Used Car Buyers Soaked By New Tax Law - - Tyler, Longview, Jacksonville |ETX News

04/30/07-Upshur County

Used Car Buyers Soaked By New Tax Law

Many people who have a used car sell them privately to a friend, a neighbor, even to someone in their family.  Often, they sell it cheap, as a favor.

For some thinking they got a deal, stands the State of Texas to soak them big.  

Mark Tims has driven a white Ford F-150 pickup for years at his job.

"I [recently] purchased the truck from the place where I used to work, and I paid $1,100 for it," he says.

It still runs fine.  It's a dependable truck, and was a real deal -- until he made a trip to the tax office.

"I was told they didn't tax you on the purchase price, they tax you on the perceived value on the vehicle."

A little-known law took effect in October.    Instead of Mark paying tax on his actual price,

"I paid $1,100, and they said it was worth about $3,600, so that's what they were going to tax me on," he says.

It's called the "Standard Presumptive Value."

Buyers will pay 6.25 percent on 80 percent of the "Presumptive Value" determined by state tables.  

Prospective buyers can enter in the make, model, year and odometer reading into a TxDOT website and find the value they'll the taxed on.   Even if they plan to pay a lot less to buy the vehicle.

New vehicles are exempt, and so are very old cars.  Dealer purchases, salvage jobs, outright gifts or even trades aren't subject to the tax change, either.

The supporting lawmakers said it was a way to collect taxes from people who routinely lied about how much they really paid.  Mark says -- for honest folks -- it's a bill they don't deserve.

"I don't think it's fair at all to tax people for more than what they bought it for," he says.

You can go to a dealer or adjuster, pay them a state-mandated fee of several hundred dollars, and see if they appraise your vehicle for less.

Fervent supporter of the bill, Senator Jeff Wentworth of San Antonio says he expects the extra tax money to be about $35 million a year, and that it will all go to fund public education.

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