Sales Tax On Buy Back Transactions In Texas

shovelhd

Veteran Member
Joined
Mar 26, 2014
Location
Western MA
TDI
2014 JSW
So what happens if you buy a car that costs less than the price of the buyback? Do you pay no tax? This could be a fairly common situation for this program.
 

bizzle

Veteran Member
Joined
May 21, 2013
Location
Southern California
TDI
2015 GSW SEL (totaled), 2013 Touareg Executive
The taxing agency will cut you a rebate check.

You know how much these agencies love to return taxes.
 

Salsaman06

Veteran Member
Joined
Dec 30, 2012
Location
Texas
TDI
2013 Passat TDI SEL (sold back to VWoA Dec 21, 2016)
The sales tax in the great state of South Carolina where I reside is capped at 300$. So no matter if you buy a 4 grand used car or a 400 grand Lamborghini, the most you would pay in sales tax is 300$
That's because you have to pay property tax on vehicles every year. ;) And in the S.C. county I used to live in (Dorchester) it's 6% of the fair market value....every year. In Texas, its 6.25% one time sales tax.
 
Last edited:

Airpizz6

Veteran Member
Joined
Nov 17, 2015
Location
Bel Air, MD
TDI
Now TDI-free, but there now is a 15 MB E250 BT in the driveway
That's because you have to pay property tax on vehicles every year. ;) And in the S.C. county I used to live in (Dorchester) it's 6% of the fair market value....every year. In Texas, its 6.25% one time sales tax.
Guess that explains why I saw so many s---boxes last time I drove through the Palmetto state.
 

Salsaman06

Veteran Member
Joined
Dec 30, 2012
Location
Texas
TDI
2013 Passat TDI SEL (sold back to VWoA Dec 21, 2016)
I contacted the Texas State Comptroller's office today. The gentleman I spoke to in the vehicle sales tax refund office was very nice and said he knew about the TDI emissions lawsuit but didn't have a lot of details. I had to educate him on some of the finer points. but said the state tax attorneys and CPAs have not provided any guidance yet. He said this situation is unlike anything they have dealt with before but IF the transaction falls under the legal definition of Texas' Lemon Law buyback (i'm paraphrasing), at the time of the buyback transaction they would add tax, title, license costs in addition. This is based off of what he has seen with previous manufacturers buying back vehicles. This kind of tracks with something I read last night on the Comptroller's web site. However, I am thinking that if Lemon Law does not apply, then we Texans may be SOL. But I'm going to continue pounding the state on this for guidance. Probably would do better going to a tax lawyer.

The other interesting thing is that he said I was the first to call about this. I am thinking that if more Texas residents called, it would prompt the CPAs to provide guidance on this.
You can reach that office at 800-531-5441 ext 34545
 
Last edited:

HBarlow

Veteran Member
Joined
Nov 3, 2012
Location
Crosby County, TX
TDI
2009 Jetta Sportwagen, 2016 Audi Q5 TDI
I commend you for taking the initiative to contact the comptroller's office and ask the questions. It might at least alert them that answers will be required in court houses all over the state by November - December - January.

I doubt the comptroller's staff is going to do much at this point. Lawyers operate on written documents. Until the federal judge has approved the VWoA agreement and the lawyers publish it there is nothing for the comptroller's lawyers to read and interpret.
 

Salsaman06

Veteran Member
Joined
Dec 30, 2012
Location
Texas
TDI
2013 Passat TDI SEL (sold back to VWoA Dec 21, 2016)
.... I doubt the comptroller's staff is going to do much at this point. Lawyers operate on written documents. Until the federal judge has approved the VWoA agreement and the lawyers publish it there is nothing for the comptroller's lawyers to read and interpret.
I completely agree. Didn't mean to imply they would give guidance prior to final settlement. The guy in the tax office so much as said that. But they can begin to prepare - read where this is at today and be ready to go with guidance once the final settlement has occurred. At the very least, we should communicate to that office that citizens are interested in this and expect guidance once the settlement is final. Basically what you said above. ;)
 
