I got a county tax letter for a car I bought out of state?

Question

This car was bought from a Chevy dealer in '07 which I no longer have. (I totaled it). I bought the car in Indiana but I live in Illinois.

Just 2 days ago I got a letter in the mail saying that I MAY owe county taxes on the purchase. Included was a blank form for me to fill out the purchase price and some other figures.

What is this?

What would make me owe anything?

Answer 1

You have to pay the taxes on any car you purchase - Generally you pay the tax in your home state - if it is not called sales tax, then it is called use tax.  If your county or city also has a sales or use tax, then you have to pay the county or city as well.  With the age of computers, more and more governments are exchanging information - so they help each other collect the taxes that are due.

Answer 2

When you bought the car in Indiana, legally you had 30 days to register the car in Illinois.  And yes, registering the car makes you liable for Illinois taxes on the car.  Even if the car was totaled later, you generally have to pay the taxes for a full year of ownership.

Give them the information, as well as copies of the paperwork from your insurance company that shows when the vehicle was totaled and what the disposition of the vehicle was.  The taxing authority can choose to prorate the tax or they may waive it altogether under the circumstances.  

EDIT:  The above is assuming that your county is contacting you about county property taxes.

SALES tax, on the other hand, is a different issue.  If you bought the vehicle from an individual, they would not have collected Indiana sales tax from you.  In that case, the state of Illinois is going to collect what's called a USE tax.  A use tax is charged on something you purchased in one state but plan to use in another.  The use tax is generally the same tax rate as you would have paid if you had bought the car from a dealer in Illinois.

If you bought your car from a dealership in Indiana, the sales paperwork should show whether or not they collected Indiana sales tax.  They probably did.  So what Illinois is asking is for you to prove that sales taxes were paid at the time of purchase.  If the Indiana sales tax that you paid is equal to or more than what the Illinois sales tax would have been, then Illinois will most likely call it even and leave you alone as far as sales/use tax are concerned.  BUT, if the Indiana sales tax is LESS than Illinois sales tax, then Illinois will bill you for the additional tax that you would have paid if you'd bought the car in state to begin with.

Even though the car is now totaled, you will most likely still have to pay any sales/use tax that Illinois says you owe.  But it's still worth a shot at sending them copies of the paperwork showing how soon after purchase the car was totaled.  You might be lucky and get a sympathetic employee in the tax department who has the authority to waive the tax due.

Answer 3

You did buy the car in Indiana, but your county obviously has a stupid tax.  Did you buy a chevy?  That was probably their clue.

They also tax lotto winnings with the stupid tax.

...and cigarettes.