Barn Find Cars and State Taxes

[Dangermouse]

I had an experience today at the DMV that made me think about Barn Find Cars (or any other “ran-when-parked” type car) and the DMV, specifically the taxes due.

If you sell a Barn Find car, that hasn’t been registered (and therefore taxed) since say 1985, are you liable for outstanding ad-valorum taxes. Or is the buyer.

(My experience today: I bought a 1971 Triumph TR6 in 1995 in Alabama, registered it, and got a lifetime “Antique” tag, that meant I didn’t have to pay any more ad-valorum taxes. When I moved to GA in 2005, I left the car at a friend’s house in AL, and just recently brought it across to GA to work on/ restore (it’s a non-running project car). In Georgia, any motor vehicle must be registered and titled. But when I went to the DMV, they wanted to charge me back taxes and fees/penalties back to 1995, even though I didn’t live in the state back then – almost $2000. After talking to a supervisor they only charged me back taxes to when my latest GA drivers license was issued – in ’09.)

So if you sell a Barn Find Car to someone in-state, and the new owner registers it at the DMV, I think it is entirely possible that the DMV/Dept Revenue will send the Seller a tax bill for 25 years ad-valorum taxes. Anyone heard of this having been done?

[Stainless]

That wouldn't fly in my state. I can foresee the buyer being required to pay taxes for those years the car was not in use, but nobody would want to sell an old lawn ornament car if they had to pay backed taxes on it. They would most likely lose money on the sale. Makes no sense.

[r00b]

To get around the back pay, you register the car in another state and then bring it back. One of my auto teacher told us that.

[Bitsyncmaster]

I've never run into this but our area the cars are only taxed with sales tax when you register the car.

[Stainless]

I've never run into this but our area the cars are only taxed with sales tax when you register the car.

x2

[David T]

The way taxes are handled is a very local thing. In some areas you are taxed separately annually on your possessions and in other areas you only pay sales tax when you register the car for the first time. When buying a car the buyer is usually responsible for the sales tax and he pays it when he Titles and registers the car based on the price he paid to buy the car. If there are "back taxes" owed from before a buyer owned the car it would seem the buyer cannot be held responsible for that. Now if there is a Tax Lien or other incumberance (loan or collateral on a loan, etc) on the car the buyer may have to cover that or the car could be taken away. The seller should indemnify the buyer against ALL problems with the Title. Including if the car was stolen. This is why a "clean" Title is so important. Imagine the position you would be in if you bought a cheap barn-find car, spent a ton of money on to fix it up and when you went to Title it and register it you find out someone else owns it or it was stolen and they take it away from you!!!!!!!!!!! Your only recourse would be to sue the seller. Good luck with that! Especially if it is another State. One of the very first things a buyer should do with any car you buy is to at least Title the car. Now , at least you know you own it! Some States do not charge Sales Tax on Titling, only when actually registering the car. Some require the Bill of Sale and others just take your word for the # on the form. Every State handles this differently so it is up to you to "do your homework". Don't forget to insure it even while you are storing and working on it. You may not need Liability but comprehensive will cover collision, theft, and fire.
David Teitelbaum