Last edited:

Airpizz6

Veteran Member
Joined
Nov 17, 2015
Location
Bel Air, MD
TDI
Now TDI-free, but there now is a 15 MB E250 BT in the driveway
I completely agree. Didn't mean to imply they would give guidance prior to final settlement. The guy in the tax office so much as said that. But they can begin to prepare - read where this is at today and be ready to go with guidance once the final settlement has occurred. At the very least, we should communicate to that office that citizens are interested in this and expect guidance once the settlement is final. Basically what you said above. ;)
One would think that of the 1200 comments submitted to the court, this issue probably had more than its share of the total quantity. I'm not expecting any real changes in the final settlement, but it would be great if Judge Breyer at least acknowledged this issue in his conclusions and recommended that the various states consider some type of compensation. That might break the inertia somewhat and might lead to something positive. Of course, I'm just dreaming.
 

Salsaman06

Veteran Member
Joined
Dec 30, 2012
Location
Texas
TDI
2013 Passat TDI SEL (sold back to VWoA Dec 21, 2016)
One would think that of the 1200 comments submitted to the court, this issue probably had more than its share of the total quantity. I'm not expecting any real changes in the final settlement, but it would be great if Judge Breyer at least acknowledged this issue in his conclusions and recommended that the various states consider some type of compensation. That might break the inertia somewhat and might lead to something positive. Of course, I'm just dreaming.
Yes I was actually thinking this myself. Especially the idea that there probably aren't going to be any major changes to the settlement. The tax office could start digesting the information now and just make the minor course corrections when the final comes about. That way they can be ready to publish something shortly thereafter.
 

S2000_guy

Veteran Member
Joined
Sep 4, 2013
Location
ohio
TDI
2014 Sportwagen TDI
Why would the judge ask states to forego tax revenue to benefit customers who have already received the value of the car + "generous compensation?" ;-)
 

Salsaman06

Veteran Member
Joined
Dec 30, 2012
Location
Texas
TDI
2013 Passat TDI SEL (sold back to VWoA Dec 21, 2016)
Why would the judge ask states to forego tax revenue to benefit customers who have already received the value of the car + "generous compensation?" ;-)
Because "tax" is an added cost. Its not part of the value of the car. And unless the "restitution" has been clearly defined to cover tax, title, license (it may, I haven't found anything on that yet) then it is an extra cost that should be compensated for. It will all boil down to the individual state laws and the legal decisions of the lawsuit itself.
 

Rico567

Top Post Dawg
Joined
Jun 13, 2003
Location
Central IL
TDI
2013 Passat TDI SEL Premium (Turned in 7/7/18)
Why would the judge ask states to forego tax revenue to benefit customers who have already received the value of the car + "generous compensation?" ;-)
Fundamentally, in my view, because there are 50 states, and tax on vehicles is handled very differently from state to state, a few having no tax at all. It may well be that the compensation exists - at least in part - to take care of any tax issues. But to require VW to compensate each individual owner for tax paid, or all the accessories and add-ons some put on their cars (should I get additional money for my aftermarket floor mats?) just adds levels of complexity to an already involved situation.
So I believe that the compensation amount is intended to cover this, and not (as some construe) to make up for some "injury" VW caused the owners. No such thing exists, VW broke the emissions statutes, period*, has admitted it, and the settlement flows from that.

*Please: no one bring up the issue of criminal charges against VW employees; that is an issue that is entirely separate from the topic under discussion.
 

dubStrom

Veteran Member
Joined
Aug 6, 2007
Location
Kansas City Missouri
TDI
2003 A4 Jetta (sold), 2010 JSW (sold), 2013 Passat 6MT traded for 2014 JSW with 6MT-TOTALED in November 2016, 2003 ALH 5MT conversion (sold), wheezing 2015 GSW/DSG and a new 2021 Tacoma Access Cab 4x4 p'up
Car buying has a special place in the US. And changing something like tax policy to penalize consumers that are already the victims of fraud is unlikely in most States. I predict that the standard trade-in policies will be followed.

