the green was flashed or in another scenario, the feeling was the bike was going to go to a good "home"?

Does the taxman need to know all this shit and have his collective nose up your ass 24/7/365 and does a bit of salesmanship or buyers advantage make one less honest? I don't think so. I love to play poker with guys who think that way and send em home early.

If this really is a hurdle for anyone, I suggest going here for succor sucker. www.fauxhairshirts.com.