Purchasing a vehicle out of state might be cheaper, but only if the documentation is handled correctly.
The ABC7 I-Team discovered a local resident's unfortunate experience when an error by an out-of-state car dealership left him responsible for paying twice the expected sales tax.
He reached out to consumer advocate Jason Knowles, and it paid off.
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Jim Herring, a resident of Chicago's southwest suburbs, claims a Texas car dealership made an expensive mistake by charging him Texas sales tax. Illinois officials contend that this tax revenue should have been remitted to Illinois instead.
It's gleaming and brand new," Herring stated. "It's a fantastic vehicle. We couldn't be happier with our purchase.
Herring discovered a good price on an Acura RDX at an El Paso, Texas car lot. Consequently, he and his wife traveled by plane to finalize the transaction.
The car dealer charged Texas sales tax, but they should have provided paperwork for him to pay Illinois taxes. As a result, Texas received the tax money. Later, the Illinois Department of Revenue contacted Herring to collect the owed taxes. The total due, including penalties and interest, approached $3,000.
Since you reside in Illinois, you are obligated to pay Illinois state taxes," Herring stated. "The dealership should have been aware of this. I inquired, 'But the dealer remitted payment to Texas. Can't you contact the State of Texas and request a refund?' Their response was, 'No, we will not contact Texas... They actually demanded the money from us; in fact, they confiscated our 2024 state tax refund.'
Unable to get a response, Herring stated he contacted the I-Team. ABC7 also attempted to contact everyone involved.
According to David Harris, the Illinois Department of Revenue director, the Texas car dealer wrongly charged the buyer Texas sales tax. Harris stated that the dealer should have instead required the buyer to submit a tax exemption form.
Harris stated that they took action following ABC7's questions.
Harris stated that a supervisor from their sales tax processing department contacted the Texas dealership, explaining, "The tax shouldn't have been charged. You actually need to give this person their money back." Harris continued, "I don't know the specifics of the conversation, but the dealer consented to issue a refund to the taxpayer."
Nobody paid any attention to what we were saying," Herring stated. "However, they were unaware that we had a powerful ally, and we were prepared to involve the bullpen, contact the I-Team, and get Jason Knowles involved. Suddenly, as soon as we started reaching out, everyone was eager to assist. Everyone wanted to fix the issue, and it was all because of our phone call... The dealer provided $2,929.
The car dealership in Texas informed the I-Team that they consistently aim to find solutions for their customers, and they are pleased that this particular issue has been settled.
The Illinois Department of Revenue advises that when purchasing a vehicle from an out-of-state dealer, ensure they furnish the necessary paperwork for Illinois taxation. Be aware that some states, such as Michigan and Indiana, require you to pay taxes to the state of purchase.
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