Once the buyback starts, the motor vehicle department (called contract offices here in MO by the Department of Revenue) will be forced to get answers fast, because there is a 30 day limit on registration! There will be an uproar if we are charged ~7% on the full purchase price in this State. It just won't be tolerated, and politicians may even weigh in and squelch it.

Since the policy of paying tax on the difference between trade-in allowance and purchase price is already established here, and there are forms to accomodate it already in place, they'll just make a quick order to all contract offices and a memo State-wide and it will be done with.

I called and verified it yesterday...the tear-off form at the bottom of your MO title ("notice of Sale/Transfer") is exactly the same thing as MO form 5049 (also has the name "notice of sale/transfer". The only difference is that the tear-off form on your title has the VIN (and barcoded VIN) already on the form. This is all you need to get the tax credit for trade-in. The REALLY cool thing is that you have 6 months to purchase a new car!

I'll go wildly out on a limb on this issue ;) and predict that Missouri will follow this policy on the buyback cars. Similar process will probably follow through in most other States where the policy is in place.
 
Last edited:

HBarlow

Veteran Member
Joined
Nov 3, 2012
Location
Crosby County, TX
TDI
2009 Jetta Sportwagen, 2016 Audi Q5 TDI
Fundamentally, in my view, because there are 50 states, and tax on vehicles is handled very differently from state to state, a few having no tax at all. It may well be that the compensation exists - at least in part - to take care of any tax issues. But to require VW to compensate each individual owner for tax paid, or all the accessories and add-ons some put on their cars (should I get additional money for my aftermarket floor mats?) just adds levels of complexity to an already involved situation.
So I believe that the compensation amount is intended to cover this, and not (as some construe) to make up for some "injury" VW caused the owners. No such thing exists, VW broke the emissions statutes, period*, has admitted it, and the settlement flows from that.

*Please: no one bring up the issue of criminal charges against VW employees; that is an issue that is entirely separate from the topic under discussion.
Well stated.

If the proposed settlement becomes the approved settlement I will be very generously compensated - actually over compensated.

There is no sane way to pretend that my second hand VW JSW with 114,000 miles is worth anywhere near the $14,300 in total compensation I expect to receive for it.

I've never purchased lottery tickets or gambled but selling my VW to VWoA for the figure I've seen must be similar to the feeling the clowns who tie up cashiers in convenience stores buying scratch off lottery tickets feel when they win.

I will leave the floor mats, cargo mat, recent new Michelins, and the recent new battery in the car and will probably run it through the automated car wash several more times before I drive it to the VW dealer in a month or several.
 

Airpizz6

Veteran Member
Joined
Nov 17, 2015
Location
Bel Air, MD
TDI
Now TDI-free, but there now is a 15 MB E250 BT in the driveway
Fundamentally, in my view, because there are 50 states, and tax on vehicles is handled very differently from state to state, a few having no tax at all. It may well be that the compensation exists - at least in part - to take care of any tax issues. But to require VW to compensate each individual owner for tax paid, or all the accessories and add-ons some put on their cars (should I get additional money for my aftermarket floor mats?) just adds levels of complexity to an already involved situation.
So I believe that the compensation amount is intended to cover this, and not (as some construe) to make up for some "injury" VW caused the owners. No such thing exists, VW broke the emissions statutes, period*, has admitted it, and the settlement flows from that.
*Please: no one bring up the issue of criminal charges against VW employees; that is an issue that is entirely separate from the topic under discussion.
While states as you say handle tax on car purchases quite differently, there are many that only tax on the difference between the purchase price and the trade in allowance. Since the buyback is based on the clean trade in value, why would those states not consider this as a trade in which would serve as an allowance against the purchase of a replacement within so many days of the buyback? Seems logical to me, but 'logic' and 'state governments' are generally mutually exclusive. And I have no dog in the fight. Haven't traded in a car since 1983.
 

