Hi Everyone, just joined the forum as I've been a long time lurker but finally needed some advice. I bought a used IS today, drove it off the lot and took it directly to my mechanic to get it checked (the dealer did not allow me to do a pre-purchase check). The mechanic immediately spotted multiple areas that had repainting done and work done on the the door panel that was uneven (I couldn't see it until the auto mechanic pointed it out). The dealer presented the car as clean carfax, clean title, and no accidents.

Long story short, I drove it directly back to the dealer, and the dealer said he would accept the return of the car. However, he would not be able to refund us back the sales tax paid, with the reason being that everything was processed and sent it electronically to the California DMV already and he’d be on the hook for the tax. He inputted all the info online during signing of the papers.

During the time of the sale, we declined the 2 day contract cancellation.

Is the dealer being truthful in that he can’t refund us the taxes because it’s already done and sent electronically to the DMV? If the car is returned and refunded it’s technically not a sale anymore so why wouldn’t he be able to apply for a return of the tax for something that he has now back in his inventory? Is this legal? Im located in California, so I know the rules get really tricky. Any advice or previous experience would be so greatly appreciated!!!!

 

You might want to call a CarMax, or other mega-used car dealer that promotes a return policy. They will know.

 

Welcome to CL as a new poster.

Sorry we can't give you a more definitive answer here, but whether you get the CA sales tax money back or not depends on a number of factors. It is possible, though, in some cases, to do so, depending on where you live and the nature of the company you are dealing with. For instance, when I bought my second new Saturn a number of years ago (after being very pleased with the first one), it proved unacceptable, with the 30-day money-back policy, even after numerous attempts to address a shimmy, and the company refunded not only the entire sales price but also the price of the factory car-cover I had ordered with it and the Maryland sales-tax as well. I didn't lose a single penny on the deal. One of two things happened.....either Saturn was willing to go to a little extra a length to please their customers or the laws in MD allowed a refund of the tax money. That question, of course, is what you will be facing in CA and with Car Max in that state. But, even if you don't get the CA sales tax money back, it will t all have been wasted in vain. You can still get credit for having paid it and deduct it, in some circumstances, from your other taxes.

 

I used to work in F&I for Enterprise Rent-a-Car where our car sales team had a 7-day 1000-mile return policy. I'm 99% confident you are dealing with a shady dealer; car sales tax can only be collected upon a transaction (which in this case is no longer the case). As there is no transaction they can account this sales tax for, the dealership (in my opinion) is likely keeping the $$ as the State of California cannot collect on tax revenue with no actual sale. I never sold in the state of CA so obviously further diligence is required but reading through Carmax's website, Carvana's and AutoNation's (all 3 brands offer returns), their 100% refund (all fees inclusive of tax) do apply in CA as well.

 

I don't believe for a second that the sales tax cannot be recovered. If I return a sweater to the store, I get my sales tax back too. It would be no different on a car.

The state can't collect sales tax on the same car two times. Nonsense. Sounds like he is just being lazy as there are probably additional forms that he needs to submit to get that tax money back from the state. He probably doesn't want to front you that tax money back while he waits to get it back from the state.

 

https://www.cdtfa.ca.gov/industry/us...le-dealers.htm Everything you need is on this site. If the dealer is in the wrong, you can file a fraud complaint. Following the proper legal path will not only get you the proper results quicker, but it will also discourage the dealer from abusing other consumers. Let us know how it worked out.

 

Exactly.

I wonder if the person at the dealer is confusing sales tax with registration fees. CA is not going to refund fees to register the car in the owner's name, but sales tax is only imposed on a sale. If the dealer takes the car back, there's no sale.

 

Toofy, don't believe a word the 'dealer' says... get a lawyer if you can (and it won't cost more than the sales tax but maybe even if it does, worth it to get the dealer to do the right thing).
failing that, there must be a consumer advocate (bbb?) you can contact.

 

Isn't that exactly what the the state is doing if and when the same car is re-sold to different owners, as a used car, within the same state? It is possible for the same vehicle to be re-sold in the same state any number of times....and sales tax, usually based on the car's KBB value, is collected by the DMV every time a title is transferred. My (late) mother was a Notary-Public, and used to sign and seal that paperwork herself.

 

Perhaps I did not word my response well. My intent was to explain that they cannot collect sales tax on it twice for selling it this one time. If the sale is cancelled but they don't refund the sales tax, then collect tax again when they sell it to the next person, they've collected twice as much tax as they should have.

 

OK, I see what you are getting at (you have a point), but, at the same time, it will depend on how the state DMV or Department of Taxation actually views it. They may (?) consider the returned car actually being sold, from the buyer, back to the manufacturer or dealer...in effect, a double-sale. Interesting question.

 

I want to personally thank each and everyone of you for taking your time to give input into this complex situation I'm in. The responses here have really made me feel empowered to know that the consumer does have options (and resources) to not get cheated.

I am in the works of calling the California consumer tax affairs (DMV branch) and will let you know what they say tomorrow. It's so amazing that this forum can bring together so much knowledge and experiences together...definitely feeling the love! I'll keep you guys updated for future reference.

 

Good luck Toofy! Yes, please do let us know how this turns out.

 

So, did you get a resolution yet? Hoping that the dealer quickly cooperated after you spoke to the state agency.