# Is sales tax on the doc fee legit?



## Fe2O3 (Jan 13, 2009)

I was emailed an out-the-door quote on a new car (purchase/not lease) and I noticed the sales tax is charged on a balance that includes the dealer's doc fee. 
This is in Georgia if that makes any difference.
This makes all of $40 difference, but hey, you tell yourself it's "only" enough times and it adds up :thumbup:


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## rodion_kjd (May 25, 2011)

Hi!

I'm a sales manager for MINI in Ohio and the $250 doc fee is taxed. Not sure how it works in Georgia but here that fee ends up with the state and/or the feds anyway. We have to process a ton of papers when you buy a car these days on everything to OFAC to the normal state level stuff.

Title and license ($36.50) is not taxed, or rather the whole thing is a tax since it goes directly to your state if it's easier to think about that way.

-Ken


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## Fe2O3 (Jan 13, 2009)

rodion_kjd said:


> Hi!
> 
> I'm a sales manager for MINI in Ohio and the $250 doc fee is taxed. Not sure how it works in Georgia but here that fee ends up with the state and/or the feds anyway. We have to process a ton of papers when you buy a car these days on everything to OFAC to the normal state level stuff.
> 
> ...


Hey, thanks for the reply. Looks like that correct for GA as well. I searched online before posting my question, then finally just hit the GA revenue code section for this. Tax is charged on the "sales price". Defining "sales price" yields this (I underlined what I think captures the answer to my question):


> Georgia Code Section 48-8-2(9) states:
> “Sales price” means the total amount valued in money for which tangible personal property or services are sold. Any services that are part of the sale are included, whether or not paid for in money. Sales price also includes any amount for which credit is given to the purchaser by the seller. No deduction is allowed on account of the cost of property sold or materials used, labor or service costs, losses, or any other expenses.


I initially asked the question because typically labor and some other fees are not something taxed. The code continues to say this (I underlined what I hoped my give me some grounds to contest, but processing costs aren't really what ii below is describing):


> B) “Sales price” does not include;
> (i) Cash discounts allowed and taken on sales;
> (ii) The amount charged for labor or services rendered in installing, applying, remodeling, or repairing property sold; or
> (iii) Finance charges, carrying charges, service charges, or interest from credit extended on sales of tangible personal property under conditional sale contracts or other conditional contracts providing for deferred payments of the purchase price.


So you can have a contractor install a staircase on your deck and expect to be charged sales tax on only the materials, not his installation labor. But the documentation fee in a car sale isn't treated as labor services by the tax code. 

Oh well, at least I can file that as having learned something 
Not to seem like I'm picking over peanuts, the average doc fee in GA and the southeast is $400 to $600, so there is a reason for my digging for this.


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## gsprobe (Jan 29, 2006)

*Sorry BS...*

The doc fee is additional "profit". Period. Period. And yes, it is profit added to the car's selling price so it is taxed at region's sales tax. The mini sales manager is very incorrect and that dealer does not understand. All state, local, federal, county, and city taxes are required to be disclosed on every purchase agreement. "truth in disclosure..." or something similarly named. Doc fee is addl profit added to sales price--- the fun is asking the sales rep what that fee covers. Possibly the dude above is thinking of holdback, which is also solely additional profit... 

I have heard-----To keep the lights on... Paying some fees to keep DMV records... Paying loan and administrative costs... It is all BS. Anybody telling you that DOC fees and holdback are ANYTHING but additional profit is LYING.


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## gsprobe (Jan 29, 2006)

Bumped for truth, read my last post up here........

Know the facts people.


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## rodion_kjd (May 25, 2011)

Hey,

Just wanted to clarify. The DOC fee, at least in Ohio, covers just that: the documentation fees. It's profit in the sense that we charge it when you purchase a vehicle but it is used to cover operating expenses related to title and license (the runner who takes care of those things,) the OFAC and credit inquiries (not free), the licensing for operating systems (R&R, ADP, Autobase, etc).

Please don't perpetuate the myth that every car dealer in the world is trying to gouge customers. Profits in cars are razor thin (the fault of consumers like you) and like any business there are expenses involved.

-ken


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## Fe2O3 (Jan 13, 2009)

gsprobe said:


> The doc fee is additional "profit". Period. Period. And yes, it is profit added to the car's selling price so it is taxed at region's sales tax. The mini sales manager is very incorrect and that dealer does not understand. All state, local, federal, county, and city taxes are required to be disclosed on every purchase agreement. "truth in disclosure..." or something similarly named. Doc fee is addl profit added to sales price--- the fun is asking the sales rep what that fee covers. Possibly the dude above is thinking of holdback, which is also solely additional profit...
> 
> I have heard-----To keep the lights on... Paying some fees to keep DMV records... Paying loan and administrative costs... It is all BS. Anybody telling you that DOC fees and holdback are ANYTHING but additional profit is LYING.



