Vehicle Sales Tax Questions

CRJ

Hi Terry...I spoke with Infiniti Financial Services about it and they are telling me that New York State will not require me to pay sales tax on an assumed lease. The tax was paid in full when the car was originally leased. Do you think they are incorrect? Normally, if the car was being sold and I held the title I would agree with you, but since it's a lease I'm not sure. It makes no sense that I would pay tax again on the lease. The State would be collecting twice! The original lease was 48 months and there are now 32 months left. If I am taxed could the original leasee get a sales tax refund on the payemnts they will not be making? Thanks again.
Craig

rroyce10

...... I would never try to tell the state of NY on what to do .l.o.l... .. every state is different and so is their tax structure, and not to the advantage of the consumer ... **The State would be collecting twice!** ... they been doing that for years ..

            But, I would check very closely with New York State on this one .. "most" states charge a new tax on a new contract with a new name and address .... *example only: in Ohio, you pay all the taxes on a lease not by months or by quarters, but - "upfront" .. so if you trade/sell/re-lease another vehicle you get to pay the tax all over again, and no refund from the last vehicle, even if it's 20 months of a 42 month lease .... I ain't no tax man and my book is in my office - so check close ..................... ;^)

                                Terry.

audia8q

I'm not sure about the tax on a lease assumption but NY taxes the entire Cap cost of the lease up front not the base monthly payment like many states. (it appears to be similar to your Ohio example)..so in theory the lease tax was paid when the lease was originated. But it would be odd they missed a chance to collect additional taxes on an assumption. So I agree with you that further research may be in order. Nothing like a $1500 tax bill surprise.

stickguy

I was discussing buying a new car in Massachussets, even though I live in NJ. My expectation was that I would get a temp transport tag, and register it in NJ, and pay the 6% NJ sales tax.

The dealer said, however, that they collect the 5% MA tax, and the buyer is responsible for any difference when the register it.

Question is, does anyone have any experience with this (in particular how NJ DMV would treat this)? I'm assuming it would be the same answer if you bought in PA or NY, which is more common.

audia8q

That only works if the two states involved have reciprocal agreements....I would never trust this. The dealer is on the hook for the state tax so they are trying to cover their butts...You could end up paying sales tax in two states and the dealer will wash his hands of the whole thing.... Here in CT if we sell out of state, we just handle everything. This way the sales tax is paid in the correct place, once and we have all the documents to avoid CT sales tax.. The problem usually starts when the dealer has the consumer do his own plates and taxes. Why won't the dealer do everything for you???

montanafan

If you take delivery in Massachusetts, you pay Massachusetts Sales Tax. Dosen't matter is you get a temp tag from New Jersey (Massachusetts dosen't have temp tags), its where you take delivery. I am under the belief that you would then pay the difference to New Jersey, and New Jersey would try to get the 5% from Massachusetts. (Seen it work this way in a Massachusetts/Florida example several years ago) Call New Jersey DOR or DMV and ask.

stickguy

Thanks. It would be much easier to have a local dealer with the great prices, or at least close to the out of state guys. I will call NJ DMV Monday and see what they say, and talk to the other dealer again.

CRJ

Terry & Audia8q......After trying to get an answer from NY DMV without any luck, I contacted the NYS Taxation Department. The person I spoke with told me that if a new contract was being written for the lease transfer, then sales tax would be due on the remaining payemnts. They also told me Infiniti would collect the tax and report it to NYS. Infiniti Financial Services originally told me that I wouldn't have to pay sales tax, since it had already been payed in full on the original 48 month lease. I would be assuming the lease with 32 months left. When I spoke with the IFS rep, and told them what NYS told me, they were quite upset and disturbed by the fact it seemed NY would be collecting twice. Another point IFS made was that when one of their leases is assumed, the original leasee remains as a co-signer on the lease. While it is a new contract, the original leasee's name is still on it. The IFS rep spent the better part of a day researching the situation and finally contacted NYS Taxation directly to debate the issue. NYS told the rep the same thing I was told and I guess the rep politely told NY what they thought of the law.

