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question on back tax owed on used vehicle

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Artmakerjenny

Active Member
Hope I'm posting in the right place...

OK, my husband bought himself a nice lightly used pick up truck from a private party. It was to be his "retirement toy."
All I know is the guy he bought it from wanted to get out from under the payments. My husband took the money from one of his retirement investments, not even sure which one, and paid the balance due on the truck in full.

Then he died last Sept.

All of a sudden the state of Michigan is claiming he paid 20,000.00 grand and of course the tax on that BUT that they deem this truck to be worth almost 35,000.00 and they want a big whopping chunk of money in back taxes.

now I can no longer ASK my husband what he actually paid. I cannot find out what the original owner had paid off either. Truck is about 5 years old.

Before he got real sick he signed off titles to the truck and a small car he had. Both have been sitting in my driveway. I have yet to have the truck put in my name, will eventually, just haven't had it in me to do much of anything lately. The car he wanted to give to our daughter but right now she just doesn't need it so it sits.

HOW do I answer their letter? Just mail them a copy of his death cert? I have NO CLUE what deal he had with the original seller and don't even have details of who that person was. And now.... I'm suddenly on a fixed income which so far is BARELY making the bills let alone come up with over 800.00 they say is owed in taxes. HOW THE BLAZES does the state know what he paid OR what this used truck is worth?

what do I do here?
 


Taxing Matters

Overtaxed Member
Are these all vehicle taxes (e.g. taxes imposed when getting title or annual registration of the vehicle)? Or is the state saying there is tax owed from the retirement account withdrawal? The vehicle taxes are likely just owed by him (and now his estate). If that's the case, then what you'd do starts with the financial state of his estate. If you've not yet met with a probate attorney that would the first thing I suggest you do since probate may be needed to transfer any assets he owned or had an ownership interest in for dealing with bills that he owed at or after his death.

For property you jointly owned you'll want to get documentation to prove the value of that asset on the day he died because that will affect your income tax later should you sell the asset. The closer in time the appraisal or estimate is to the date of death the more convincing it's likely to be to the IRS and state revenue department.
 

Artmakerjenny

Active Member
Not sure what your initial question is here, he paid in full for the truck. (And all our vehicles are used, fully paid for etc.)
He immediately went to get the thing registered plated insured. This was all done months ago.
Now the letter the state sent is addressed to him. Clearly they do not know he died. I have until the 25th of this month to answer it. I was thinking of just sending a copy of his death cert and saying this is all a done deal, taxes on what he spent were already paid. Let THEM hire a lawyer.

Meanwhile I'm going to get the title put in my name, hopefully tomorrow. Now being as I'm his wife do I need to pay tax for this thing AGAIN? I'm NOT re buying it, just getting it put in my name.
 

zddoodah

Active Member
All of a sudden the state of Michigan is claiming he paid 20,000.00 grand and of course the tax on that BUT that they deem this truck to be worth almost 35,000.00 and they want a big whopping chunk of money in back taxes.
When talking about a large entity (such as a state), it's helpful to be more specific. Who exactly is making this claim, and how was the claim conveyed to you? I'm not looking for a person's name, but rather, something like this: "On January 31, 2025, I received a letter from a person with the Michigan Department of State whose title is ____. This person wrote, ____ and said that the amount of $____ is due."

From a quick google search, it appears that sales tax of 6% of the purchase price is due at the time of title transfer. I therefore assume the "big whopping chunk of money" is either $1,200 (6% x $20,000) or $2,100 (6% x $35,000) (possibly with some late fee added). Is that about right?


I can no longer ASK my husband what he actually paid. I cannot find out what the original owner had paid off either.
Can't you contact the guy who sold the truck to your husband? Can't you check your husband's account records?


HOW do I answer their letter? Just mail them a copy of his death cert?
It's impossible for anyone who hasn't read the letter to suggest intelligently how to respond. I doubt, however, that the DOS would want a copy of the death certificate. That would probably just kick the can down the road.


HOW THE BLAZES does the state know what he paid OR what this used truck is worth?
The value of a motor vehicle is very easily to ascertain through any number of online sources, and one would assume that the sale price was disclosed on the title transfer document.


800.00 they say is owed in taxes.
Perhaps this is the difference between the disclosed sale price and the alleged fair value. It kinda sounds like the state may be claiming that the seller or your husband lied about the sale price on the title transfer document.

Given the amount apparently at issue, the simplest thing to do might be to sell one or more of the three vehicles you mentioned in your post and use that money to pay the tax.


Meanwhile I'm going to get the title put in my name, hopefully tomorrow. Now being as I'm his wife do I need to pay tax for this thing AGAIN? I'm NOT re buying it, just getting it put in my name.
If I'm right about the numbers, I'd be willing to bet that you won't be able to transfer title to yourself without paying what the state says is due.
 

Artmakerjenny

Active Member
"
It kinda sounds like the state may be claiming that the seller or your husband lied about the sale price on the title transfer document.

Given the amount apparently at issue, the simplest thing to do might be to sell one or more of the three vehicles you mentioned in your post and use that money to pay the tax."

THAT ONE. And honestly I don't know what he paid. This was his toy from his savings. But so long after the sale suddenly the state says oh no we didn't charge enough? HOW can the state possibly know what amount of money one man hands to another? This was a USED truck 2019 to be exact. All the seller wanted to do was get out of the payments. But he had been paying all this time so the current value of the truck is NOT what my husband actually paid for it. He got a deal. But tax should be paid on the amount spent right? OR better idea, if it's so easy to look up the value of a vehicle, WHY didn't they do that when he paid the tax? "Oh no sir, this isn't enough." YA THINK?