And I have no problem with dealers making a profit. They aren't charities. :beer:
My original question was more a technical issue as to whether the doc fee should be taxed or not, and that's been answered. :thumbup:


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## gsprobe (Jan 29, 2006)

Please do no perpetuate the myth that dealerships are not trying to gouge customers. It is always a matter of extremes. Whether you make $80,000 or $180,000, or $380,000 doing F&I depends on how extreme you are. When your buy rate is 6.2%, do you tell the customer it is 6.2%? Or 8.2%? Or are you strong enough to tell Joe Punchclock that the very best you could do is 12.99% due to this crazy economy? Or do you set them up with 60 months and balloon payments and explain they can buy their way out of it later? If you don't yet understand, let me educate you. 


"THE GUY THAT OWNS THE DEALERSHIP IS A MILLIONAIRE. HE IS DEFINITELY FAR BETTER AT HIDING HIS PROFIT FROM YOU, THAN YOU ARE AT HIDING IT FROM YOUR CUSTOMERS"

Let me guess O HOLIEST OF NOBLE AND REPUTABLE of salespeople..... There is some dealership nearby that gouges people, buries them forever, and makes customers do stupid things with their money. But not your dealership... You HELP people...

I have been at both types of dealerships, and for the sake of HELPING FELLOW DUBBERS, trust me when I say that you have lots to discover about the business. Have fun, but don't kid yourself.:wave:


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## zukiphile (Oct 28, 2000)

rodion_kjd said:


> Not sure how it works in Georgia but here that [doc] fee ends up with the state and/or the feds anyway.


Ken, this is misleading. The doc fee a dealership charges is not for a tax paid on that specific transaction.

Grocery stores, gun stores and shoe stores all pay taxes and do paperwork, yet they do not charge that fee.

The idea that a customer owes a retailer a separate fee for the retailer to keep its owns records is something peculiar to the experience of dealing with a car dealership.


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## gsprobe (Jan 29, 2006)

Again, the "DOC" fee is solely used to disguise profit. Dealer profit cleverly hidden from amateur sales reps and from the customers. Period.

In Florida, the shady dealers try to get $500 DOC fee. It only fools stupid people (and noob sales reps from OHIO...  )

My old DOC fee was $20 in NY but $75 in CT. Screw em, that's why.


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## rodion_kjd (May 25, 2011)

gsprobe said:


> Again, the "DOC" fee is solely used to disguise profit. Dealer profit cleverly hidden from amateur sales reps and from the customers. Period.
> 
> In Florida, the shady dealers try to get $500 DOC fee. It only fools stupid people (and noob sales reps from OHIO...  )
> 
> My old DOC fee was $20 in NY but $75 in CT. Screw em, that's why.


I'm really not interested in getting involved in an Internet debate with someone who doesn't know the business.

From reading your posts two things are clear:
1. You used to work in sales and don't any more.
2. You are the reason people expect bad experiences at dealerships.

If you worked in F&I in the 80s or early 90s and raped and pillaged your way through helpless and ignorant clients who you never expected to see again; great, more power too you. I'm glad you're able to sleep at night and have cultured a HOLIER THAN THOU that you for some reason feel absolves you from your actions. You screwed people till you got an ulcer and then you got out. We get it.

I can't speak for every dealership in the country but the things you're talking about JUST DON'T HAPPEN as a rule. Do bastards still exist? Sure, but they exist at restaurants and construction sites too.

I've put in 5 years of 70 hour office weeks, countless hundreds of classroom hours, and more of my limited personal time than I'd care to admit to reach my current position and am proud of what I've achieved and what my department has achieved under my training and leadership. Please don't speak about things of which you no longer have knowledge. Your past actions have made my job difficult enough without your continual insistence that things haven't changed in 20 years.

Good evening.

-Ken


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## zukiphile (Oct 28, 2000)

rodion_kjd said:


> I'm really not interested in getting involved in an Internet debate with someone who doesn't know the business.


The one part of GSProbe's assertion with which I would take issue is that the doc fee is profit. It is revenue, but to know whether it is categorically profit would require a knowledge of costs that will likely not be known until the end of the year.


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## gsprobe (Jan 29, 2006)

1st I undress you as a sales noob, but now you want to act like you know me??? 5 years in country makes you a baby. 

Let's use revenue. 

Doc fees, cleaning fees, fluid fees... they are cleverly hidden as mandatory charges on a bill of sale, and are ONLY additional revenue. STOP. Same goes for holdback. To say/infer/represent anything different is incorrect. 

