Gifting Vehicles in the State of Washington

[Biggy]

My question involves vehicle registration or title in the Socialist State of: Washington State

Will gifting a $14,000 car to someone raise eyebrows is the State of Washington ?
What are the rules for gifting vehicles in Washington State ? Someone wants to gift me a car that is worth $14,000 and who is the original owner, and has owned it for 8 years.

What are the tax implications ? Anyway to run afoul of the law here ? IE What would constituent fraud on the state - the RCW seem knda ambiguous ? thank you

[Taxing Matters]

My question involves vehicle registration or title in the Socialist State of: Washington State

Will gifting a $14,000 car to someone raise eyebrows is the State of Washington ?

I guess that depends on who that person is. It is not illegal to give a gift of a car to someone, that happens all the time. If there is a lien on the car then it's possible the lienholder will take the car to satisfy the lien if the debt owed isn't paid. If the person giving you the gift owes money to unsecured creditors at the time he gives you the car and he is insolvent at the time then the creditor may be able to get the transfer to you set aside under a fraudulent conveyance statute. (Note that the term fraud in this context does not refer to a crime; it's simply a transfer that a creditor can get reversed to help collect the debt owed).

Apart from that, I don't see that there would be any potential trouble spots for you in this from just the information you've provided.

What are the tax implications ?

There are none for you. Receiving a gift is not taxable income for federal income tax and Washington state does not have an income tax. Nor does the person receiving the gift have to worry about federal gift tax since it is the person making the gift that pays federal gift taxes. A person can give gifts totaling up to $15,000 to any person during the year and not have any liability for gift tax. So if this car is the only gift the person gives you this year, he or she won't have any gift tax issues.

Anyway to run afoul of the law here ? IE What would constituent fraud on the state - the RCW seem knda ambiguous ? thank you

What has you thinking that fraud against the state is at all an issue here? Simply giving a gift of a car you own to someone else isn't defrauding the government. If there is a tax lien on the car, the state can come and take the car. The state might also be able to use the fraudulent conveyance statute to get the car if he owes money to the state and doesn't have the ability to pay it when the gift is made. In other words, the state is treated like any other creditor here. So the risk is that you might end up losing the car if this gift is a plan by the donor to avoid paying his creditors.

I don't know why you suspect the state would be at all concerned here unless you are leaving out some important information.

[Biggy]

If the purpose of the conveyance was to avoid sales tax ..

[Taxing Matters]

If the purpose of the conveyance was to avoid sales tax ..

Well, if this is truly a gift then there is no sales tax.

But if what is really going on is that your friend is selling you the car for $14,000 and you claim it's a gift when registering the car to avoid the 6.8% sales/use tax that Washington state imposes on the sales of motor vehicles then that is of course tax evasion. If the state discovers that tax evasion you could be prosecuted for that and/or hit with a civil penalty of 50% of the tax you tried to avoid, plus interest, in addition to having to cough up the tax of course. So if this is really a sale and you are thinking of evading the sales tax you need to decide if saving $952 in state tax (plus any local tax that might apply) is worth running the risk of either criminal prosecution and/or having to end up paying a whole lot more if the state finds out.

[flyingron]

While this is probably not an issue here, gift's are only free from sales tax IF the gifter (or previous gifter, they are allowed to be chained) has already paid sales tax on the car to the STATE OF WASHINGTON.

[Biggy]

thank you excellent points - was also thinking about it being a possible fraudulent conveyance which a future judge could reverse and allow a past creditor to acquire superior title and seize the vehicle

[adjusterjack]

What's the real story here? Why are you and this person cooking up this plot? Nobody gives away a $14,000 car out of the goodness of their heart.

[flyingron]

What's the real story here? Why are you and this person cooking up this plot? Nobody gives away a $14,000 car out of the goodness of their heart.

I don't know why you'd say that. I've gifted cars on a couple of occasions. One each to my adult son and daughter (my daughters was worth twice what we're talking about here). And one to a very close friend's mother who was in desperate hard times.

If it is really a gift (and not an undisclosed sale or attempt to hide assets from a judgment or other legal action), it's technically only takes an assertion on the paperwork that it was a gift. The state may inquire, but it shouldn't result in any liability if it's truly a gift.

[Mark47n]

Have you called the DOL? That's a really good place to start.

The first hitch though, is that the current owner will have to demonstrate that the sales/use tax was paid on the vehicle in Washington. In other words, the state wants to make sure they get their piece. This is 10% of Blue Book or NADA assessment of the value of the vehicle.

[flyingron]

Have you called the DOL? That's a really good place to start.

The first hitch though, is that the current owner will have to demonstrate that the sales/use tax was paid on the vehicle in Washington. In other words, the state wants to make sure they get their piece. This is 10% of Blue Book or NADA assessment of the value of the vehicle.

If he bought it new in Washington, the state knows that.