Does the California DMV report used car sales to IRS?

Yes, the California Department of Motor Vehicles (DMV) does report used car sales to the Internal Revenue Service (IRS). Each state DMV, including the CA DMV, is required by federal law to share vehicle registration and title information with the IRS. This includes information such as the:

- Vehicle identification number (VIN)

- Purchase price of the vehicle

- Date of sale

- Names and addresses of both the buyer and the seller

The IRS uses this information to ensure compliance with tax laws, particularly when it comes to capital gains or losses on vehicle sales. The DMV is required to report the sale of used cars with a purchase price of $600 or more. If the purchase price is less than $600, the DMV is not required to report the sale to the IRS. However, the IRS may still investigate the sale if they have reason to believe that it was underreported or that the seller is attempting to avoid paying taxes on the sale.