Rico567

Top Post Dawg
Joined
Jun 13, 2003
Location
Central IL
TDI
2013 Passat TDI SEL Premium (Turned in 7/7/18)
While states as you say handle tax on car purchases quite differently, there are many that only tax on the difference between the purchase price and the trade in allowance. Since the buyback is based on the clean trade in value, why would those states not consider this as a trade in which would serve as an allowance against the purchase of a replacement within so many days of the buyback. Seems logical to me, but 'logic' and 'state governments' are generally mutually exclusive. And I have no dog in the fight. Haven't traded in a car since 1983.
My post was not addressing why the states would or would not consider a buyback to be the same thing as a trade in (or, as some have theorized, a lemon law turn-in), only that, as with alcohol, say, states can vary quite significantly in their laws. This has always been the case, and is likely to continue.
On the one hand, life might well be simpler if we had uniform laws on all subjects from sea to shining sea in this country, but that would require revolutionary changes, and not for the better, with all laws emanating from Versailles-on-the-Potomac inside the I-95 beltway.
 

CT_White_SRT

Veteran Member
Joined
Oct 30, 2014
Location
CT
TDI
2015 Golf SEL
Well stated.

If the proposed settlement becomes the approved settlement I will be very generously compensated - actually over compensated.

There is no sane way to pretend that my second hand VW JSW with 114,000 miles is worth anywhere near the $14,300 in total compensation I expect to receive for it.

I've never purchased lottery tickets or gambled but selling my VW to VWoA for the figure I've seen must be similar to the feeling the clowns who tie up cashiers in convenience stores buying scratch off lottery tickets feel when they win.

I will leave the floor mats, cargo mat, recent new Michelins, and the recent new battery in the car and will probably run it through the automated car wash several more times before I drive it to the VW dealer in a month or several.
I am happy for you but others are not getting such a "generous" deal
 

GyroRon

Veteran Member
Joined
Feb 21, 2014
Location
Fort Mill SC
TDI
2013 Jetta tdi
That's because you have to pay property tax on vehicles every year. ;) And in the S.C. county I used to live in (Dorchester) it's 6% of the fair market value....every year. In Texas, its 6.25% one time sales tax.

I do have to pay property tax each year, but that goes to the county. The sales tax when I purchase the vehicle goes to the state.

The property tax sucks, and is kind of high. Not sure what the rate is, but for example, the tax on my 2013 jetta TDI was 286.60$ for this year. That included the DMV registration and tag renewal as well. Each year as the car is worth less the tax goes down. They valued the car at 14,667$ for tax purposes.
 

dubStrom

Veteran Member
Joined
Aug 6, 2007
Location
Kansas City Missouri
TDI
2003 A4 Jetta (sold), 2010 JSW (sold), 2013 Passat 6MT traded for 2014 JSW with 6MT-TOTALED in November 2016, 2003 ALH 5MT conversion (sold), wheezing 2015 GSW/DSG and a new 2021 Tacoma Access Cab 4x4 p'up
The taxing agency will cut you a rebate check.

You know how much these agencies love to return taxes.
OK, that's funny! Sarcasm. Unfortunately, zero tax payment is the best we can expect. No one is entitled to collect tax from the govenment!

I know it's a joke, but someone might believe you!

And thanks to HBarlow for motivating me to call the Motor Vehicle Department and find out. Alightner's web research (THANKS) also reminded me that these things are available on State DOR websites!

This stuff borders on legal advice, but no one here is going to pretend to have an official opinion. But at the same time, all of you are really valuable on this site for your opinions, and we work together.

Maybe we SHOULD have a dedicated thread for how to handle the sales tax issue for links to policies and forms. People can also post there experiences as they go through the buyback and buy a new car.
 
Last edited:

bloc

Veteran Member
Joined
Apr 25, 2006
Location
Austin, Tx
TDI
2013 Touareg TDI
Called the texas comptroller's office this morning, and got transferred to an automotive specialist.

She said that unless the buyback and replacement purchase are both a part of the same transaction, there will be no sales tax offset.

Hoping someone else comes up with something different...
 

