Kadner: New tax on car buyers seems unfair
BY PHIL KADNER firstname.lastname@example.org November 13, 2012 5:10PM
Cook County now taxes auto sales between people outside of dealerships. | File photo
Updated: December 15, 2012 6:22AM
Steve Kelly, of Evergreen Park, bought an old Dodge Caravan for $500 in July.
“I mean this thing was a 2001 with 300,000 miles on it,” Kelly said.
Earlier this month, he received a notice from the Cook County Department of Revenue.
He was being hit with a $175 tax on his $500 vehicle.
This is called the Cook County Home Rule Use Tax for Non-Retail Transfers of Motor Vehicles.
In plain English, a person who buys a car from a friend, neighbor or through a classified ad in a newspaper now has to pay a tax.
It is a tax that’s going to hit the poorest folks in Cook County the hardest: Young kids with minimum-wage jobs looking to buy their first car. Single suburban mothers hoping to buy a vehicle cheap to get to their new jobs.
The tax rate depends on the age of the vehicle, not its Kelley Blue Book value.
A vehicle 5 years old or newer is taxed at $225; vehicles 6 to 10 years old at $200 and those 11 years and older at $175.
The tax is assessed by the Cook County Department of Revenue on the car buyer after a person files for a vehicle title change with the Illinois Secretary of State.
There’s a tax break for people who want to sell their cars, or simply transfer the title, to family members.
The tax rate is $25 for a purchaser who is the “spouse, mother, father, brother, sister or child” of the former car owner if proof of the family relationship is established.
Cook County long has had a tax on the sales of new and used automobiles bought from dealerships.
But this is a tax on people-to-people sales.
“This doesn’t seem right to me,” Kelly said. “I wouldn’t even buy a car for $500 if I knew I was going to have to pay a $175 tax.”
Bob Mankowske, of New Lenox, was hit with the tax even though he lives in Will County.
“I went to a currency exchange I do business with in Palos Hills to register the title,” Mankowske said. “This was months ago. I bought five used vehicles because I was thinking of expanding my business, A1 Services, which I run out of my home.
“Well, soon after I bought them, I realized I wouldn’t be able to expand so I sold them to another guy.
“And last week I get a tax notice in the mail. They want $225, $200, $175. I never heard of this.”
Mankowske said he went to the currency exchange and they told him a number of people who file for their state vehicle title through the exchange also had received letters in the last week or so.
“There’s no notice posted at the currency exchange. I had to go on the computer and find out about this non-retail use tax.
“I think it’s just awful for some poor working stiff who buys basic transportation for a few hundred dollars to be hit with what amounts to a 40 percent tax that he didn’t even know about.”
The Cook County Board passed the new tax a year ago and it took effect March 1. But apparently the county revenue department didn’t start enforcing the tax until the past month.
Cook County Board President Toni Preckwinkle spokeswoman Kristen Mack said the county and the state still are arranging for the state to collect the tax when the title application is submitted. Meanwhile, the county revenue department began collecting the tax “by issuing notices to the taxpayers directly after the transfer takes place. This is based on receiving taxpayers’ data from the state offices that are working with the county. Individuals are given an opportunity to inform the county of any discrepancies, exceptions or exemptions.”
Mankowske said he was calling the county revenue department for days and no one called back.
“I wanted to know how they could impose a tax on someone in Will County for a car sale that took place in Will County,” he said.
Mankowske did finally contact county revenue officials by getting a telephone number through a friend. Apparently, the tax he was assessed was a mistake.
“I paid for FedEx to deliver the titles and had them drop it off at the Palos Hills currency exchange in Cook County and apparently they saw that address at the department of revenue and decided it was subject to the tax.
“The guy I spoke with said if I could provide proof of my residence then I wouldn’t be taxed. I told him that they mailed the tax bill to New Lenox so they have the proof: Just look at the address the bill was mailed to.”
What’s really happening here is that Cook County is short of money because it’s rolling back a 1 cent sales tax increase that was very unpopular with voters.
Since Preckwinkle has assumed office she’s been cutting the county budget, but she’s also been proposing all sorts of new taxes and fees.
She wanted to tax residents of unincorporated Cook County for police services.
She’s proposed parking fees at suburban Cook County court buildings.
She’s proposed taxes on bullets and guns, raising the cigarette tax, and on and on it goes.
The fact is that Cook County needed that sales tax revenue, but former Cook County Board President Todd Stroger was an incompetent administrator who squandered the funds.
Preckwinkle, who won office by vowing to roll back the last half-cent of the sales tax hike, has been nickel-and-diming taxpayers ever since to recover some of that revenue.
Just to make the point clear, this is not a tax on retail sales outlets.
It’s a tax only on people who buy a car from another private party and register the title in Cook County.
At the very least, in my opinion, it should have been linked to the car’s value.
For example, there’s a $4,000 difference between the Kelley Blue Book resale price of a 2004 Lexus ES with 120,000 miles on it and a Chevy Malibu of the same year and with the same mileage.
One is basic transportation, the other a luxury ride, even if it is eight years old.
This is an issue of tax fairness.
It’s not fair to the little guy trying to avoid getting ripped off on a trade-in by a dealer.
And it’s not fair to the working stiff trying to buy a car cheap.
But at least you know there is a tax for non-retail transfers of motor vehicles now. I sure didn’t know about it before.