Class Action Lawsuit against California Rip-off Sales Tax?

[El Huapo]

There’s a big difference between something being discounted or on sale than using a rebate or manufacturer incentive. Let’s attack this from a different direction- If I was to give you $2000 cash, and the only stipulation is that you must use it towards the purchase of a car at the time of purchase. You find a car for $10,000 straight up- no discounts or anything, and you decide to buy it, using the $2000 I gave you towards the purchase. Do you believe that you should pay sales tax on the $10,000, or $8,000?

Well Jimmy, in one case, there's real money changing hands and in the other case, some of the money is "Fake money" or imaginary money and so maybe I should pay those taxes with imaginary money too---joke. No really, the $20K is not real money, no matter what name or label is put on it. I'm sure to be able to collect extra taxes is why they call it a "rebate" not discount. Thanks for your thoughts though.

 

[El Huapo]

You live in California and are complaining that you think you are paying too much in taxes......

Complaining is the first step in doing something about it. In this country, disgruntled people fought Great Britain to standstill---twice!---because our ancestors wouldn't hold still for a screwing. And maybe the taxation was only a small part of it.
I am still thinking this tax is a swindle, and I do not care what the politics are---I just saw MadDog's post but I have been away for a week or so and missed whatever he deleted, and am likely glad he did what he did, thanks.

 

[El Huapo]

Not true, the OP statement is incorrect. i purchased my 2019 Laramie at Bob Baker Auto Group Carlsbad, California on Dec 31, 2019 and the list price was 70,160.00, - after discount, the sale price was 60,352.00. Tax paid was 7.75% on the 60,352.00, total of 4761.37 taxes paid. Was not taxed on the sticker list price. If OP paid tax on the list price, it was not legal and should go to them for refund.

Right. In your case the difference was labeled a "Discount". But moneywise, the "Rebate" is just a discount with another name and shouldn't be taxable IMHO. Going to the dealer for a refund will not work, they are tied to it by law.

 

[El Huapo]

What is this sales tax you speak of?

Now that's funny! I don't care WHO you are!

 

[El Huapo]

Just moved to Maryland and just bought a 20 Laramie when I got here.
Same thing. Tax you on the retail price before the discounts. But the technicality on Maryland is that the REBATES and CASH BACK are exactly that. Stuff they pay you back AFTER the transaction.

Shiesty bastages.

Mahalo

 

[Batt4Christ]

My complaint: You or I buy a new Ram that MSRP's for $50K as an example. Say it has been discounted by $20K for this discussion. So you pay $30K. When the State of California's Sales Tax is figured, it is figured on the $50K price, even though you paid $30K. So there goes an extra $1600 plus out of your pocket por nada. Maybe other states have this scam going too, I don't know but feel free to chime in if so.
A past example: Some years back, older friends of mine who had worked in California and earned a retirement benefit there then moved to another state to retire to. The Great State of California was making them pay State of California Income Taxes on the retirement benefits (money) that had been earned years before in California even though they didn't live there anymore. Someone started a Class Action Lawsuit and the Great State of Taxifornia lost it's case and refunded the money.

Now I'm sure a lot of "Other Folks" who don't live here are getting a hoot out of this and that's fine. Just please don't hog the forum bandwidth with counter-productive remarks, thanks.

My question: Does anyone know if this particular issue has already been or is being addressed in a lawsuit? Is anyone out there cozy enough with a good lawyer who would like to take this on? I'm old and ornery enough, but don't have the money or energy to take this to its end. It probably should be a much younger person who lives closer to a city with bigger courts to do this, I'm in a podunk with few resources.
To the Forum Moderators: This is about money more than politics, so don't dump on it, thanks. We know that both sides in the California Legislative body are in cahoots to grab our dollars, so this should count as non-partisan. I hope so anyway.
To all forum readers: Thanks for putting up with my rant and I hope I got it out there in a comprehendible manner, apologies if not.

How can a state charge sales tax on a price that you didn't even pay?


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[Batt4Christ]

Similar to what @Midknight is saying, it depends on how they arrived at the price you bought it for. If the selling price is the MSRP price, and then a bunch of rebates were used to arrive at the $30,000, then it’s no different than using coupons at the grocery store- you pay tax on the full price of the groceries, then the coupons are applied. Now, if the MSRP is $50,000, and you and the dealer come to an agreement that they will sell you the truck for $30,000 without using any manufacturer incentives, then I agree you should only pay tax on the price negotiated to buy the vehicle.

What state do you pay sales tax on pre-coupon price?

I go to Walmart (or any retailer) and pic knup a product that the regular price is 10.97. Coupon is for $2 off. Sales price is $8.97. Sales tax is on the sales pice of 8.97.


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[Batt4Christ]

There’s a big difference between something being discounted or on sale than using a rebate or manufacturer incentive. Let’s attack this from a different direction- If I was to give you $2000 cash, and the only stipulation is that you must use it towards the purchase of a car at the time of purchase. You find a car for $10,000 straight up- no discounts or anything, and you decide to buy it, using the $2000 I gave you towards the purchase. Do you believe that you should pay sales tax on the $10,000, or $8,000?

