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  1. #1
    Join Date
    Jun 2013
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    Post Can I Sell a Car I Bought from Somebody Trying to Avoid an IRS Lien

    Hello from Colorado. I'll try to be brief.

    I bought a car from someone I had known and trusted. The vehicle is/was worth ~$5K, but the bill of sale had me buying it for $400. I come to find out that the person was getting me roped into their tax evasion scheme by selling me the vehicle so it wouldn't be taken by Uncle Sam, then asking me to sell the vehicle back to them. I refused to do so once I learned of their plan; as I had learned, the person who sold me the car was being investigated by the IRS.

    A year later now, an interested buyer has now come along, and I am considering selling the vehicle to him/her and being done with the vehicle. I'm also considering repairing it and using the vehicle for myself, now that I have more income. Whatever I may choose, am I legally safe to sell the vehicle? Am I legally allowed to retain ownership of it (like I have for the past year)? Can someone from the IRS that's investigating the scammer come and take ownership of the vehicle from me depending on what I do? The title and registration have all legally been transferred into my name for over the past year.

    Thank you for your help!

  2. #2
    Join Date
    Oct 2006
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    16,474

    Default Re: arghipr

    Quote Quoting newcarowner
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    Hello from Colorado. I'll try to be brief.

    I bought a car from someone I had known and trusted. The vehicle is/was worth ~$5K, but the bill of sale had me buying it for $400. I come to find out that the person was getting me roped into their tax evasion scheme by selling me the vehicle so it wouldn't be taken by Uncle Sam, then asking me to sell the vehicle back to them. I refused to do so once I learned of their plan; as I had learned, the person who sold me the car was being investigated by the IRS.

    A year later now, an interested buyer has now come along, and I am considering selling the vehicle to him/her and being done with the vehicle. I'm also considering repairing it and using the vehicle for myself, now that I have more income. Whatever I may choose, am I legally safe to sell the vehicle? Am I legally allowed to retain ownership of it (like I have for the past year)? Can someone from the IRS that's investigating the scammer come and take ownership of the vehicle from me depending on what I do? The title and registration have all legally been transferred into my name for over the past year.

    Thank you for your help!
    No, the IRS cannot and would not attempt to take the car from you. The IRS is not in the business of selling used cars. The IRS wouldn't have taken the car from the scammer either. However the IRS will certainly find other ways to punish the scammer for attempting to evade tax and/or hide assets.

    Selling a used car is not normally a taxable event for a non-dealer anyway. Why? Because a casual sale of a personal vehicle is not considered to result in a taxable gain or tax deductible loss.

  3. #3
    Join Date
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    Default Re: Can I Sell a Car I Bought from Somebody Trying to Avoid an IRS Lien

    Quote Quoting newcarowner
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    I bought a car from someone I had known and trusted. The vehicle is/was worth ~$5K, but the bill of sale had me buying it for $400.
    So... did you pay $5,000 or did you pay $400? Does any part of your question relate to sales taxes, and whether the state is going to investigate your claim to have purchased the car for $400 (and having paid taxes only on that amount) if a new buyer registers it while reporting a purchase price of $5,000?

  4. #4
    Join Date
    Sep 2011
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    OH10
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    17,019

    Default Re: Can I Sell a Car I Bought from Somebody Trying to Avoid an IRS Lien

    Apparently, the car was a gift which was recorded for $400. Not fraud, unless paying taxes not owed is considered fraudulent. Sell the car, enjoy the gift, whatever. The scammer has no recourse.

  5. #5
    Join Date
    Oct 2006
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    16,474

    Default Re: Can I Sell a Car I Bought from Somebody Trying to Avoid an IRS Lien

    Quote Quoting Mr. Knowitall
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    So... did you pay $5,000 or did you pay $400? Does any part of your question relate to sales taxes, and whether the state is going to investigate your claim to have purchased the car for $400 (and having paid taxes only on that amount) if a new buyer registers it while reporting a purchase price of $5,000?
    While that's a valid point, the state has no way of knowing how much money the OP had to put into the car to sell it for 5k...so the issue is unlikely to arise. I sold a car to someone once for 250.00 because I did not want to put any money into it. They spent a couple of grand, drove it for a couple of years, and then sold it for about 2500.00.

  6. #6
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    Sep 2005
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    Default Re: Can I Sell a Car I Bought from Somebody Trying to Avoid an IRS Lien

    Quote Quoting llworking
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    While that's a valid point, the state has no way of knowing how much money the OP had to put into the car to sell it for 5k...so the issue is unlikely to arise. I sold a car to someone once for 250.00 because I did not want to put any money into it. They spent a couple of grand, drove it for a couple of years, and then sold it for about 2500.00.
    I was trying to feel out the basis for the OP's concerns. Odds are a separate issue.

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