Sorry I forget I'm talking to legal minds here and I do tend to ramble.
Lets try this.
Does the state charge tax based on the book value of a vehicle,
OR
Does the state charge tax based on the price transacted between seller and buyer?
 

LdiJ

Senior Member
Not sure what your initial question is here, he paid in full for the truck. (And all our vehicles are used, fully paid for etc.)
He immediately went to get the thing registered plated insured. This was all done months ago.
Now the letter the state sent is addressed to him. Clearly they do not know he died. I have until the 25th of this month to answer it. I was thinking of just sending a copy of his death cert and saying this is all a done deal, taxes on what he spent were already paid. Let THEM hire a lawyer.

Meanwhile I'm going to get the title put in my name, hopefully tomorrow. Now being as I'm his wife do I need to pay tax for this thing AGAIN? I'm NOT re buying it, just getting it put in my name.
The state will have a lien on the truck for the $800, so you won't be able to put it in your name or sell it to someone without paying the tax. However, if he was able to register and plate the truck he paid at least part of the tax when he registered and plated it. If they disagreed with the listed value of the truck I would have thought that they would have challenged it then, not now. You are definitely going to have to talk to them to figure out what is going on.
 

LdiJ

Senior Member
"
It kinda sounds like the state may be claiming that the seller or your husband lied about the sale price on the title transfer document.

Given the amount apparently at issue, the simplest thing to do might be to sell one or more of the three vehicles you mentioned in your post and use that money to pay the tax."

THAT ONE. And honestly I don't know what he paid. This was his toy from his savings. But so long after the sale suddenly the state says oh no we didn't charge enough? HOW can the state possibly know what amount of money one man hands to another? This was a USED truck 2019 to be exact. All the seller wanted to do was get out of the payments. But he had been paying all this time so the current value of the truck is NOT what my husband actually paid for it. He got a deal. But tax should be paid on the amount spent right? OR better idea, if it's so easy to look up the value of a vehicle, WHY didn't they do that when he paid the tax? "Oh no sir, this isn't enough." YA THINK?


Sorry I forget I'm talking to legal minds here and I do tend to ramble.
Lets try this.
Does the state charge tax based on the book value of a vehicle,
OR
Does the state charge tax based on the price transacted between seller and buyer?
Also, you keep saying "tax" without saying what kind of tax. I am assuming that its sales/use tax but if I am wrong, I may not be giving you good advice.
 

Artmakerjenny

Active Member
Sorry, yes sales tax. State is claiming my husband spent 20 grand, the state figures this truck to be (dont have it in front of me) 30 something grand therefore he did not pay enough tax at the time. And again, MONTHS AGO now. Let me think here.... he must have got it Jan or Feb.... guess last year. OF course registered it immediately. So again why now all of a sudden is the state saying not enough now?

Again is sale tax based on book value of vehicle or amount transacted?
 

adjusterjack

Senior Member
Quite often, in states that have auto sales taxes, people will write bills of sale for less than the amount actually paid, in order to reduce the tax. The taxing authority routinely checks the sale price with the then market value of the car and sends the letter demanding additional tax.

You will have to prove to the state, with appropriate documentation, that your husband actually did pay $20,000 for the vehicle.

You might wish to call the people that sent you a letter and find out what it would take to get the additional tax waived.
 

Artmakerjenny

Active Member
I will try. Wonder if anyone will pick up the phone. Last time I attempted to call the secretary of state I rotted on hold for over 2 hours until the call was cut off. Again the next day. I'm going to just walk into an office tomorrow. Will bring their letter with me and see what I can find out.
 

quincy

Senior Member
I will try. Wonder if anyone will pick up the phone. Last time I attempted to call the secretary of state I rotted on hold for over 2 hours until the call was cut off. Again the next day. I'm going to just walk into an office tomorrow. Will bring their letter with me and see what I can find out.
I am sorry to hear about the death of your husband, Artmakerjenny.

I suggest you take a copy of your husband’s death certificate with you when you go to the Secretary of State’s office. It can be best to make an appointment in advance so you don’t have to sit in one of those uncomfortable plastic chairs for an hour or more but perhaps you will be lucky and office won’t be too crowded.
 

Artmakerjenny

Active Member
Quincy you are funny. Call and make an appt. Last time I TRIED calling I rotted on hold for two hours until the call dropped.
Tried first thing the next morning, more of the same.

No the only option is go there. Daughter is on her way here, moral support for me since every time I pick up any paperwork involving him I just lose it. She will be my level head today. Grateful for that. I'll post any follow ups. Thanks everyone.
 

quincy

Senior Member
Quincy you are funny. Call and make an appt. Last time I TRIED calling I rotted on hold for two hours until the call dropped.
Tried first thing the next morning, more of the same.

No the only option is go there. Daughter is on her way here, moral support for me since every time I pick up any paperwork involving him I just lose it. She will be my level head today. Grateful for that. I'll post any follow ups. Thanks everyone.
Some offices operate better than others, I guess. I know scheduling an appointment in advance was common during the pandemic and this worked out well.

Anyway, good luck today. I hope you can get everything resolved in one trip.
 

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