Retroactive sales tax?????

Starfire61 · January 25th, 2008

Anybody ever had an experience like this?

Early in 2007 I bought a 1961 Olds Ninety Eight convertible project. The car is somewhat operable & looks halfway decent if you don't know what you're looking at. The reality of the car is that it needs a lot of work: mechanically it's quite tired, the color's wrong, the paint's bad, the interior's wrong, nothing works on the car... get the picture?

I think I paid a fair price for the car. It had been on Ebay with a Buy it Now of around $13K with no takers, so I got it for somewhat less. In IL, the sales tax on a car over 11 years old & costing under $15K is $25. This is what I paid in tax when I titled the car in my name.

Regardless of age, if the car sells for $15K or more, a tiered sales tax kicks in, going from $750 for a $15K car all the way up to $1500 for one costing $30K or more.

Today I received a certified letter from the Illinois Dept. of Revenue with a bill for in excess of $1600 in extra sales tax, interest, & penalties on this car. Apparently, regardless of what I paid for the car, some flunky in Springfield has decided that my 47 year-old restoration project is worth in excess of $30K & I need to fork over all that extra sales tax. [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img] [img]<>/mad.gif[/img]

Bear in mind that nobody from the state ever laid eyes on this car. For all they know it's in boxes.

I had this happen once before, but it was with a much more expensive car that arguably was worth the value the state was assessing it at. At that time, they were only after a few hundred dollars. I was astounded when my attorney told me that what they were doing was perfectly legal. Furthermore, he said that by the time I paid the cost to fight the state I'd probably come out ahead just paying the tax bill.

I'll be talking with my attorney tomorrow. I'm much more inclined to try to fight this time- it's a lot more money. Either way, it's probably going to cost me a bundle, but I'd rather give $1600 to my lawyer & an appraiser than to the damn corrupt State of IL.

What say you, SEMA people???

Chuck

MCHinson · January 25th, 2008

I'm not a SEMA person, but I would have a qualified appraiser appraise the car for you. I would send them a copy of the appraisal along with a letter from your attorney explaining what you paid for the car, explaining the condition of the car and inviting them to come look at the car in person to confirm that the value is not what they have apparently decided that it should be.

I would recommend IVAN appraisals.

http://www.i-van.org/

(Of course I would also recommend that you move to NC, where you pay an extra $10 each year for your antique vehicle license plate, and then the vehicle is only taxed at a maximum tax value of $500.) [img]<>/grin.gif[/img]

ted sweet · January 25th, 2008

NY does the same thing, They can dispute the value of any car and bill the added tax.

Packin31 · January 25th, 2008

Wow I am sure glad I registered my car back in '96 when I inherited it.

tcwilson · February 12th, 2008

nj does the same thing with every car. if they can find the car on nada listings they are happy to send along a tax bill because they need the money. i use junkers because i work down the docks [ salt water ] they want tax money from the last truck i bought. its no use trying to talk to them.

ChopShopCustoms · February 26th, 2008

Originally Posted By: MCHinson

I'm not a SEMA person, but I would have a qualified appraiser appraise the car for you. I would send them a copy of the appraisal along with a letter from your attorney explaining what you paid for the car, explaining the condition of the car and inviting them to come look at the car in person to confirm that the value is not what they have apparently decided that it should be.

I would recommend IVAN appraisals.

http://www.i-van.org/

(Of course I would also recommend that you move to NC, where you pay an extra $10 each year for your antique vehicle license plate, and then the vehicle is only taxed at a maximum tax value of $500.) [img]<>/grin.gif[/img]

I agree an appraisal of the vehicle would ayt least provide a legal document as to the value of the car. Usually they use the Kelly BB if they dont have anything else to go by....too bad you arent in MASS- I do appraisals.

pistoncollector · April 19th, 2008

If you don't want to move to NC you can move to SC. Our tax is 5% up to $6000 cost and at that point it tops out at $300 no matter what you pay for the car. You can pay a million dollars for a car and the sales tax is still $300. And property tax is fixed on cars 25 years old also. Its less than $20 per year.

You need to move.

BobOlds · April 24th, 2008

Don't pay it. This is a revenue fishing expedition by the wonderful state of ILL. You have a legitimate bill of sale and that's what determines the tax which you already paid. This topic has come up recently on other forums.

Fred Zwicker · June 14th, 2008

Sometimes it is better to handle this without a letter from your attorney, as the state may think you are hiding something (my attorney told me to do this when receiving such letters from out of state). You can always get the attorney involved later. Write a return letter, stating the price that you paid for the car with documention of the cost and enclose a photo or two (non-flattering pictures). Mention in your letter that since the cost and true value are far less than the threshold, you will not be sending in any money. Then see what they say. You will probably never hear from them again, as this is what Bob Olds calls a "fishing expedition".

If you do hear from them again, then go to your attorney, get an appraisal and defend yourself vigorously. The market is soft now, so a low appraisal should be appropriate. Good luck.

Fred

Reatta Man · July 16th, 2008

Ask them to agree to the value of the car by an independent appraiser BEFORE you have the appraisal done. If it would help, ask THEM to recommend an appraiser!

That way, if they come back and claim the appraisal is too low, you already have them agreeing in writing to an independent appraisal first. And, of course, send photos!

Also, one of the tricks I use to document the date of the photo is to put a major daily newspaper on the windshield of the car when taking the photo. If they claim your photo is 6 years old, just show them the headline.

You know, a headline everyone will recognize, like "Obama changes policy on Iraq" should be memorable!