Salsaman06

Veteran Member
Joined
Dec 30, 2012
Location
Texas
TDI
2013 Passat TDI SEL (sold back to VWoA Dec 21, 2016)
Called the texas comptroller's office this morning, and got transferred to an automotive specialist.

She said that unless the buyback and replacement purchase are both a part of the same transaction, there will be no sales tax offset.

Hoping someone else comes up with something different...
Go back and read my post #35 in this thread. I'm not sure what you mean by "automotive specialist" but if you didn't talk to the auto sales refund office (yes there is such a thing) I would not believe what she said. In fact, there is a real possibility of getting some amount of a refund but it appears to be limited. There is an application process for that - but it would come under the lemon law justification. The question is whether this transaction can legally be considered part of the Lemon Law. IF it does, then you CAN get some of the tax back. HOWEVER, there is a 4 year time limit from the day you purchased the vehicle within which you must submit the paperwork to request the refund.
 

rjacobs

Active member
Joined
May 6, 2015
Location
Dallas, TX
TDI
2015 Jetta S 6mt
Go back and read my post #35 in this thread. I'm not sure what you mean by "automotive specialist" but if you didn't talk to the auto sales refund office (yes there is such a thing) I would not believe what she said. In fact, there is a real possibility of getting some amount of a refund but it appears to be limited. There is an application process for that - but it would come under the lemon law justification. The question is whether this transaction can legally be considered part of the Lemon Law. IF it does, then you CAN get some of the tax back. HOWEVER, there is a 4 year time limit from the day you purchased the vehicle within which you must submit the paperwork to request the refund.
Thats the big thing, I dont believe these cars are being considered "lemon's" by the definition which is usually defined as: 4 times in the shop for the same problem in the 1st year OR more than 30 days in the shop for the same problem, again, in the 1st year. I believe you could go 3 times in the first year and the 4th in the second year and still be covered.

Also in a true lemon case, the title will be changed to a lemon title(maybe not lemon, but something other than a clear title) and will forever be disclosed as such.

I went through a lemon law case with a 2012 Hyundai. The dealership(or whoever) settled before we went to court and bought the car back from me. They got a clean title car to do with as they please, even though the car met every definition of a lemon and then some...

I dont believe either of those things are occurring and this is a buy back with clear titles retained(as far as I know, the titles will NOT be branded as lemon's). NOW they may show up on carfax(or the like) as being a manufacturer buy back, but still a clear title.

Thats the big difference IMO that, at least in the State of Texas, would make the difference between a sales tax refund or not.


AND as bloc mentions, unless the two transactions are on the same piece of paper(they WONT be), you wont get any offset. The dealer is not buying your car like they are in trade situation, VW corporation is buying your car. VW could do the buy backs at a big ass warehouse for all they care. They are choosing to do them at dealerships, for convenience, but they dont have to.

I think we are hosed either way, again, in my opinion.
 
Last edited:

saggii

Veteran Member
Joined
Apr 24, 2016
Location
Texas
TDI
No longer - Jetta(s), A6
I contacted the Texas State Comptroller's office today. The gentleman I spoke to in the vehicle sales tax refund office was very nice and said he knew about the TDI emissions lawsuit but didn't have a lot of details. I had to educate him on some of the finer points. but said the state tax attorneys and CPAs have not provided any guidance yet. He said this situation is unlike anything they have dealt with before but IF the transaction falls under the legal definition of Texas' Lemon Law buyback (i'm paraphrasing), at the time of the buyback transaction they would add tax, title, license costs in addition. This is based off of what he has seen with previous manufacturers buying back vehicles. This kind of tracks with something I read last night on the Comptroller's web site. However, I am thinking that if Lemon Law does not apply, then we Texans may be SOL. But I'm going to continue pounding the state on this for guidance. Probably would do better going to a tax lawyer.

