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This past weekend I won a car, I'm blessed and thankful! I had the option to take the $, what is the 20% charge & Two taxes?

Miami, FL |

I had the option to take the $ and sale it right back to the dealer, without taking the car out of the lot.I signed the sales paperwork over the weekend. The dealership is giving me $11,000 from the $17,924 sticker price, it's already deducted the sales tax of the vehicle plus a 20%. The Manufacturer suggested retail price of the car is $15,929.They wanted to deduct the tag plus other dealer fees, but I reminded them that I'm not taking the car.So the manager said 'yes you have a point, you won't get charged for that'. After signing all the paperwork, I was told that their accounting department is not open to release the check. Today I get a call from dealership,and they want me to give them a check for $1197 for taxes.I told them that the taxes are already deducted. Im paying 2 taxes?

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Attorney answers 3

Best Answer

It's hard to tell from your description exactly what they deducting and whether they're double dipping. Although, it sounds like they're trying to squeeze money out of your winnings, so they can pay out as little as possible. If I was you, I would have an attorney deal with the dealership on your behalf. This way, the attorney can review the terms associated with winning the prize and make sure you get what you deserve. From my experience, car dealers are not to be trusted with being honest about financial dealings.

I'd be happy to help. It would probably only take a couple phone calls with dealer to make sure you're not getting ripped off.

Ali Eatwmadpour, Esq.

My replies to Avvo questions should not be considered specific legal advice to any individual, and no attorney-client relationship is formed with you. My aim is to provide general principles that may be useful to the Avvo community as a whole. You should seek individual legal advice pertaining to your specific factual situation, and the laws applicable to your jurisdiction. For a free 30 minute initial telephone consultation call my law office at 813-400-0892.



Thank You Alireza Eatemadour for your prompt response & willing to help! The dealership agreed on Saturday to buy the vehicle back at $11k, again I'm thankful to have won the car 2 days after my Birthday. And double thankful that I was given an option, so I opted for the $. I understand and I know that I have to pay sales tax, so the dealership agreed to release a check for $11k. Today I was told that I have to give a check for $1197. So in reality the dealer will be giving me a check for $9802.00. Which I'm still blessed but it's not what we agreed on Saturday. I already had signed all the sales paperwork plus an income form. I asked them what is the 20% for I was told is their fees & they must charge that. I just want to make sure I'm not getting doubled taxed & what the 20% is really for since at the end of the year I'm going to report to IRS & pay taxes again. Yes you are right I felt they are trying to squeeze $ out. It sounds like a lot of taxes + the 20%. going to contact my accountant also to find out if I have to pay taxes on the sticker price or the buy back amount of sale. I have the rules of the contest also. I'll contact your office tomorrow, thanks for your help! Claudia :)


Congratulations on winning the car. Now the issue is getting things settled with the dealer. You're correct in what appears to be a double tax situation. If you can't get it resolved quickly with them, get an attorney involved - it's a simple math issue but you may need a little professional clout to resolve it.

Good luck.

Evan A. Nielsen is licensed to practice law in California and handles federal tax matters throughout the U.S. The information provided here is for educational purposes only and is not intended as legal advice for a particular matter. This response does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult an attorney.



Thank you Evan A. Nielsen, I'm thankful & grateful! I went to dealer today, what they did is instead of the sticker Dealers price of $17,924 the manager reduced the cash price of vehicle to $15,779.91. The car depreciate it's value once is sold back to dealer, even though it was not driven off the dealership lot. The car is considered used. So I had to give sales tax plus tag today, in order for them to cut me a check tomorrow. Their lawyer suggested that. I checked with my accountant today I have to pay income tax on it in 2014, but not sure if the tax will be of the cash price of vehicle or the amount of the check which will be less than $11K. The car is at their lot & will be sold as used to next buyer, the car has 16miles only. They needed to close the deal today so I had to make a decision between taking the car or cash, they sounded in a hurry already. I'm just blessed to have won this gift :) thank you Evan for your response & insight...I know I can count on you guys in case a next tax question arises.


You should not have sales tax imposed on a car that you won. A prize is simply not subject to sales tax. The car dealer will have use tax on the car which is not something that they can impose you. Selling the car back to the dealer would be exempt from sales tax as both an occasional/isolated sale since you don't regularly sell cars or the dealer can give you a resale certificate for the car. Either way, you should not have to charge sales tax to them when selling the car back to the dealer.

In fact - if the dealer charges you sales tax on the price, then you could request a refund of the sales tax as a transaction that is exempt from sales tax.

I smarter way would be for the dealer to not give you the car and buy it back. It would be much smarter just to give you the option to take a cash prize equal to the value of the car. Then the dealer would not have to incur a use tax on giving you the car as a prize onto to buy it back immediately.

There very well might be a required federal income tax withholding on the prize, which might be the 20%.

If you have any questions on this, then please let me know. Florida sales tax is my primary practice area.

I hope this helps.

James Sutton, CPA, Esq.



Thanks James Sutton for the information! I already payed the taxes in the amount of 1197 on Thursday. They seemed in a hurry to close the price, so I didn't have that much leeway time to hire a lawyer. I was about to though. I see what you are saying of the 20%. But how one can find out about 20%. Now I'm just waiting for them to hand me the check....