Used Cars: Totaled before title transfer, tax cpa, sec of state

Question
We are in MI, and purchased a vehicle from a private seller in CA.  The vehicle was wrecked during shipping and declared a total loss.  Due to some confusion, we just received the title (3wks later) in the mail from the seller.  They and their leinhoder have signed it, and they printed our names on the back of the title as new registered owners.  Our insurance company needs us to send them the title before they will pay on our claim.  We asked them if we needed to transfer the title into our names, first.  They were unsure - said to ask MI DMV.  We called the DMV, and they said we should still transfer the title and pay the tax.  We spoke with a sales and use tax CPA expert, and they believe we should not need to pay it or the registration as there will be no use in MI or on MI roads, and we did not take physical ownership as it never made it to MI.  If they had not printed our names as new owners, I would think for sure we could just send it to them.  What are your thoughts?  Any advice would be much appreciated.  Thanks!

Answer
Hello Sarah thanks for your question. You still have to pay the tax. It is a "sales" tax not a use tax. If you use the car or not does not matter to the state of MI. The vehicle has to be put into your name(registered)in order to get a check from the Insurance co. Until you register the car and pay the sales tax the car is still in the previous owners name. Just because they wrote your name on the title doesn't mean anything, it still has to be processed with the Sec of State. I am surprised your insurance co. is willing to do anything if the vehicle is not in your name. Think of it this way, Your asking the insurance company to pay you for a vehicle that you don't "legally" own. It would be no different if the car was sold here in MI. For example if you bought a car from a guy in Detroit,went to pick it up 5 days later and found out that it caught on fire and is totaled. You would still have to get the title put into your name and pay the tax on the purchase to get a settlement check from your ins. co. They will only pay the person who's name appears on the title since that is the legal owner. The tax is based on the "purchase" not if you were able to use it or not.  I wish I had better news for ya.

Good Luck with this and Take Care,  Shane