I have carefully considered assuming the lease, and will probably do it, but I am very upset about the fact that NYS collects sales tax in this manner. In my opinion the original leasee should be entitled to a refund for the 32 months worth of payments they will not be making, but apparantly they are not.

Thanks for your help and input.

mrog71

Since I can't figure out how to start a new thread, I'll post in this one.
Does anyone know the tax implications of someone in FL wanting to gift a car to me in GA? Should we make it a $10 sale instead of a gift?
Thanks
Matt

CarMan@Edmunds

Hi Matt. I am not familiar with the specific tax laws that exist in Georgia, but most states have closed the loophole that allowed people who wanted to give a car as a gift to someone to sell it to them for a dollar. Most of the states that I have heard about now use some sort of book to determine an approximate value for the vehicle that is being transferred and charge tax based upon that value when it is registered under the new individual's name. You may be able to find out more information on this subject by visiting the following Web sites: Georgia Department of Motor Vehicles or Georgia Department of Revenue.

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rroyce10

....... Car_man is right .... Florida and GA have closed the "loopholes" on these "giveaways" .. they use an average figure out of the NADA book, so you have to be real careful here .. they might not get ya now, but they will get you in the next 9/15 months ..........

                           Terry.

stickguy

according to the nice, helpful lady at the info desk at the local DMV (now that's a sentence I never thought I would type), if I pay tax to MA, I will just have to pay the difference to NJ. As long as the bill of sale shows the tax, they don't come after it again.

so, as long as the insurance company knows about it, and the dealer can slap a temp/transport tag on it, it should be pretty straightforward to buy out of state, regardless of what they do for taxes.

rroyce10

**but I am very upset about the fact that NYS collects sales tax** ...

           Bud, I'm sorry you have to pay the tax .. but I knew darn well, I've never seen a purchase or a lease, that once changed, taxes didn't have to be paid ...

                      I appreciate the update ..

  
                            Terry.

montanafan

Like all vehicle tax issues, not all states are the same. Massachusetts allows an exemption for cars given as gifts. The gift has to pass a fact test. Here is the form link: http://www.dor.state.ma.us/forms/mvu/pdfs/mvu_24.pdf

kally

I plan on leasing a car from a Boston dealership. When I register the car in MD do I pay tax on the whole vehicle price or just the portion being leased? Thanks.

CarMan@Edmunds

Hi kally. I am not all that familiar with the tax rules for residents of Maryland, but you may be able to find out the answer to your question by visiting one of the following sites: Maryland Motor Vehicle Administration or Comptroller of Maryland Site.

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dkarch

I have a question. I was just about to sign the lease papers for a 2005 Honda Odyssey EX. I was told that I had to pay monthly taxes on my lease payment of 6%. Is this the case in NJ? The pre-tax payment was $348.00 the total with tax was going to be $368.88. In the past I think the tax was calculated in to the price. Thanks

CarMan@Edmunds

Hi dkarch. Some states calculate tax on leased vehicles differently than others. I believe that your home state, New Jersey, taxes the depreciation portion of leases, adding the sales tax to the monthly payment. You may be able to find out more informaiton on your state's tax policy by visiting the following web sites: New Jersey Motor Vehicle Commission or New Jersey Taxation

 

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pka

Do we pay sales tax on used cars when purchased from dealer?...i would suppose so since it is a purchase...but what if you buy the same exact car from a private seller who is, for discussion purposes, selling the car for 10 K less....do we still pay tax when registering at dmv? Wouldn't this cause a huge discrepancy in taxes paid ?

 

What if i purchased a new car and registered it in Va (sales tax 3%) and the a few months later I move to NJ or NY...would I have to pay any taxes again when I register the car in NJ OR NY?

