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Marvin,EA, Enrolled Agent
Category: Tax
Satisfied Customers: 1672
Experience:  Enrolled to Represent Taxpayers Before The IRS
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We bought a vehicle from dealer in California for exporting ...

Resolved Question:

We bought a vehicle from dealer in California for exporting to Russia. Vehicle was purchased for $43000. While we were waiting for pink slip to come for 3 months, we decided to sell it to a friend for $11000. Due to a dept that we owed to my friend, in return we sold the vehicle for $11000 to cover the difference. However the car will still be going out of the country. Now the DMW does not provide the pink slip basing on the fact that Tax should be paid on $43000. I have to questions 1) Does the second owner has to pay the Tax if he still going to send it out of country? 2) If he still needs to pay the Tax, does he still need to pay for $43000 or for $11000. Thank you very much
Submitted: 8 years ago.
Category: Tax
Expert:  Marvin,EA replied 8 years ago.
Hello and thank you for using Just Answer. When you first bought the vehicle for $43,000 sale tax was due on the purchases and should have been paid the tax to the dealer. Selling the vehicle to your friend is a new transaction and sale tax is due on the $11,000 in CA. Sending the vehicle out of the country does not void the sales in CA. Sale tax is due on the purchase of the vehicle.
Customer: replied 8 years ago.
Marvyn when someone purchases vehicle and ships it out of country does not pay the Tax. When we bought the vehicle we did not pay Tax to the dealer because we were going to ship it of country. Now since we sold it to our friend, DMV is asking us to pay Tax on $43000 but the car still going out of the country. My question was if we still have to pay the Tax and if yes, is it correct for DMV to ask Tax on $43000
Customer: replied 8 years ago.
Marvin I just want to know if you still ?
Expert:  Marvin,EA replied 8 years ago.

When you sold the vehicle to your friend the vehicle was in the country. This would make the transaction a resale of the vehicle and taxes should have been paid on the first transaction. DMV is looking for sale taxes to be paid on all vehicle transaction and your friend will have to pay sale tax on the $11,000 to the DMV.

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