are rebates for cars and electronics just a scam to collect more taxes?

Question

i wanted to buy a car its price was $25,000 plus 8.25% tax. thats $2062.50 more. but there was a rebate of $3000 so i would only pay $22,000 for the car, but the dealership said i had to pay taxes on the whole $25,000. that means that i had to pay an extra $247.50 in taxes on money i was going to get back!!!

so i told the guy, "if you are going to give me $3000 back, why do i have to pay taxes on it. why not just sell it to me for $22,000 and only pay taxes on that?"


well, he would not take my offer. so is this a scam? a way to make more money that they will not send to the IRS???

or is the IRS in on it to collect more money from us???

Answer 1

Sure

Answer 2

It is not a scam to collect more taxed but it is a ploy to get us to buy something we may not consider normally because it is a "better deal now". Its all about advertising. The IRS simply collects sales tax on the price of the car. By definition you only get a rebate "after" you purchase the vehicle. That is why you have to pay tax on the original price.

rebate n. A return of part of a payment.

Answer 3

A rebate is money given back to you by the manufacturer of a product & has nothing to do with the IRS , You still pay tax on your actual purchase price, BEFORE the rebate.

Many, Many rebates are "mail-in" requests.
For example:
You buy an item at the drug store or grocery store,
you pay for it
you pay tax on the purchase price
then you mail (to the manufacturer) some sort of proof of purchase or reciept
then they mail you a rebate check.

With Big ticket items like cars or electronics, many manufacturers allow their dealers to process rebates for you automatically, therefore you don't have to wait for a check.

It's not a scam & its been going on for decades!

Answer 4

I doubt it's a tax scam, as I live in Oregon, which has no sales tax, and the same thing is done here.