'The Oldest of American Traditions:' Car Experts Say the DMV Knows People Lie About How Much Cars Cost. What If You Get Caught?
Instagram user Driveway Finds (@driveway_finds) is a page dedicated to car comedy from Dustin Hallinan and John Birto. In a since-deleted
video
posted on Aug. 1, the duo portrays a personal vehicle sale between friends. Cash in excess of $500 and a car title exchange hands. Meanwhile, a shadowy figure monitors the situation from afar.
'The DMV knowing you aren't buying cars for '$500' but they can't prove it,' reads the on-screen text.
Paying Taxes on Used Vehicles
Let's take
Texas
, for example. In the Lone Star state, buyers who buy from private sellers are obligated to pay a 6.25 percent sales tax on either the purchase price or standard presumptive value (SPV). How do you know which one? You guessed it—whichever is higher.
How does the state prevent people from doing what's portrayed in the skit? Well, if you tell the DMV that you paid way less than the vehicle is actually worth, you'll have to get the car appraised and pay sales tax on that amount.
However, it's important to note that the law exempts certain vehicles from this requirement. Those include
New vehicles
Vehicles purchased from licensed dealers
Vehicles bought at a foreclosure auction
Vehicles that are 25 years old
Dirt bikes and ATVs
Salvaged vehicles
Vehicles sold through storage lien
Gifts
Even-trade vehicles
Viewers React to the Skit
In the comments section, many viewers vented their frustration with the tax system in the United States. 'There should be no tax the second time something's sold,' wrote one person. 'Stop taxing the same thing over and over.'
'Remember kids: Not paying taxes is the oldest of American traditions,' wrote another user.
Others offered strategies for getting around this rule. 'Mine are all $100,' joked one person.
A second person simply said, 'Writing 'gift.''
''Engine blew' is my favorite line,' wrote a third person.
Is It a Good Idea to Fib on the Purchase Price?
A
user posed this
question
to r/AskReddit about 15 years ago after agreeing with a private seller to list a lower purchase price of a used vehicle he'd just acquired. 'Has anyone gone through this? What does the DMV catch things like this? What would the consequences be if caught?' the person asked.
One person in the comments replied, 'I don't think I have ever heard of a person NOT doing this.'
A second person agreed. 'Unless you make it SO obvious that the price you gave is phony, they aren't going to care,' they wrote.
But what are the consequences if you do get caught? Well, it depends on where you live and where you purchased the car. In
Utah
, for instance, car buyers who underreport the purchase price of their used car can be subject to a 100% fraud penalty. That means you'll be required to pay double the amount you underreported.
Motor1
reached out to Driveway Finds via Instagram direct message and email for comment.
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