# Lawn Mower Tax



## whchunter (Jun 3, 2016)

Went to a dealer and inquired about trading in my mower. Retail price of mower was $7000. Rebate was $1000 and trade-in was $2000. The bottom line price was then $4000. The tax was computed on the retail of $7000. Went to 2 other dealers and they figured tax on bottom line price.
The dealer at the first place said IRS looks at rebates and trade-ins as down payments. He said if the other dealers (which I never gave any names) if caught/audited would be in big trouble.
I asked about how car dealers use this as incentive to get trade-ins and he said the GOV exempted them to help auto sales.
Has anyone ever heard or witnessed this?  Is this the way it is?


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## NE GA Pappy (Jun 3, 2016)

I know the rebate is not taxable.  If you go to Walmarks and they have a 20 percent off sell, do you pay taxes on the original price or the sale price?  a rebate is a discount off the selling price, so it is the same thing.  Besides that, how could the federal gooberment put out a ruling exempting something from a state tax?  that makes no sense either.

Just my thoughts, but if they taxed you on a trade in, and then tax the next guy when he bought it, wouldn't that be double taxing?


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## NE GA Pappy (Jun 3, 2016)

I know the rebate is not taxable.  If you go to Walmarks and they have a 20 percent off sell, do you pay taxes on the original price or the sale price?  a rebate is a discount off the selling price, so it is the same thing.  Besides that, how could the federal gooberment put out a ruling exempting something from a state tax?  that makes no sense either.

Just my thoughts, but if they taxed you on a trade in, and then tax the next guy when he bought it, wouldn't that be double taxing?


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## NOYDB (Jun 3, 2016)

Figure out your net price at each dealer, however they figure it. Chose which suits you however they allocate the money. You don't collect sales tax, and shouldn't care if they do.

What matters to you is how much scratch you have to put out to take the mower you want home. And who and where can you get service and warranty work.


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## Dr. Strangelove (Jun 3, 2016)

NOYDB said:


> Figure out your net price at each dealer, however they figure it. Chose which suits you however they allocate the money. You don't collect sales tax, and shouldn't care if they do.
> 
> What matters to you is how much scratch you have to put out to take the mower you want home. And who and where can you get service and warranty work.



This is the way I buy cars (and mowers, if I needed one). I figure the top number I will pay and tell the dealer that is what I will pay, they can split it up however they like. Dealer prep fee? Fine, I don't care - I'm paying $XXXXX amount, split it up however you like.


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## GoldDot40 (Jun 3, 2016)

Dr. Strangelove said:


> This is the way I buy cars (and mowers, if I needed one). I figure the top number I will pay and tell the dealer that is what I will pay, they can split it up however they like. Dealer prep fee? Fine, I don't care - I'm paying $XXXXX amount, split it up however you like.


That's exactly how I bought my truck. We negotiated for about 5 minutes when I said, "Look, I'll pay you $XXXX...out the door, which would include taxes, registration fees, etc. Take it or leave it. They took it...so I took it.


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## Robert28 (Jun 4, 2016)

Is there any way you can justify it for ag use? That's what I did with my zero turn. I use it for my grass, plus I cut grass in between my buildings on my farm so they could classify it for ag use.


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## whchunter (Jun 6, 2016)

*Search*

Did a little research and it does appear that rebates are considered taxable and only down payments.
Only the GOV could get away with this.  

But like others have said, it can be avoided if you find a dealer who doesn't do it this way.


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## rjcruiser (Jun 6, 2016)

whchunter said:


> Did a little research and it does appear that rebates are considered taxable and only down payments.
> Only the GOV could get away with this.
> 
> But like others have said, it can be avoided if you find a dealer who doesn't do it this way.




Think of it this way.

You buy a box of $10 Shotgun shells with a $2 mail in rebate.  You pay tax on the entire purchase ($10) and then mail in the rebate at a later date.  You don't complain because it's only $10 or a $2 rebate.  Same process for dealer rebates.


