Illinois pastor’s act of kindness for woman leaves her with $759 tax bill
CHICAGO (CBS) – No good deed goes unpunished – a retired Illinois pastor is learning that the hard way.
He tried to help a young woman in need, but his kindness is costing hundreds of dollars. CBS 2’s Lauren Victory explained the car tax complication.
For Simone Lester, a minivan was a lifesaver of an unexpected gift during an unpredictable time.
“I had recently been divorced,” Lester said. “I was awaiting a job transfer.”
She was driving a much older car with doors that didn’t even lock.
“I had been told by a mechanic that I didn’t have much time left with it and then they offered to give me this van,” Lester said.
By “they,” she meant the parents of her high school classmate. Paul Schreck was worried about Lester.
“We’ve made a positive change for her,” Schreck said.
The retired pastor’s old minivan became her new ride, no strings attached. They went to the Waukegan Secretary of State’s Office to make the transfer official. Vehicle paperwork came in the mail several weeks later.
“It was like, ‘Oh she’s so excited the title is finally there in her name, no more worries about that,’ and then, the angst,” he said.
That’s because the letter wasn’t the title. It was a tax notice from the Department of Revenue. Lester needed to cough up an extra $759 in sale tax.
But there was no sale. He gave Lester the car as a gift.
It turns out, a purchase price of $0 will be flagged and reviewed and sales tax is assessed on a vehicle’s “fair market value.”
The state took another look at Lester’s case for CBS 2 and determined she still owes the money.
Schreck: “You think the clerk at the DMV office would understand the tax ramifications of putting a zero and …”
Victory: “And tell you then?”
So what if you but down $1 on the bill of sale? Can you avoid higher sales tax and a mess like this? The state said no.
“I make like $500 to $600 a week that I take home,” Lester said.
But she paid the nearly $800 bill to put the car tax issue to bed.
“I did feel nauseated,” Lester said.
Schreck added he felt, “just disappointment.”
It was a lesson learned that even kindness can have costs.
The Secretary of State’s Office said its employees are not responsible for providing tax advice. Also, sales taxes might be lower in some cases where a vehicle is gifted to a sibling, child, or parent.
Anyone interested in financially helping out Lester can leave her a “tip” on her artwork website.