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Sales Tax on GGT?


ToddL

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I had my salesman work the final numbers on my GT500 (MSRP from a small dealer), and noticed that the Gas Guzzler tax was added to the MSRP, which then gets sales tax added to it. I know, call me cheap, but I am a numbers type guy, and the sales tax on the GGT is almost $100. Hey, thats 2 tanks of gas!!

 

Does this sound right to add a tax on a tax?

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OK, I have a theory...

 

When you buy a car from a dealership, you are actually the 2nd owner. The dealer had to buy the car outright from Ford first. According to the IRS Gas Guzzler Tax rules (Form 6197), the Gas Guzzler Tax applies only to the "...manufacturer’s first use (sale) of an automobile or first lease of an automobile." If the dealer is the first "buyer" the dealer is responsible for paying the GGTax. Therefore, the GGTax you pay the dealer isn't really a tax. It's just a markup the dealer is adding to the MSRP in order to cover the tax expense they incurred, so you aren't really paying a tax on a tax.

 

I'm just thinking out loud here, but it seems like a possible explanation of the tax on a tax issue. :shrug:

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Dealerships are not the "1st owner" of a new car. New cars are on an "MSO" and not actually titled. Once the car is sold by the dealership to a customer, then the MSO (Manufacturer's Statement of Origin) is turned in for a title, thus making the first titled customer the real 1st owner of a car.

 

Laws may vary from state to state, but here in Washington state, sales tax is collected by the dealership on behalf of the state on all amounts for the vehicle purchase except license tabs and extended warranties. So, the GG tax, ADM's, purchase price, accessories, dealer fees (if any), etc. will all be taxable items per Washington state law. Again, laws may vary from state to state.

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Ok. Here's a better question: Will we have to pay sales tax on the amount we may have agreed to pay over dealer MSRP? :shrug:

 

 

 

Here's what I did. I told the dealer that the two grand was nothing more than a "rights fee"for the right to order one at MSRP. So, my buyer's order sez MSRP, nothing more.

 

:shift:

 

bj

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What in the hell is AIR CONDITIONING TAX !!! :headscratch::hysterical2:

 

yeah we all know its better for the environment to drive down the highway with windows down (time to recalculate the drag coefficient again) than to use air conditioning; at least they got rid of the $5/tire tire tax a few years back- it was supposed to cover recycling costs of old tires but the media found out the funds were going into the general treasury so there was a big stink-up and the tax was eliminated.

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B)-->

QUOTE(Five Oh B @ Jun 21 2006, 06:34 PM) 21918[/snapback]

Dealerships are not the "1st owner" of a new car. New cars are on an "MSO" and not actually titled. Once the car is sold by the dealership to a customer, then the MSO (Manufacturer's Statement of Origin) is turned in for a title, thus making the first titled customer the real 1st owner of a car.

 

Laws may vary from state to state, but here in Washington state, sales tax is collected by the dealership on behalf of the state on all amounts for the vehicle purchase except license tabs and extended warranties. So, the GG tax, ADM's, purchase price, accessories, dealer fees (if any), etc. will all be taxable items per Washington state law. Again, laws may vary from state to state.

 

 

Thanks for the clarification, Five Oh. I guess that blows my theory out of the water. So, it sounds like we do pay sales tax on the GGTax...doesn't seem right to me.

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so the question is...is the Gas Guzzler Tax really a tax? or is it a fee?

My guess is that it is a federal tax and if that's the case, the each state would be collecting a % of the $1300. So for example, if there is a 8.5% State Sales Tax, then they would be getting an additional $110.50 out of each one of us.

(% varying by state of course).

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so the question is...is the Gas Guzzler Tax really a tax? or is it a fee?

My guess is that it is a federal tax and if that's the case, the each state would be collecting a % of the $1300. So for example, if there is a 8.5% State Sales Tax, then they would be getting an additional $110.50 out of each one of us.

(% varying by state of course).

 

 

According to the IRS, it seems to be a true tax. See attached tax form. And, yes, it seems there is an additional indirect GGTax from the state (via sales tax on the GGTax).

irs_ggtax_form_6197.pdf

irs_ggtax_form_6197.pdf

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yeah we all know its better for the environment to drive down the highway with windows down (time to recalculate the drag coefficient again) than to use air conditioning; at least they got rid of the $5/tire tire tax a few years back- it was supposed to cover recycling costs of old tires but the media found out the funds were going into the general treasury so there was a big stink-up and the tax was eliminated.

 

I like that phrase "stink up"....I'm gonna use that 5 times tomorrow so it becomes part of my vocabulary. And believe me...I will have plenty of opportunities to use that phrase given the office I work in. :fan:

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so the question is...is the Gas Guzzler Tax really a tax? or is it a fee?

My guess is that it is a federal tax and if that's the case, the each state would be collecting a % of the $1300. So for example, if there is a 8.5% State Sales Tax, then they would be getting an additional $110.50 out of each one of us.

(% varying by state of course).

 

 

The GG tax is a tax paid directly to the IRS by Ford. It's a tax Ford pays for producing a car with lower mileage. So Ford actually collects it from the dealer (I don't know if it shows on the dealer invoice from Ford, but I strongly suspect it does -- any insight Five Oh B???)) and it would therefore be part of the cost of the car from Ford because it's a production expense to Ford. So, technically, we're not paying a tax on a tax any more than paying tax on the cost of the vehicle, which includes other taxes Ford pays. If the GG was a sales tax of some sort it would be a tax on a tax but, in this case, I think it's legit (though it still bothers me to pay it).

 

Well, when they're going for $1300 under MSRP in '08/'09, it will all balance out (just kidding... don't stone me now!! Sheesh! :)

...

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