If you have me dash directly to pay towards the car... I still paid $10,000 because that's the final price out of my hand.

Most automotive "rebates" never touch your hand or bank account. It really is just a massive version of a manufacturer's grocery store coupon.


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[Batt4Christ]

I live in Indiana, and have purchased vehicles in the five surrounding states (MI, IL, OH, WI and KY).

I bought a new RAM 1500 Limited in Michigan in late March (just before the state shut down). Michigan collected 6% sales tax on the MSRP. Indiana will charge me an additional 1% tax (IN sales tax is 7%) on the MSRP as well (If I can ever get the damn title from Michigan).

Kentucky is the only state that applies taxes AFTER the incentives. Not that it matters, all of the surrounding states have reciprocity with Indiana. Indiana will get it's money regardless.

Wisconsin applies taxes AFTER a trade in. That would be valuable if I didn't drive my vehicles for 15 years and 300,000 Miles. It's a beautiful state, but I don't think I'll move there to save a couple thousand dollars every 15 years. The heating costs alone would kill me.

The following website may be of some use for people who want to pick up and move to save on sales taxes. Montana and Oregon don't look bad : https://www.salestaxhandbook.com/nevada/sales-tax-vehicles

Kentucky is not the only state. Arkansas charges sales tax on vehicles based on the final sale price (which means the trade value of your trade in also is not taxed). Here's an example:

MSRP: $58,000
CASH ALLOWANCE/"REBATES": $18,000
TRADE-IN ALLOWANCE: $20,000
FIBAL SALE PRICE (TAX ABLE): $20,000

I've bought too many over the last few decades.


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[Jimmy07]

What state do you pay sales tax on pre-coupon price?

Well...in 29 of the states, including yours (if it’s Arkansas), that’s how it works. If the coupon is from the MANUFACTURER of the item (not the retailer), then you pay tax on the price that the retailer is selling the item for, THEN the price of the coupon gets deducted from from the total taxed price of what you paid.

If you have me dash directly to pay towards the car... I still paid $10,000 because that's the final price out of my hand.

Most automotive "rebates" never touch your hand or bank account. It really is just a massive version of a manufacturer's grocery store coupon.


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It doesn’t matter if it touches your hands or not.
Have you ever bought an item from a retailer that came with a rebate (let’s say $25 rebate), where you pay for the item at retailers cost, then you go to the service desk to get the rebate. You fill out the rebate form, mail it in, and 6 weeks later you get the check in the mail from the manufacturer. You receive $25. Not $25 plus the tax you paid on the item from the retailer.
Same thing with a manufacturer rebate or incentive from an auto maker. They have nothing to do with the price the retailer (car dealer) is selling the car for. The dealer can sell the car for whatever they want, and that’s what you pay tax on. In the OP’s example, he bought the car for $50,000. No matter what way you slice it. That’s the amount of money that the dealer sold it to him for. The only difference is, instead of the dealer giving him a $20,000 manufacturer rebate to mail in and wait on the check to be delivered, the rebate is immediately applied- so, it would be the same thing as a down payment, because that’s the stipulation of the rebate or incentive is to apply it towards the purchase of the vehicle.

 

[Batt4Christ]

You are wrong. I'm not sure where you are getting you facts, but it isn't from Arkansas law.

Receipts show prices, minus coupon, then taxes calculated on the net price.

Now- back when cellular carriers gave"free" phones with a two yes contract, I had to pay the sales tax on the phone...based on the usual retail price at the time.

As to source of coupon... Again - I go to say Kroger as they produce their own store coupons as well as honoring manufacturer coupons- , axes are still calculated the same way: the total sales price less all coupons and discounts.

I'm a staunch anti-tax guy who pays VERY close attention to these things.

Well...in 29 of the states, including yours (if it’s Arkansas), that’s how it works. If the coupon is from the MANUFACTURER of the item (not the retailer), then you pay tax on the price that the retailer is selling the item for, THEN the price of the coupon gets deducted from from the total taxed price of what you paid.
.

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[Batt4Christ]

Likewise, just as one of my other posts detailed- auto sales tax here in Arkansas is the actual price paid (retail price, minus rebates and incentives, minus trade-in). In fact, if I don't trade my old one in, but instead sell it privately, I can deduct what I sold it for from the taxable price of my new ride (if within 30 days).





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[Jimmy07]

You are wrong. I'm not sure where you are getting you facts, but it isn't from Arkansas law.

Receipts show prices, minus coupon, then taxes calculated on the net price.

Now- back when cellular carriers gave"free" phones with a two yes contract, I had to pay the sales tax on the phone...based on the usual retail price at the time.

As to source of coupon... Again - I go to say Kroger as they produce their own store coupons as well as honoring manufacturer coupons- , axes are still calculated the same way: the total sales price less all coupons and discounts.

I'm a staunch anti-tax guy who pays VERY close attention to these things.






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Perhaps something changed since this was written about Arkansas...?
https://www.salestaxhandbook.com/arkansas/sales-tax-vehicles

 

[Batt4Christ]

Perhaps something changed since this was written about Arkansas...?
https://www.salestaxhandbook.com/arkansas/sales-tax-vehicles

I don't know who is behind that web site, but I wouldn't base by business model on it.

