DFW Elite Car Club
Anybody know anything about these people?
One of my fellow 3rd shift lieutenants went to the Dallas Auto Show and entered a bunch of contests and ended up winning the use of an Elise for a month (June). Well, he was excited about it (as was I, I could finally examine one up close to see if it's what I want to work toward) as any car guy would be. They called it a month long "Joy Ride" or something to that effect.
Well, on the 30th, they called him up and demanded $1500 up front, plus all applicable taxes... WTF?
I don't get it. If someone wins a "Joyride" in a car, how the HECK is there applicable taxes? Are they turning it into a rental?? I don't get it!
He won the use of it, he's not renting it. I don't know if the $1500 was a deposit or what, but that's still BS in my book. He doesn't have extra money so it was a HUGE letdown for him, he looked ready to cry when I saw him after that.
I mean, heck, we even GUARDED their cars when they had them at the mall, it would seem they would be at least a LITTLE gracious toward him.
I for one was planning to take one of their day-long exotic car cruises when I hit 25, now I'm not even going to consider it. Bunch of jerks.
Am I missing something here?
09 Lexus RX350
.... no Miata
And my house was selected to be a model home for aluminum siding!Originally Posted by MadMonkey
I would guess that everybody that entered that contest was a "winner", a closer examination of the fine print on the entry form or "award notification" would be in order. You're right that there shouldn't be taxes (at least sales tax) involved if it was truly an award or prize.
When you win a prize, a value has to be assigned to it. In this case, the value is equivalent to the cost to rent an Elise for a month. This value is then submitted to the IRS and is treated as taxable earnings. I could see the taxes on this running in to the thousands. The $1500 mentioned is likely a security deposit and would seem perfectly reasonable when they are handing over an exotic car to whatever Billy Bob than one the raffle.
Some what related, a friend in High school was on Wheel of Fortune teen week. He cleaned up, winning a sweet fully loaded Jeep, a trip to Europe, and a $4000 entertainment system. The first thing he did when he took delivery of the Jeep was to sell it for almost $20k. Once he had paid the taxes on the Jeep, trip, and entertainment system, he had just enough to buy a base model Suzuki Samurai for around $8k.
What Titus said, I had a friend that won a car once...he had to come up with the taxes to get the car....it wasn't cheap but cheaper than a new car.
Look at lottery winners arent prizes in the 40% tax rate bracket?
bottom line is there ain't no free lunch. unless you win something small or from a group of tax deffiant people....for instance my guitar I just won (2250. value) no taxes to me.
99 Miata Black
Nothing comes for free.
Yeah, but it would seem to me that they could at least be nice and give it a smaller value so the person winning would at least have a chance. They can't expect us all to be rich
09 Lexus RX350
.... no Miata
Sounds more like a scam to me.
Read This
This in particular is what gets me.
Forth Warning Sign: The scammer will tell you that you need to pay an upfront cost such as, an administration fee, taxes or postage and shipping costs.
Here is an article about paying taxes in prize winnings.
Note:
and3) How are Taxes Paid?
Taxes on prizes are paid on your tax forms at the end of the year, just like your regular salary. They are listed as other income and paid at your normal tax rate. It is possible that your prize wins could bump you up into the next tax bracket.
4) Will I Ever Have to Pay Taxes to a Sweepstakes Sponsor?
In most cases, you should never pay taxes directly to a sweepstakes sponsor. Asking for money for taxes before sending a prize is a sign of sweepstakes fraud. If it’s a real win, you won’t have to pay for it.
Exceptions include vacation giveaways, where the sponsors occasionally collect travel-related taxes like hotel and airport taxes or port fees.
It lines up with what they have listed on the website. Doesn't appear he won anything, looks like he signed up to be a member of the club.
If it sounds to good to be true it blah, blah, blah, blah.
Last edited by POS Racing; 06-01-2007 at 08:26 AM. Reason: Fixed Link!
That they are collecting taxes upfront would indicate state sales tax. Although a prize is treated by the IRS as taxable income, I don't believe that is collected upfront by the contest sponsor, nor would I think a month's free car rental would be a real high $$$ priority on the IRS radar. (unlike all those women on Oprah who won cars, only to find out they owed taxes on them)
So, if they are collecting taxes upfront, and it is state sales tax, then it was never a "free" award to begin with, because state sales tax in TX is based on the price assigned to the transaction with the consumer, which theoretically should be $0. So therefore, more likely its some marketing gimmick instead.
