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NBC 10 I-Team: Taxed at every turn

Adam Cesario knew his 2001 Pontiac was on its last legs. So, he and his wife started saving, determined to pay cash for more reliable car. They bought a 2009 Toyota Camry.

"Just like everybody else, we struggle to get by. We live our lives week-to-week financially," Cesario said.

Cesario is a student at New England Tech, studying to become a surgical technician. Through careful saving, he and his wife put aside money for the car, and a few hundred dollars extra for sales tax.

But when he got to the state Division of Motor Vehicles, he learned it wasn't nearly enough.

"When we went to the DMV, they ended up taxing us on the clean retail value of $11,475," Cesario said.

That's right: a taxable value of close to three times what he paid for the car. The total tax bill was more than $800 in sales tax on a car for which he paid $4,000.

"I expected to be taxed on a bit more than what I paid because I know the car is worth more, but not three times more than what I paid," he said.

Here's why.

If you buy a car from a dealer in Rhode Island, you're taxed on the price you pay.

Simple.

But if you buy a car that's less than 10 years old from a private party -- a transaction that can often lead to paying less than what a car is worth -- you're taxed on the car's "clean retail value." That's the highest possible price calculated by the National Auto Dealers Association.

The NBC 10 I-Team has been reporting on the impact of using those numbers to determine excise tax for months. It turns out that the sales tax on private party sales is based on that same fuzzy math.

Let's run the numbers. The 2009 Toyota Camry cost $4,000 to buy, then add $800 in sales tax and another $400 or so in excise tax for the first full year. Even before the cost of registration or inspection -- that's $1,200, or 30 percent of the car's purchase price in taxes.

"It seems like the state of Rhode Island is just completely out of control with its taxes," said Monique Chartier.

Chartier, who represents the advocacy group Rhode Island Taxpayers, said the hits just keep coming and that average taxpayers can only take so much.

"There's an assumption there by our state officials that people can pay this inflated value," Chartier said. "People can't."

Cesario said he's had enough. Once he finishes his degree, he and his wife plan to move out of state.

"Me as a 29-year-old lifetime Rhode Island resident, I'm looking to go over state lines and build my life elsewhere. It's at the point where it's nearly impossible to get off the ground as a young family these days," Cesario said.

So, what can you do if you buy a used car from a private party, and you're told it's worth thousands more than you paid? There is an appeals process.

You have a few options to support your claim: an appraisal from a licensed dealer, estimates or bills for repair work, or a notarized statement showing high mileage.

But you have to pay the bigger tax bill first, and then appeal to the state's Division of Taxation for a refund with Form C-REF-SU. Rhode Island gives you only 30 days to get it done.

"I would not be surprised if a fair amount of citizens have no idea about the appeal process," Cesario said. "I've registered many cars in my life. I had no idea about the appeal process."

Once he found out, Cesario acted fast, and sent in the paperwork right away.

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