CHICAGO (CBS) – No good deed goes unpunished – a retired Illinois pastor learns this the hard way.
He tried to help a young woman in need, but his kindness cost him hundreds of dollars. CBS 2’s Lauren Victory explained the car tax complication.
For Simone Lester, a van saved her life from an unexpected gift during an unpredictable time.
“I had recently divorced,” Lester said. “I was expecting a transfer.
She was driving a much older car with doors that didn’t even close.
“A mechanic had told me I didn’t have much time left, and then they offered to give me this van,” Lester said.
By “they,” she meant her high school classmate’s parents. Paul Schreck worried about Lester.
“We made positive change for her,” Schreck said.
The retired pastor’s old van has become his new car, no strings attached. They went to the Waukegan Secretary of State’s office to formalize the transfer. The vehicle papers arrived in the mail several weeks later.
“It was like, ‘Oh, she’s so excited that the title is finally here in her name, no more worries about it,’ then the angst,” he said.
This is because the letter was not the title. It was a tax notice from the Department of Revenue. Lester had to pay an additional $759 in sales tax.
But there was no sale. He gave the car to Lester as a gift.
It turns out that a $0 purchase price will be reported and reviewed and sales tax is assessed on the “fair market value” of a vehicle.
The state re-examined Lester’s case for CBS 2 and determined that she still owed the money.
Schreck: “You think the DMV office clerk would understand the tax ramifications of putting a zero and…”
Victory: “And tell you then?”
So what if you only pay $1 on the bill of sale? Can you avoid higher sales tax and a mess like this? The state said no.
“I make $500 to $600 a week that I take home,” Lester said.
But she paid the nearly $800 bill to fix the car tax problem.
“I felt nauseous,” Lester said.
Schreck added that he felt “just disappointed”.
It was a lesson learned that even kindness can have costs.
The secretary of state’s office said its employees are not responsible for providing tax advice. Also, sales taxes may be lower in some cases where a vehicle is gifted to a sibling, child or parent.
Anyone interested in helping Lester financially can leave him a “tip” on his artwork website.