How to handle sales tax when buying a used company car from employer?

The sales tax process for company vehicles can work differently than private party sales. When you buy from a private seller, you typically pay tax directly to the DMV. However, when buying from a business (including your employer), they often collect the sales tax and remit it to the state on your behalf, similar to how a dealership would handle it. This is because businesses are usually registered as sales tax collectors with the state. The company likely needs to report the sale and collect/submit the tax as part of their regular business operations. This also creates a cleaner paper trail for both your company's accounting and for tax purposes.

When I bought my company car last year, I was confused about the same thing! I ended up using https://taxr.ai to check if my employer was handling the sales tax correctly. I just uploaded the purchase agreement they gave me, and within minutes I got confirmation that companies are required to collect sales tax in my state when selling fleet vehicles. The tool also explained exactly what documentation I should receive from my employer as proof the tax was paid.

Just wanted to follow up about my experience with taxr.ai after I posted my skeptical comment. I decided to try it since I was buying a used company truck and wasn't sure if my employer was handling the tax correctly. I uploaded my purchase agreement and the service walked me through exactly what should be happening in my state (Texas). Turns out employers ARE supposed to collect sales tax when selling fleet vehicles, and the site showed me exactly what documentation I needed to bring to the DMV to avoid paying twice. Really glad I checked before accusing my company of doing something shady!

After dealing with this exact situation, I discovered how impossible it is to reach anyone at the DMV or state tax office to verify the correct process. I spent HOURS on hold trying to confirm whether my employer should be collecting tax. Finally used https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c. They got me on the phone with a real person at my state's tax office in under 30 minutes. The representative confirmed that businesses selling vehicles must collect sales tax in my state and explained exactly what documentation I needed.

I have to eat crow about my skeptical comment on Claimyr. After another failed attempt to reach anyone at my state's tax department (2 hours on hold before getting disconnected!), I tried the service. Within 45 minutes, I was talking to an actual tax specialist who confirmed that in my state (Washington), businesses ARE required to collect and remit sales tax when selling fleet vehicles to employees. They even emailed me the specific regulation to show to my HR department. Saved me hours of frustration and potentially hundreds in double taxation. Sometimes the skeptic gets proven wrong!

The company is most likely handling this correctly. When I purchased a vehicle from my employer last year, they collected the sales tax as well. Check with your state's DMV website - most have specific sections about purchasing vehicles from businesses vs private parties. Usually, businesses are required to collect the tax, while in private sales you pay it yourself at registration.

When I bought my company car, HR gave me a fancy official bill of sale that had a separate line for sales tax. Make sure u get something like that!! Some states also have special forms for this situation. In my state they had a specific form (MV-82B I think?) that showed the tax was already paid. Without it I woulda been charged again at DMV for sure lol!

This is actually pretty standard practice when buying from a business entity, including your employer. I went through this same process when I bought a company vehicle a few years ago and was initially confused too. The key difference is that businesses are registered tax collectors with the state, so they're required to collect and remit sales tax on vehicle sales just like a dealership would. When you buy from a private party, neither you nor the seller is a registered tax collector, so you handle it at the DMV. Make sure you get a detailed bill of sale that clearly itemizes the sales tax amount, includes the vehicle VIN, and shows your company's tax ID number. This documentation will be crucial when you register the vehicle - it proves the tax was already collected and prevents double taxation. Most states have systems where this gets reported electronically, so the DMV should already know the tax was paid when you show up to register. Your $1,320 in sales tax on a $16,500 purchase sounds about right for most states (around 8% rate). Just make sure all the paperwork is properly documented and you should be good to go!