Phone: 630-495-2282 Fax: 630-495-2260 Map/Directions

Texas revamps ‘liar’s affidavit’

November 18, 2010

In tax collector offices throughout Texas, they were known as "liar affidavits," signed statements that a buyer paid a certain price, often far below market value, for a used car.


That all changed Oct. 1, when the state began relying on a used vehicle’s "book value" to calculate how much sales tax a person pays when buying from a private party. 

Used-vehicle buyers who have been understating sales prices are expected to pay more in taxes on purchases from private parties, thus raising their overall costs.


"The form was commonly referred to as ‘the liar’s affidavit,’ said Paul Bettencourt, a county tax assessor-collector. "This shuts the fraud off." 

In a special session earlier this year, the Texas state legislature changed the method of collecting sales taxes on used-car sales between private parties. The change is expected to add an additional $72 million into state coffers in 2007 and 2008.


Texas has mandated that "the standard presumptive value" of a vehicle be used in calculating sales taxes. So-called book prices are set by a company picked by the state, and take into account mileage. 

A sales tax of 6.25 percent is paid on 80 percent of the standard presumptive value.


Buyers who think the standard presumptive value is too high can pay a used-car dealer or an insurance company adjuster to provide a certified appraised value. If that is lower than the standard presumptive value, the buyer can be refunded any sales tax overpayment.