Well it could also be like going to Vegas and winning a Dollar amount over $1,000 you pay the taxes right then and there.
Blah blah blah!
Hmm... wasn't some guy that works for them a member here? I remember him from when I posted the pictured of the cars in the mall... I feel like yelling at somebody.
09 Lexus RX350
.... no Miata
Love that one! When I bought my second Miata, the guy lived only a few minutes from the tax office so we both went straight there to transfer the plates. He asked what I wanted him to say the purchase price was to avoid a higher tax! Not ethical I suppose but neither is taxing the 3rd owner IMHO either so the heck with it!
90 MX5 281k miles! - euro spec, Porsche Riviera Blue w/black hardtop, 97 motor swap, vintage Borbet rims, GC, FM shock hats/frame rails/rear sub-brace, AGX, sway bar, stb, Fidanza/ACT combo, EBC Yellows
92 COMMA SM - new paint coming soon...
When I got my first car it was free.I went to transfer the title and they charged me taxes off of what they called the "fair market value." I knew they would do this if I put "gift" in the sale price, so I put $10 instead. I still ended up paying about $100 in tax.
'06 RSX Type-S NBP
Everyone should think twice before entering any of those "contests". You gave away personal information to someone that you have no idea who they are. Any Joe Blow can set up a box and collect information on thousands of unsuspected, if not a little greedy, people.
Gabriel
This last time I went to the tax office, there was a guy that bought a car from a dealership for a set price. He was going around and around with the lady at tax office because he had the contract in his hand with the price paid for the car $8500 IIRC and the state now taxes you on what they percieve the value of the car to be $12,500. Needless to say he was three shades of P.Offed!!! But what else can you do if you need a plate?Love that one! When I bought my second Miata, the guy lived only a few minutes from the tax office so we both went straight there to transfer the plates. He asked what I wanted him to say the purchase price was to avoid a higher tax! Not ethical I suppose but neither is taxing the 3rd owner IMHO either so the heck with it!
05 MX-5 Mazdaspeed #1024 Titanium Gray Mica
In the casinos (IRS loves us!) here's the deal.
Prize won, free entry type contest, anything valued $600 or more is subject to tax. Fill out form W-2 and take the prize. Taxes your responsibility at tax time.
Gambling winnings (slots, bingo) anything $1,200 and up is a taxable event, fill out form W2-G and then same as above.
Table games (BJ/Craps/Roulette/Poker), wins not subject to tax, however ID is required to cash out 10k or more. A form CTR-C is generated and sent to the Treasury Dept for Title 31 purposes. Also applys to cash in transations (Title 31 applies across the board, in all Businesses, 10k cash in or out, needs ID)
Also in tables, any winning wager that pays 300-1, and is 5k or more, is taxable,
Sports/race book, anything that pays 300 to 1 (or more) is a taxable event.
Win a car in a casino. Fill out the IRS form and away ya go! The big hit comes at registration, where they kill ya with state taxes and such.
But, back to the original post. What have we learned? Never, never, never sign up for anything that dangles a prize. Unless you enjoy a neverending assualt of timeshare offers, or cheap land in Arkansas, or .....
I used to work there, but left before the auto show. While I don't know the details of this promotion, or your friends situation, it sounds like they are asking for taxes (required by law on prize winnings) and perhaps a deposit. From what I remember, it's usually a soft charge to the CC, and never shows up on your statements (unless you wreck the car). If you consider that their Elise goes for around 300-400 per day, and he has it for a month.. well that adds up, and so would the taxes.
I do know that they *are not scammers*, and the owner is heavily involved in the day to day business. I would suggest your friend talk to him or any of the managers. They are a service oriented business, and are out to make sure their customers have an awesome time.
Plus, 2nd or 3rd hand stories are often missing small, but important details
Last edited by Shoefly; 06-03-2007 at 11:38 AM.
'99 FMII + everything (sold!)
'97 FMII (previously)
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