State Taxes: Calculation of Taxes Owed on a Used Vehicle Purchase

Is the sales tax on a used car based on how much the seller sold it to me for? If so, he sold it to me for $1.00 (no kidding, I am serious as a heart attack).

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Quoting flyingron

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The DMV won't accept that nonsense. Except in the case of a bona fide gift between family members, they'll look at the $1 OVC declaration and impute the actual value of the car from the blue book and tax you on that.

You might fare a little better by slightly undervaluing the car, but you stray too far from the book value, they'll just laugh and charge you the tax on the book value.

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Quoting adjusterjack

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If the price on the bill of sale is not reasonably close to the book value they will use the book value.

I suggest you look up the book value (KBB, NADA, or Edmunds) and have the bill of sale written for the lowest value shown for poor condition. You should be able to justify that but you won't be able to justify $1.

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Speaking of tax fraud... sales tax is a percentage so wouldn't them charging me more than the accurate percentage be them committing tax fraud? Not sure what the exact percentage is but lets say for argument sake that it is 5%, so since I paid $1.00 the sales tax should be $0.05. I know $1.00 for a vehicle sounds unbelievable but he is my roommate, we have become really good friends, he is moving out of state soon and when he leaves he will be flying out so he won't be able to take the vehicle with him, and he wanted to help me out.

State Taxes: Calculation of Taxes Owed on a Used Vehicle Purchase