Do you have to pay sales tax if you buy a used car from a non-car selling business in California?

Answer 1

Here are opinions and answers from FAQ Farmers: * There are probably different laws in different states, but in Kansas you show the sales tax receipt when you register the vehicle. If you did not pay sales tax to the seller, the county clerk will collect it then. * No. The BUYER probably will. * I believe that in most states when you go to register the car as the buyer you will pay sales tax on the purchase price equal to the sales tax rate of the county you live in. * Sales tax is a State tax and laws and rates do vary. Cars (like real estate) are, by the very nature of values involved, frequently handled under special rules. Generally, just like if you buy say a used washing machine from a business, that business will collect the sales tax. With cars, if you don't buy it from a business, when you go the register it, the Dept. of Mtr Vehicles will collect it for the state. If you trade a car in to a dealer, many places they can give you a credit for the value of the trade, and only charge you sales tax on the amount above it. * YES -- I just discovered yesterday that if you live in Georgia, you WILL have to pay sales tax if you buy a used vehicle from a business. This may be the rule in other states also, even if you purchase the car from out of state. Last month I flew to New York to pick up a beautiful 2003 Cadillac Escalade, and drove it back down here to Georgia. The car was loaded with everything, and I bought it from an individual (so I thought). Since I got a good price on the car compared to a dealership, and thought I would be avoiding any sales tax, I felt it was a very good deal. The only problem was that the seller had bought the car through his small business/company, in which he was a partner, and the company's name was written first above his name on the title. Yesterday, when I went to the county offices to register it, I was told that I would have to pay just over $2100 sales tax at 7% (the county rate) because the car was purchased from a business (although not a car dealership). While I am very happy with the car and still got a very good price, this is a loophole that I've never run into before. So, if you think that you are buying a used car from an individual, make sure that you ask them if it was purchased and titled under the name of a small business or company they own, otherwise you may be liable for the full taxable amount.

COMMENT/CLARIFICATION on above: The person above is confusing things: That the seller had it registered however he had (business name or not) makes no difference. When you buy a car from a NON auto dealer, you pay the tax when you register the car. When you buy it from a dealer, (who normally handles all the registration stuff for you)...you pay him the tax to pay the State. When you buy a car for export out of the State, the tax isn't charged until you register it in the destination State (or if it is, most States will give you a credit for the tax paid, if it was done to get a temporary transit permit).

As far as my previous response, I'm not confusing the matter, just reporting on what happened here with the county when I went to register the car. The fact that the vehicle was "owned" by a business is what affected the taxes. It would have been the same if the owner was in Georgia or in another state. I have purchased vehicles both in and out of state, and because it was from an individual, I did not have to pay sales tax at all when it was registered. These were non auto dealers, and there was no tax owed to the county gov't. I'm not trying to create confusion, just letting you know what happened to me here in Georgia.

The commenter immediately above is absolutely correct. In Georgia, a used vehicle purchased from an INDIVIDUAL (whether he/she is in-state or outside of Georgia) has absolutely no sales tax liability, either at the time of purchase or when the vehicle is registered in Georgia. If, on the other hand, you buy from an AUTO DEALER (either in-state or outside of Georgia) they are legally obligated to collect the sales tax and forward it to the Georgia Department of Revenue (retain proof of such payment in case they fail to do so). The only exception to this rule is if you buy from an out-of-state auto dealer who then ships the vehicle to you in Georgia via "common carrier" (in other words, you don't take delivery in this other state). In that case, they have no legal obligation to collect Georgia sales tax, but you will then owe "Use Tax" (same principle as sales tax) when you register your vehicle at the Georgia DMV (the exact rate of tax may vary from county to county within Georgia; you will pay the rate effective in your county of residence). If you buy from a BUSINESS ENTITY THAT IS NOT AN AUTO DEALER (say a car rental firm that's selling excess inventory), whether they are in-state or outside of Georgia you are still liable for the sales tax. It makes absolutely no difference whether that business is an auto dealership or not: it's whether the name on the seller's title is of an individual or a business that determines sales tax liability in Georgia. In short: individual seller (in Georgia or out of state) = no sales tax when registering vehicle in Georgia; business seller (auto dealer or not, in-state or outside of Georgia) = sales tax liable (with the one exception noted above, when an out-of-state dealer ships you the vehicle via common carrier -- then you are responsible for paying the "Use Tax" when you register at the Georgia DMV). NOTE: When you buy a Georgia vehicle and register it in another state, you will pay the prevailing sales tax rate in that other state. Thus, it doesn't make sense to travel to Georgia to buy a vehicle just to avoid the sales tax. Same would be true for vehicles purchased in Oregon, or any other state that doesn't tax vehicle sales (unless, of course, you also live in such state).

CLARIFICATION: If you purchasde a used vehicle from a private owner in Georgia (and you live in Georgia), then you avoid paying any sales tax on the car. Georgia considers this type of transaction a "casual sale" and only charges sales tax if the previous owner registered the vehicle for a business. Expect to pay sales tax in Georgia, however, if the previous private owner registered the vehicle for business use, or, you bought the car from a dealer. Cars purchased out-of-state also incur a sales tax. For example, if you live in Georgia and purchased a car in Florida from a private individual, you DO pay a SALES TAX in Georgia.

Previous postings incorrectly state that you don't have to pay a sales tax in Georgia if you bought a car from a private individual outside of Georgia. It does matter! I live in Georgia and purchased a new Mercedes Benz in Florida from a private individual, I HAD TO PAY A SALES TAX when registering my car in Georgia.

You do NOT have to pay sales tax in GA when a car is purchased from a privaqte seller regardless of where the private seller resides. This is deemed a casual sale. Please see the links below for the official documentation from the GA dept of Revenue:

http://motor.etax.dor.ga.gov/motor/registration/regrequirements.asp

State Regulation 560-12-1-.07 regarding sales tax (casual sale)

http://rules.sos.state.ga.us/docs/560/12/1/07.pdf

OK, has anyone noticed that the guy asking the question specifically refers to California? Why is everyone discussing Georgia? So frustrating!