Any way to avoid paying tax on ADM?

[CINISI]

Since no one has given you the correct answer …DONT PAY ADM AND DONT GET CHARGED TAX ON IT.

 

[MookeyB37]

Since no one has given you the correct answer …DONT PAY ADM AND DONT GET CHARGED TAX ON IT.

Unfortunately the only way I was getting a 37 package LF truck was to pay over. Only color I wanted…

I had deposits at 3 dealers. The two at first that promised at MSRP but both of them apparently lied about having allocations because they never produced even a VIN #. Both of which I’d put a deposit down before ordering even opened in June.

Found the 3rd which had a VIN and build date. If I didn’t want LF and was opened to a different color… I woulda held out.

Other option was having it painted or wrapped… both of which woulda been more than I’m paying ADM so this was just easier

 

[xxxMannimalxxx]

Correct. State sales and use taxes are codified, generally, on the actual sale price of the vehicle. I’d encourage you to know the law and administrative code your state vehicle registrars use BEFORE you sign.

If you buy private party and obtain a bill of sale, the tax is on the actual sale price. Pay attention here, you may need a notarized receipt.

I got into an all day long fight with the MD MVA branch chief in Waldorf, circa 1992 or 1993 on my first Mustang, bought used for around 6400 bucks or so, which was substantially under KBB. MD admin wanted full KBB because it was 1200 higher and I said F*** you, here’s my receipt, I didn’t pay that.

Oh, but Mr. Smurfslayer, MD requires a notarized receipt for anything under kbb value.

“Cite to authority, please”. followed by perplexed looks, so I followed up with “show me in the state code or state regulations, your authority to charge me more than the receipt, and/or your authority to require documentation above what the courts require”. This poor woman was absolutely stymied. They wanted me to move out of line, and I refused - “I have business with MVA, have the required documentation and the funds to complete the transaction”. They called a charles co. deputy, and he backed me, so they could not service another person until I was done -- So they got someone else at the counter.

I made them produce the code book - this is pre pdf days, pre strong internet search, etc. So they brought out 2 volumes of MVA regulations, rules and policies that were easily Webster’s unabridged sized. I made the branch chief pour through that manual to find the relevant authority. It took her 30 minutes to try and bargain out of it and I offered “I’ve taken the whole day off, and you’re not charging me another $200 in taxes”. Back to the books. About mid afternoon, she found it, and the text was an MVA “policy”, not a state regulation or law and they lacked authority to enforce it. I demanded they process the registration & tax at my receipt’s price, eventually she relented.

I knew the state law at the time, but I was sketchy on administrative code. I knew they couldn’t legally enforce agency ‘policy’ on me though through probably 10 years of encounters with MD MVA, all of which were negative. I got fed up with being abused by them and came prepared. Yes, it cost me an entire day off, which was at best a break even affair for saving $200 but I didn’t make much at the time and that money was important to me.

If your ‘sales price’ of the vehicle includes the ADM, it’s taxable.

I am interested in why they couldn't enforce their own policies and procedures. Most often those policies and procedures are what the courts look at when the state law is silent, and courts give deference to the agencies own interpretations of their rules/policies if ambiguous.

 

[Mars911red]

One option for avoiding tax on ADM is possibly to have the ADM amount be for a service that is not taxable, like driving the truck around from out back building to the front or some other dealer deal that can be a separate but related sketch transaction. Dealer may not want to play.

But the tax man is serious and everything above board is always a good policy.

 

[1BAD454SSv2]

One option for avoiding tax on ADM is possibly to have the ADM amount be for a service that is not taxable, like driving the truck around from out back building to the front or some other dealer deal that can be a separate but related sketch transaction. Dealer may not want to play.

But the tax man is serious and everything above board is always a good policy.

Or make the ADM the dealer prep fee as long as it was labor and not taxable. Or some other non taxable fee.

 

[Raptorny]

Maybe I'm looking at this wrong. If Walmart sells product X for $100 and Target sells the same product X for $120 you pay taxes on the whole purchase not the difference in price. I don't know why it would be any different with a vehicle. However there could be odd laws in states that I'm not aware of.

new york you pay tax on the difference if you have a trade.if not then you pay on the full amt .

 

[Donovan]

Does the dealer send the bill of sale to the IRS?

That is what ties you...

......if you have the copy of the bill of sale.... O_O.

I'm not a lawyer, I can't give you any sound advice past what google has/can provide/d.

 

[Badboy4fun_wa]

If it is a large Adm offer to pay 60% of the Adm in cash 100s. Pretty sure all are happy to avoid the taxes. Oh the IRS and state might not like it so much. In this case there is no Adm you just lost the cash in the finance office on competed signing….. sorta hard to write off the business expense or show the cash flow…. I think it is the reason the petty cash fund had problems all year.

 

[CoronaRaptor]

new york you pay tax on the difference if you have a trade.if not then you pay on the full amt .

That's how it is up north here as well.

 

[melvimbe]

While I get why you would ask the internet about this, I would talk to the dealer about it. Sure, they are not your friend in many instances, but no doubt that they are fully aware of what taxes have to be paid and any potential ways to avoid them. For one thing, and method of tax avoidance has to be something they are willing to go along with, whether it be cash under the table, ADM as a service fee, etc.