Today, I got nailed by a provision of the current RCW 82.08.010, which provides for the collection of retail sales tax on automobile purchase transactions. Here is my story: On July 26th I sold my car to my father for $12,900.00. I owed the bank $12,300.00 for the car in question. I then purchased another car the very next day for $17,500.00 from a private owner. I was under the assumption that I would only have to pay sales tax on the difference between to two, or $4,600.00. WRONG! I got skinned to the tune of $1,847.10 for combined sales tax, excise tax, and other taxes and fees. Washington allows a tax credit when you trade in a vehicle at a dealership on a new or used model, but not if you sell your vehicle on your own, and then purchase a replacement. The Dept. of Revenue claims this is a valid practice as the tax credit is based solely on the single transaction. If you traded your existing vehicle for another vehicle through a private owner, then that would also qualify for the single transaction credit as well. I whole-heartedly disagree and wish to point out to whomever will listen that through this legislation, the State of Washington is quite literally entering into unfair competitive practices with the auto dealers in the Pacific Northwest. As a good consumer, you will always look for the best deal you can find. Traditionally, you will get more for the vehicle you are disposing of by selling it yourself. Reciprocally, you are more apt to find the car you want at a more affordable price being offered by a private owner. Washington single-handedly tips the scale in the auto dealers favor by offering a tax break for doing business with them. Talk about corrupt government! Here is a suggestion that I intend to press upon my representatives (unless this has been addressed in I-695): How about offering the same tax credit to the tax-payers if they can produce notarized, bills-of-sale for both the vehicle they have sold and purchased, provided that both transactions have taken place within 30 days. That is not so tough now is it? Virginia does it, so does Missouri (I know, I took advantage of that provision in both states). Another gripe: I only owned the car I sold to my father for 30 days....I did, however title and register it and paid all the tax as well. Why cant I have a refund? In 1999, I have now paid over $3500.00 in taxes and license fees for my vehicles. I have more than paid my fair share, why not give some back? Worst part is, only the excise tax is deductible on my federal tax return. Oregon may have an oppressive 9% income tax, but at least it is all deductible! Okay, so here I am mad as all get out about the check I had to write today. My question is: Will I-695 cover the sales/use tax troubles as well? Removing the excise tax is wonderful, but hard-working families really need relief from the sales tax associated with purchasing a new vehicle as well. Lord knows I could sure use it, and I didn't even buy a new vehicle!

-- Matt Yaskovic (myaskovi@eli.net), August 25, 1999

Answers

Matt:

Sales tax is restricted by the initiative, but only if a change is proposed that would be a rate increase, a monetary increase, or an expansion of the legal definition of the tax base. Some uncertainty exists about whether the monetary increase language could apply to the sales tax, but the rate does. In the situation you described, the initiative does not reduce your sales tax obligation.

A related, little known, issue is that the sales tax you pay is the rate in effect at the dealership you bought a vehicle from. If you buy from an out of state dealer, it is your home address tax rate. The variations in sales tax rate are great enough to have some effect on the sales price, particularly on high dollar purchases. On a $50,000 vehicle, a 1% difference is $500.

-- dbvz (dbvz@wa.freei.net), September 10, 1999.