The other interesting thing is that he said I was the first to call about this. I am thinking that if more Texas residents called, it would prompt the CPAs to provide guidance on this.
You can reach that office at 800-531-5441 ext 34545
Salsaman, thank you for this info. I called them and connected right through the vehicle sales tax refund office. A nice lady offered to start a claim process right away but said it would be up to the case reviewers weather or not I would get a refund. I would urge more texans in this forum to call them just to ensure they have visibility of what is coming and what to do when we submit our claims.
 

PC Passat

Active member
Joined
Jun 10, 2009
Location
Scottsdale, Az.
TDI
2017 Jetta GLI
I just did a little research on Arizona Law. I will first state that the law has the usual amount of legal wiggle words that would require an interpretation most likely.
Title 44-1263 states that if a vehicle does not meet the express warranty 'emissions in this case' then the following applies. If manufacture "Accepts the return of a motor vehicle from a consumer without replacing the motor vehicle,the manufacture shall refund the amount of the tax of the vehicle to that consumer."
Seems fairly clear, getting it done would probably require lawyers though. The Judge should be aware of local and state law when writting his decision.
 

Rico567

Top Post Dawg
Joined
Jun 13, 2003
Location
Central IL
TDI
2013 Passat TDI SEL Premium (Turned in 7/7/18)
<snip>
Seems fairly clear, getting it done would probably require lawyers though. The Judge should be aware of local and state law when writting his decision.
Are you aware of the implications of this? Bringing "local and state law" into it would mean the decision would be delayed so that heirs would be the ones enjoying the buyback......
 

daesania

Veteran Member
Joined
Mar 4, 2010
Location
Omaha, NE
TDI
VW Jetta Sportwagen
Go back and read my post #35 in this thread. I'm not sure what you mean by "automotive specialist" but if you didn't talk to the auto sales refund office (yes there is such a thing) I would not believe what she said. In fact, there is a real possibility of getting some amount of a refund but it appears to be limited. There is an application process for that - but it would come under the lemon law justification. The question is whether this transaction can legally be considered part of the Lemon Law. IF it does, then you CAN get some of the tax back. HOWEVER, there is a 4 year time limit from the day you purchased the vehicle within which you must submit the paperwork to request the refund.
LOL In the county our car is registered, there's literally one person who does it all. No "auto sales refund office" in anderson county.
 

Mitral

Active member
Joined
Mar 7, 2013
Location
Twin Cities
TDI
2013 SportWagen TDI
Any update on this topic now that we've had a few months of buybacks under our belts? I'm have a buyback appt on March 18, and my new GTI should arrive by the end of the month. I had assumed that this would be a considered a trade in and I would only pay tax on the difference. Like many of you, that could mean a $1K + tax bill depending on how things shake out. That may be just enough to push me towards another manufacturer......

I'd love to hear peoples experiences the past few months.

Cheers!
 

Rico567

Top Post Dawg
Joined
Jun 13, 2003
Location
Central IL
TDI
2013 Passat TDI SEL Premium (Turned in 7/7/18)
<snip> I had assumed that this would be a considered a trade in and I would only pay tax on the difference. <snip>
This is quite a large assumption. There is only one state that I have seen confirmed in posts on this forum that allows the buyback to be credited like a trade-in (VT, I think). Most, if not all other states consider this to be something completely different (which it really is), and you're going to pay sales tax on the full purchase price. I don't know which "Twin Cities" you live in, probably the ones in MN. The ones I live in (in IL) are subject to the IL sales tax statutes, which are pretty specific on this subject: no trade in allowance on the buyback.
 

daesania

Veteran Member
Joined
Mar 4, 2010
Location
Omaha, NE
TDI
VW Jetta Sportwagen
Any update on this topic now that we've had a few months of buybacks under our belts? I'm have a buyback appt on March 18, and my new GTI should arrive by the end of the month. I had assumed that this would be a considered a trade in and I would only pay tax on the difference. Like many of you, that could mean a $1K + tax bill depending on how things shake out. That may be just enough to push me towards another manufacturer......

I'd love to hear peoples experiences the past few months.

Cheers!
You have to pay the full sales tax.
 
Top