Diamond Bar, CA asked in Consumer Law and Tax Law for California

Q: Can I get around the California car use tax by gifting the car to a relative and having them gift it back to me after?

I bought a used car back in May, when I lived in a different state. I moved to California now and noticed they charge a use tax (the difference in sales tax paid at my original state and the CA sales tax) if I bought the car within the past year of moving to California. Is it possible to circumvent this use tax by gifting the car to a relative who lives in California, and having them gift it back to me after they register the car in California? Would gifting the car back to me raise some red flags?

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3 Lawyer Answers
William John Light
William John Light
Answered
  • Riverside, CA
  • Licensed in California

A: Anything done fraudulently is a problem. Tax fraud is a crime. If you are caught, it's a problem.

Robert Philip Cogan agrees with this answer

Maurice Mandel II
Maurice Mandel II
Answered
  • Consumer Law Lawyer
  • Newport Beach, CA
  • Licensed in California

A: It is an ethical violation for an attorney to counsel you on how to commit tax fraud. I suggest that you discuss it with a Used Car Dealer who is not subject to such an ethical restriction.

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Scott Richard Kaufman
Scott Richard Kaufman
Answered
  • Consumer Law Lawyer
  • Los Altos, CA
  • Licensed in California

A: I'm not going to be quite as harsh although the prior two responses seem quite correct.

Are you not concerned that by gifting this thing to your relative that you would be putting them

in danger of having to pay your taxes?

If it's a tax question, you really should see a tax professional.

AND if it "feels" like fraud, it likely is fraud...

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