My Eco Credit was Taxed?!
 

I picked up my X5 35d over the weekend and I was shocked to find that the tax was calculated on the total sale price before the eco credit. The $4500 eco credit was deducted from from the total price including tax.

My understanding was that tax would be applied after sale price was reduced by the credit. i.e. (sale price - eco credit) + Tax = My price but what I got was (Sale Price + Tax) - Eco Credit = My Price

What is the correct application of Tax? Anyone that recently bought care to chime in?

Thanks.

- Noonsey

From what I've seen with other rebates and credit programs, you are taxed on the amount before the rebate/credit is added.

Thats a negatory. The dealer will most likely try this, but if you point it out, stick to your guns and are lucky to have an honest dealer they will change it. It happened w/my order. 1st they tried to tax the whole amount before the eco credit was applied but then later changed it and apologised for the accounting screwup. The diff is only ~$180 anyway tho but always something...

spacey :D

I believe it completely depends on the specific tax law in your State. In Illinois, they do tax auto Rebates. I don't know how they treat things like "Eco Credits," but considering the tax revenue problems all the states have nowadays, I can easily see how the state tax department could interpret the eco credit as being the same as a rebate.

Since most states have the tax specifically identified on the state title paperwork, the state gets all the tax money and there is no incentive for the dealer to overcharge taxes.

:iagree: Different states have different laws on how they tax.

Thanks
 

Thanks all! Dealer said that they have no incentive to over tax and this is how the state of CA does it. Just wanted to confirm.

- Noonsey

not in Texas
 

I just picked up my 2010 X5 35d today. In Texas the rebate is applied as a credit against the selling price so you only pay tax on the smaller amount.

In my case, the dealer is in MD, and like I said they tried this, IOW, the first set of numbers I got from them had the tax applied to the amount before rebate and I was told that this is how the state requires it too... but... I whined and siad that it makes no sense but ultimately caved since if the state requires it then there is nothing I can do even though I may not like it. After a day or so, the sales guy called me back and said that he was able to straighten this out w/accounting and that in fact they did NOT HAVE to do it this way, their accounting just did, and that he was sorry for the confusion, appreciated that I pointed this out and they will be happy to do it the other way - apply the rebate before tax is calculated. This was after I already said that I buy the argument that the state requires it, he did it out of his own free will and it apparently did not cost them anything. So this was simply an accounting dept way of doing things, not a state requirement. But.. thats MD... and one helluva sales guy and apparently solid dealership.

spacey :D

"Never attribute to malice that which can be explained by incompetence."

Napoleon Bonaparte

Smart little man he was... a bit mad but definitely had his moments.

spacey :D