Just paid my sales tax on myb2020 RAM purchased in April. The retail purchase agreement has the actual numbers, beginning with the MSRP. It then, line-by-line, lists incentives, trade-in, doc fee. My sales tax was based on the bottom mm figure.


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[Jessica Smith]

Same in Virginia, tax on MSRP regardless of the sale price.

Seems like its specifically targeted against domestic manufacturers, because all the domestics have massively inflated MSRPs compared to what the actual street price is.

Look at a Subaru by contrast for example, and you'll always pay pretty close to MSRP, but they set the MSRPs pretty low to begin with.

 

[Batt4Christ]

Seems like its specifically targeted against domestic manufacturers, because all the domestics have massively inflated MSRPs compared to what the actual street price is.

Look at a Subaru by contrast for example, and you'll always pay pretty close to MSRP, but they set the MSRPs pretty low to begin with.

Not sure I see that. New price (MSRP) of Toyota Tundra is very close to similarly-equipped Chevrolet, RAM, Ford, etc. But the Tundra very rarely sees any sort of rebates/incentives.


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[Jessica Smith]

Not sure I see that. New price (MSRP) of Toyota Tundra is very close to similarly-equipped Chevrolet, RAM, Ford, etc. But the Tundra very rarely sees any sort of rebates/incentives

Value is subjective, and there's a reason that the Tundra isn't one of the top three best sellers, however, my point was that non-domestic manufacturers tend to price their vehicle's MSRP reasonably close to their actual market prices that they ACTUALLY expect to fetch.

The big-3 clearly do quite the opposite, and its a culture thing that would probably be hard to reverse, because when you have consumers used to decades of seeing $50K sticker and recognizing it as a $40K vehicle, they may not buy it if they feel they are being "ripped off" at the dealer actually only budging to $1K off sticker because the manufacturer fixed the crazily inflated MSRP.

For example, going to Edmunds and picking a night edition Lonestar Crew Cab it indicates MSRP of $47.4K (screw that!) should have an average street price of $38.7K almost $9K under MSRP and well below the so called "invoice" (great!), but a Outback Touring XT MSRP of $41.5K has a average sale price of $39.5K which is below MSRP but above invoice.

On paper, the Ram is the more expensive vehicle by a wide margin, but in reality its cheaper, and that can confuse shoppers used to buying imports. If they knew in advance they could have afforded the Ram for LESS than the little wagon, it certainly might have swayed their decision.

Its a problem the big-3 created for themselves with this intentional deception, and its hurting consumers in some states too.

 

[LarryA]

Complaining is the first step in doing something about it. In this country, disgruntled people fought Great Britain to standstill---twice!---because our ancestors wouldn't hold still for a screwing. And maybe the taxation was only a small part of it.
I am still thinking this tax is a swindle, and I do not care what the politics are---I just saw MadDog's post but I have been away for a week or so and missed whatever he deleted, and am likely glad he did what he did, thanks.

I hear ya on the frustration, up here in Washington our annual registration fees are based on a “mythical” depreciation schedule, where my truck is still worth 90+% of purchase prices even now.

that said I think it is a losing battle, even if you won and had the tax based on final or net purchase price they would simply raise the vehicle sales tax rate, and you likely would pay the same total tax dollars on the transaction

chalk it up to the “sunshine” Tax and enjoy your truck.

 

[El Huapo]

I hear ya on the frustration, up here in Washington our annual registration fees are based on a “mythical” depreciation schedule, where my truck is still worth 90+% of purchase prices even now.

that said I think it is a losing battle, even if you won and had the tax based on final or net purchase price they would simply raise the vehicle sales tax rate, and you likely would pay the same total tax dollars on the transaction

chalk it up to the “sunshine” Tax and enjoy your truck.

Hi LarryA, I do love my new truck, thanks, I've never had such a brilliant piece of automotive engineering in a 4X4 truck. I love the way it handles in the twisty mountain roads too, maybe because of the little lightweight aluminum V6 that sits way back under the hood moving the CoG more to the middle...? Oh, plus rack & pinion steering and a big sway bar in the front that I didn't have to add myself, love it---and it's more comfortable than my old Z4 if not quite as fast.

Taxwise, yes I know this probably a losing battle and I will not likely see a happy ending to it, but damnit, when I get bit I may not respond immediately but it starts a slow burn and I sometimes just need to bark about it. I am a bit surprised at how many other states are party to this rip-off, but then no, I shouldn't be, right? And I do believe more and more of them (states in the USA) will be piling on when they think there's dollars to be gained. I didn't serve my country to be ripped off by the pencil-pushers in tax schemes.

Other than that, thanks to all who responded, it's finally warming up here in the hills and I think the pollen is done dusting everything so maybe I'll actually wash my truck today or tomorrow, yay! Tenga buen dia, y'all! & Keep on Truckin'!

 

[pacofortacos]

PA charges sales tax on the final price also. However they also charge tax on used car sales.
I hope our governor doesn't see this thread or he will be trying to pass a Cali like new car tax.