What is the liability if a car sales price is intentionally under reported?

I sold a used car. The buyer wanted me to “gift” the car to him but I refused. However, I did honor his request to make the bill of sale price lower than the actual purchase price. Is there a perjury concern for us the seller, regarding the lower price? Or is that on the buyer to report accurately what they paid? I believe there was some language on the “pink slip” but cannot remember if that liability was for the buyer, seller or both of us. Can there be a charge of perjury for lying on the
DMV form?

Asked on October 16, 2011 under General Practice, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

1) Whomever filled out the paperwork is the one who could face liability for lying on it.

2) In addition, you will have committed tax fraud if you do not report--and pay taxes on--all of the income.

Obviously, the above are only issues if the true price and state of affairs comes to light. However, if they do come up in any way, you have committed acts that could result in criminal prosecution as well as civil liability--i.e. you could pay fines, possible face jail time (though as a practical matter, most likely not in a situation like this), and also be liable for whatever taxes and other fees you did not properly pay. You have more liability than the buyer, in that the potential income tax liability falls on you, not on him.


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