The dealers use it as a way to earn profit/revenue without paying the sales rep. Period

For truth in disclosure let's all rest assured they have ZERO TO DO WITH ANY CHARGES FROM THE FEDERAL, STATE, LOCAL, CITY, TOWN, COUNTY, PARISH, DMV, BANK or any place other than the dealer's pocket. 



Why do they vary....?
:screwy:


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## gsprobe (Jan 29, 2006)

Sorry to beat the horse, but I truly sympathized with the OP when he lamented that an "out the door" price had additional charges magically appearing. So was that a $400+ ADDITIONAL DEALER REVENUE cleverly disguised as some kind of mandated "DOC" Fee? I am just asking...


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## zukiphile (Oct 28, 2000)

gsprobe said:


> Sorry to beat the horse, but I truly sympathized with the OP when he lamented that an "out the door" price had additional charges magically appearing.


That is my objection to it. It is their car and they can ask whatever they like. However, adding $350 to a price we already agreed on is just another bite at the apple.

My salesman said that it was a non-negotiable fee for covering the cost of doing the paperwork for my transaction. What paperwork? I'm writing you a check. _Like I said, we can't negotiate that._ Getting up to leave is all it took to negotiate it away.

If you stopped at the grocery for milk and the girl added a "register fee", you would also feel mugged.


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## Fe2O3 (Jan 13, 2009)

gsprobe said:


> Sorry to beat the horse, but I truly sympathized with the OP when he lamented that an "out the door" price had additional charges magically appearing. So was that a $400+ ADDITIONAL DEALER REVENUE cleverly disguised as some kind of mandated "DOC" Fee? I am just asking...


My out the door quote included all charges... vehicle, tax, tag, title, doc fee, destination. Nothing magically appeared after negotiation. My question arose when I was cross-checking their local sales tax calculation. I always do that with any signficant purchase to make sure the rate and application to labor/parts/materials (if applicable) is correct. I was questioning whether that doc fee should be included in the balance subject to sales tax and I've learned that it is. 
As to how you negotiate fees off the contract or offset them elsewhere, that's a different subject IMO. :thumbup:


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## zukiphile (Oct 28, 2000)

Fe2O3 said:


> My out the door quote included all charges... vehicle, tax, tag, title, doc fee, destination. Nothing magically appeared after negotiation.


That's fair then.

When I get a quote, I don't ask sales tax, tag or title fees to be included, because I am primarily interested in what the dealer wants to be paid for its car. The sales tax is just collected for the state, and I can calculate that, and the tag and title fees are actually payable by me directly.

All the store really owes my for my check is a car, a bill of sale and a signed title.


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## mico (May 1, 2007)

In California Doc fee is capped at $55 by state law, and it is taxed.

My advise - negotiate and compare prices total out the door.


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## gsprobe (Jan 29, 2006)

MICO- you are the man.

Here in Florida now, most "doc" fees are around $400-$600. And many times there is an additional Dealership Fee of aprox $200 added to that. So paying "invoice" still gets the dealer up to $800 over "invoice" plus holdback and those charges (none of which gets considered when paying sales reps on profit over "invoice"). All are nothing more than a cleverly disguised profit/revenue.

The unarguable proof about REAL profit/revenue is evidenced with A plan, X plan, Z plan customers= They do not pay a DOC fee...


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## gsprobe (Jan 29, 2006)

*reality.... check....*



rodion_kjd said:


> "I'm really not interested in getting involved in an Internet debate with someone who doesn't know the business.""
> 
> Test me. I know the biz. You are the one who hasn't yet figured out something as simple as "DOC" fees.
> 
> ...


 Allow me to quote Steve Buscemi's rant about guilt forced tipping in Resevoir Dogs... or not. But bring me a petition to pay you more and I will sign it. 

You are mad b/c you just got clowned on a message board for quoting dealership rhetoric and being blind to the actual truth. Tuck tail and walk away. You personal attacks towards me make you look even more ignorant. 

All you have now proven to the enlightened sales people here is that you still have much to learn even after 5 years in the business, countless training seminars, and hours of online distance learning. You have difficulty understanding and accepting that your position of employment most resembles that of a whore to her pimp. Well, that might be a bit harsh. How about coked-out stripper to her strip club owner. Only I bet strippers and whores get to keep more than 2% of the actual profit...


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## Trashatch (Sep 26, 2011)

I work for VW dealership in NY. We do not tax the doc fee. It's a fee we charge to take care of the dmv for you. So basicly you pay 75 buck and what ever the plates will cost you. New plates are more expensive than transfering existing plates.


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## gsprobe (Jan 29, 2006)

Scan me a copy of a recent finance contract, I will show you how it is hidden and added to SALES PRICE. Your "DOC" fee is taxed along with the rest of the profit/revenue. :beer:


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