Sales tax on kit cars

[T-Rex]

It was bad enough when the lady at MVD charged me state sales tax when I registered my Factory 5 kit ($1100 !). Now, the city of Mesa wants a cut too. I got this letter today:

The state of Arizona has notified this office that you registered the above vehicle to a City of Mesa address and that you have paid the 6.6% State Use Tax.

This letter is to advise you that the City of Mesa also imposes a City Use Tax at the rate of 1.75%. This tax must be paid directly to the City of Mesa as the State does not collect the City Use Tax.

City Use Tax is imposed on items acquired from a retailer for which an equivalent City privilege (sales) tax was not charged at the time of purchase.

Please return this letter to this office with the amount due within 30 days.]

blah blah blah...

There are blank lines for "Vehicle Purchase Price", "Less Trade-In", and "Amount subject to tax". None of these are filled in.

Have any of you had to deal with this before? I'll call them tomorrow and see if I can figure out what's going on.

Thanks,

Rich

[LMH]

Haven't gone through it myself but Tucson charged my brother a tax on his FFR.
Of course, like you, that's in addition to the state tax.
They told him it was a city road use tax. He asked when were they going to fix the road so he could use it.
Larry

[YerDugliness]

Originally Posted by LMH

They told him it was a city road use tax. He asked when were they going to fix the road so he could use it.
Larry

LMAO @ Larry !!

Cheers from Dugly

[Bartruff1]

Why wouldn't the city use the same basis as the State ?

[SkipB]

T-rex,

I would say as unpleasant as it is, just pay it and move on. Perhaps in the past this might have escaped the city of Mesa (or any other local city/town) but not now. They are scrambling for any money they can find.

You may have paid sales tax on parts and pieces that went into the car. There might be a way to deduct these taxes from your total tax. But, I am not sure about this either. This would have applied to your state tax as well. I have heard guys that were successful in doing this, but I am not sure this has been tried in Arizona. Maybe some guys from AZ can weigh in on this. Some states could care less about the sales tax you paid on parts to build the car (i.e. California) and tax the whole completed car by your total car cost including those taxes.

SkipB

[snakebitekit]

When I registered mine, Scotttsdale Airpark, the only thing I had to pay was for the for the license. I did bring reciepts for the motor, trans, paint etc. just in case but they did not even ask to see them. I did not pay any state or local taxes.
I did have to pay extra for the plate "NICEASP".
I agree with the other post, pay and avoid the grief and then enjoy the ride.

[Scotchman]

This is just the beginning. The state of Az will now have a question on your tax return asking you to report all internet purchases, and submit the tax you owe on them. If the info is left blank, your chances of being audited will go up.

[ccomt]

Just send them a signed, blank check! You trust your government, don't you? (LOL)

[snakebitekit]

Originally Posted by Scotchman

This is just the beginning. The state of Az will now have a question on your tax return asking you to report all internet purchases, and submit the tax you owe on them. If the info is left blank, your chances of being audited will go up.

are you serious?

[T-Rex]

Originally Posted by snakebitekit

are you serious?

I sure hope not! But I also hope there aren't any politicians reading this forum; we don't want to give them ideas like that!

BTW, I tried calling the Mesa tax department yesterday, but they're only open Monday-Thursday. Guess I'll have to wait.

Rich

[Mike Brasfield]

I would losse the letter or rather you never received said letter.

[dave from mesa]

What he said except with correct spelling.

[SkipB]

What letter! Ha.

SkipB

[tin-man]

Originally Posted by snakebitekit

When I registered mine, Scotttsdale Airpark, the only thing I had to pay was for the for the license. I did bring reciepts for the motor, trans, paint etc. just in case but they did not even ask to see them. I did not pay any state or local taxes.
I did have to pay extra for the plate "NICEASP".
I agree with the other post, pay and avoid the grief and then enjoy the ride.

Sent you a pm, btw its should be Glandale and not Mesa. tin-man

[Danr55]

Speaking of buying cars.. Skip, isn't your turn coming up soon? You should be having withdrawls anytime now.

[Car Nut]

Having an internet business, I deal with use tax all of time.

The law is clearly on the side of the state, when you purchase the item from an out of state company that did not charge you sales tax. But the tax should not be assessed on anything over the purchase price on a kit car you bought, save your receipt.

If you assemble the car yourself and buy local parts that you paid sales tax, you should not be assessed use tax on those items. Receipts would be helpful.

If you used parts that you had laying around, there should be no tax on those items and purchases from a private party should also not be subject to use tax.

If you live in municipality that charges use tax, then you are also liable for the tax on the same basis as the state tax.

[Bartruff1]

Originally Posted by Car Nut

Having an internet business, I deal with use tax all of time.

The law is clearly on the side of the state, when you purchase the item from an out of state company that did not charge you sales tax. But the tax should not be assessed on anything over the purchase price on a kit car you bought, save your receipt.

If you assemble the car yourself and buy local parts that you paid sales tax, you should not be assessed use tax on those items. Receipts would be helpful.

If you used parts that you had laying around, there should be no tax on those items and purchases from a private party should also not be subject to use tax.

If you live in municipality that charges use tax, then you are also liable for the tax on the same basis as the state tax.

This, the only thing I might add is that you don't want to commit fraud. The City would have easy access to the basis for the State's tax.

[Bill Bess]

If your original purchase order from the kit builder indicates that the motor and trans. were included (but not installed)as part of that purchase, the tax mightl more, or could be less than if you provide them with the separate purchase order for the engine and tranzs....get it!

[SkipB]

Dan,

You are right. I have the itch. But thr 100 plus heat is making me wait a bit! Plus, I don't know what I want this time. Another Backdraft, maybe. Or what? Any suggestions for a local AZ car for sale?

As for taxes and kit cars. If you paid sales tax on everything you bought, I would think that would be deducted from the total tax bill. Also, I really don't know how it works in AZ, but in CA. you couldn't really buy the engine and transmission from the kit car vendor. That would constitute a "complete vehicle" meaning it would need airbags, smog equipment, etc. to meet current vehicle standards as if you bought a new car from a dealer. It may not apply here in the wild wild west of Arizona, but I am not sure. Anybody from Arizona know how this works?

I guess I am paranoid after moving from the Republic of Kalifornia. After all it took me 11 months to get my car titled there. I would just advise caution and staying under the government'r radar.

SkipB

[Danr55]

Skip, The best buys I've seen lately have been on contemporary cobras. Like the green one with the 427 with duals and the whole magilla.