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## ryanh487 (Jun 6, 2016)

Rebates are considered a payment method, not a price reduction.  Tax is calculated based on price.  A rebate isn't a discount, it's the manufacturer (or sometimes dealer) paying part of the dealer's sales price on your behalf.

Discounts are price reductions

Rebates, down-payments, and trade-ins are payment methods


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## whchunter (Jun 16, 2016)

*Maybe Not*



ryanh487 said:


> Rebates are considered a payment method, not a price reduction.  Tax is calculated based on price.  A rebate isn't a discount, it's the manufacturer (or sometimes dealer) paying part of the dealer's sales price on your behalf.
> 
> Discounts are price reductions
> 
> Rebates, down-payments, and trade-ins are payment methods



I would agree on down payments and rebates but a trade-in not. IMO this is different since it will be taxed when it sells and probably for a greater price. Which would be double taxation. The first two aren't.  
The trade-in has long been a car dealers way to get one to trade rather than sell and buy. The dealer tells the buyer that he will save in the overall taxation by reducing the sell price by the trade-in allowance. The dealer will then make money on the trade-in (above his allowance) and the GOV will collect tax off that higher amount.


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## jimbo4116 (Jun 16, 2016)

Robert28 said:


> Is there any way you can justify it for ag use? That's what I did with my zero turn. I use it for my grass, plus I cut grass in between my buildings on my farm so they could classify it for ag use.



That won't work in GA unless you have a GATE card and earn at least $2500 per years from farming or ag related business.


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## jimbo4116 (Jun 16, 2016)

There is no GA sales tax on autos purchased in GA.


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## Miguel Cervantes (Jun 16, 2016)

whchunter said:


> Went to a dealer and inquired about trading in my mower. Retail price of mower was $7000. Rebate was $1000 and trade-in was $2000. The bottom line price was then $4000. The tax was computed on the retail of $7000. Went to 2 other dealers and they figured tax on bottom line price.
> The dealer at the first place said IRS looks at rebates and trade-ins as down payments. He said if the other dealers (which I never gave any names) if caught/audited would be in big trouble.
> I asked about how car dealers use this as incentive to get trade-ins and he said the GOV exempted them to help auto sales.
> Has anyone ever heard or witnessed this?  Is this the way it is?



The tax was paid on your trade in when you bought it. He cannot tax you for using it as collateral towards the new one. 

Rule of numbers win in this case. Three dealers all sell equipment daily, one is over charging and probably over paying on his taxes. Do you believe they'll ever tell him not to pay so much? OR, maybe he's paying the legit price and pocketing the rest. 

When the odd man out in business demands he is the only one doing it right it makes me stand back and reconsider his ethics.


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## gobbleinwoods (Jun 16, 2016)

jimbo4116 said:


> That won't work in GA unless you have a GATE card and earn at least $2500 per years from farming or ag related business.



Bought mine in SC and did not have to pay sales tax.


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## ryanh487 (Jun 16, 2016)

Miguel Cervantes said:


> The tax was paid on your trade in when you bought it. He cannot tax you for using it as collateral towards the new one.
> 
> Rule of numbers win in this case. Three dealers all sell equipment daily, one is over charging and probably over paying on his taxes. Do you believe they'll ever tell him not to pay so much? OR, maybe he's paying the legit price and pocketing the rest.
> 
> When the odd man out in business demands he is the only one doing it right it makes me stand back and reconsider his ethics.



Some tax laws are written to intentionally double-dip.

TN, for example, taxes expenses.  When I bill my customers in TN for reimbursable expenses, which means stuff that the service technician has already paid sales tax on, the state of TN taxes again. When we asked the TN department of revenue about it, we were told that it was known and intentional in the law.


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## bulldawgborn (Jun 21, 2016)

Trades should be excluded from the taxable amount


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## Ihunt (Jul 1, 2016)

Pay cash!


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