by Guest » Wed Mar 16, 2011 01:01 am
Question.... Our vehicle was totaled. The people that hit us were deemed 100% at fault by their insurance carrier. Pretty straight forwards dealing with their carrier in reaching a settlement price (didn't go through ours). Vehicle loss was valued at $9200.00 and with sales tax added they said they'd owe us about $9700.00. I told them I was interested in buying back my vehicle (which they had on the auction block). They said that would be fine as long as I was willing to meet the high bid price. They called at the end of the auction...I told them I wanted it and agreed that they would deduct the $1000 buy back price from the settlement. Everything was good until we got their paperwork to sign off on. Their offer was about $500 less then what it should of been. I called them the next day to let them know of this error and they told me there wasn't any. They said since I wanted my now salvaged ($1000.00) vehicle back they didn't have to pay the sales tax on the $9200.00 settlement value. I told them that vehicle wasn't going to be repaired and be the replacement vehicle and that it was just going to be a pet project of mine. I let them know we just purchased a new replacement vehicle of much higher value and paid sales tax, title fee's etc and would submit to them the paperwork to prove it. They moreless said to bad...They aren't going to pay. Insurance company is from Wisconsin and there are laws on their books that they have to pay the sales tax. So looking for advice on dealing with this $500 mess...Thanks
Posted: Wed Mar 16, 2011 03:03 am Post Subject:
Well, best I can tell you is that I've seen it done both ways and that there are arguments both way. You know the argument for paying it. The argument against is that the other company owes you for your loss. You have damage to the vehicle if you keep it or not so that is still owed. But if you keep the vehicle, you don't incur the expense of sales tax. I've also worked for a carrier that did not pay sales tax until you submitted proof that it was incurred.
Do I think it's correct to withhold tax? Nope. Ask them to explain why they are now not paying it. They will tell you the above. Point out that you _still_ had to replace the vehicle... so you incurred the expense of tax and ask them why the loss of the vehicle was still paid... even though you were keeping the vehicle. The argument is the same for sales tax.
Sometimes issues need to be pressed in order to get something paid. I think this is one of those cases. My recommendation is to move up the ladder at the company and keep pointing out the obvious fact mentioned above... that the loss of the vehicle is still paid, you replaced the vehicle and incurring sales tax, so it's still part of the loss. If they won't change their minds, mention that you feel it's still owed and you will be filing an Dept of Insurance complaint if it's not paid. If they don't pay, file the complaint. Send them a demand in writing, giving them 14 days to include the sales tax. Let them know in writing that you will reject their offer and file suit against their insured unless tax is paid. Do all of this at different times so you can be as "squeaky" of a wheel as possible.
Posted: Wed Mar 16, 2011 05:45 am Post Subject:
Thanks for the advice. I did call our Dept of Insurance (who are in the commerce dept in Minnesota) and discussed this matter today. They moreless told me the sales tax laws only apply if the insurance company retains posession of the vehicle (like they even do that....They sell them). My responce to him was that the tax laws were established to compensate the loss-E for sales taxes incure for the purchace of a like in kind replacement vehicle. That's why most states now pay it, because it's an expence directly tied to the loss. A salvalged vehicle is far from a replacement for a 2007 45K vehicle...It'll have a branded title, can't get full coverage and all warrenties are void. I even tried to work the angle on them, that even if my intent was to repair the salvage and use it as a replacement vehicle (that's their claim), I would still incure sales tax expences on services, parts and labor and all those they should be held liable for, via the exisiting law. So bottom line.... via our state...I'm screwed. Via their insurance companies state (Wi)...I'm screw. BUT!!!!!!! I'm a fighter and I'm not ready to give up yet. I really think I have a valid case that falls within the law with our new 2011 'replacement' vehicles sales tax, title expences and I'll even send a copy of the vehicles insurance binder at them to boot.
Buying your salvage back is a seperate deal in my eyes period. It should have no baring on anything other then them reducing the settlement by that given value. They aren't replacement by no means and can be a big thorn with value, inspections, etc. They aren't a good deal for someone that doesn't like auto repair or have connections. My rule is, if you can get one cheap enough and have minimal investment in the repairs, they are the greatest vehicles you'll ever own. You just better plan to drive them into the ground and hope no-one totals them. The insurance companies will de-value them by about 30% then the clean titles (which never made sence to me...Especially when the repairs were professionally done and is inspected).
Like you said...I'll just go up their ladder until someone agrees. That normally always works. I know I can be a big enough pain they'll want to get rid of me sooner or later. I did talk with a bunch of Major Ins companies and nearly all pay sales tax irregardless if you retain possession of the salvage or not...I unfortuately ended up with the do not's
Thanks again
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