I think it is a scam. I think the dealer is pocketing the cash, and if you want to scam people it is the perfect way. After all, how do you check that he paid the tax he collected from you to the state?
I own a retail business. Every month I report our total sales, and then the taxible (in state) portion. The state then calculates my tax for me. If I was the dealer and did a $30 transfer and collected $40 in sales tax, I would have to lie and report a $484 sale, which is a lie, or the state can't take the tax. I can't just send in "extra", the system does not allow it.
I am sure if I did lie and reported fake big sales, the IRS is somehow tied in and would notice my tax return did not match. Don't know for sure about this one, but it seems like an easy thing for them to do.