What is the procedure if there is LIEN involved?

rroyce10

...... Sales tax is based on the "selling price", some States give relief on the difference price and some don't, and thats based on the State, and even that is based on what county you live in ..... you always pay tax based on your resident address .. if you buy in a another state, most States are "reciprocal" .. meaning the dealer can collect the tax and you pay the difference on the difference when you get home and do the title and tags .... as far as discrepancies are concerned, most States follow "some sort" of Nada figure for taxes .. meaning, the days of "I only paid $5,000 for this $25,000 Vette are over, you kinda need to be in that close "ballpark" or they will come back at you in 6/9 months and they slap ya upside your head with the tax difference, plus a penalty and no, you don't pay twice if you move .. that said, I'm sure some county someplace charge their .5/1%, but they are few and far between ..... liens follow the title, you need to get with the lender .... what are you buying.?

 

              Happy Holidays ...

 

                            Terry.

apothny

I am scheduled to take delivery on a 2005 Saab 9-3 Arc that I am gonna "balloon" lease for for about 6,000 off MSRP. I am also relocating to Los Angeles by March '05. The car will be shipped on my employers tab. It looks to me like I will wind up paying NY tax in addition to CA tax (both 8.25%).

 

Though I have lived in NYC all my life, I now have an apartment in LA and will start a job there in January. Should the dealer be able to do the Cali registration to avoid charging me NY tax? Consider that I still want to take delivery in NY and that I do not have a CA license yet.

stickguy

I know that Maryland charged sales tax on the difference from where it was registered. That is, if you state was 4% and MD was 6%, they would charge you 2%. If the reverse was true, you would pay nothing.

 

Even when you buy from a private seller, the state gets you when you register, even if it is the same state.

jb5

Hi. I currently have a leased 2003 Mercedes C320. I live in Texas. I plan to sell the car and terminate my lease early. The car has tax credits. Can you please explain to me what these are and how they would effect the value of the car? I am trying to determine the asking price for a private transaction.

crkeehn

"Even when you buy from a private seller, the state gets you when you register, even if it is the same state."

 

In Maryland, when you purchase a used vehicle from a private seller, you do not pay sales tax to the seller. You do pay the 5% sales tax upon registering the vehicle, the title transfer document has a space for the seller to enter the sales price for the vehicle. If the sales price is too out of line with prevailing values, Maryland may question the price or assess tax on the blue book value of the vehicle. Of course, if the sales price is more than the blue book value, the tax is paid on the sales price.

sjacobson81

I live in California, and leased a 2004 RX330 through US Bank. I desperately want to get out of the car (not right for my needs - bad decision on my part). US Bank does not allow lease transfers in CA.

 

Luckily, I found a buyer willing and capable of buying the RX for the early term total of $32.5K

 

US Bank will not do a 3rd party sale directly to my buyer. They will sell it to me only if they charge me $2334 CA sales tax. Then, when my buyer goes to title it, the State will collect another $2334 on that sale as well, even though the CA FTB laws have an exclusion on 10-day flips (Section 6277 - Vehicles sold to lessee).

 

The state says that the Lessor should NOT collect tax on the sale to me, since I will be selling within 10 days to my buyer, but US Bank insists on charging that tax (by the way, TMCC and Lexus do NOT charge that tax, they leave it up to the buyer, just for this reason).

 

US Bank suggests that I "trade it into a dealer" - then US Bank will not collect the tax - and have the dealer "sell" it to my buyer, and pay the dealer a flat fee for flipping the paperwork.

 

My Lexus dealer says no way will he help, unless I buy a new Lexus from him, even if I offer to pay several hundred dollars for his DMV time - no enough profit, I guess.

 

Does anyone have any suggestions, or a dealer / DMV contact referral that will broker this deal for me for a fee?

 

Please help! Any suggestions welcomed!

montanafan

You appear to have done alot of research and made aot of calls. My only thought would be: Is there any system for requesting a refund from Calf for excessive/incorrect amount of sales tax paid? If there is, perhaps you could pay the tax to the lease company, then file for a refund because of the flip or the fact that it shouldn't have been collected in the first place. Whoever told your the seller shouldn't be collecting the tax may know the answer.

sjacobson81

That's a good suggestion - I'll try consulting with a tax guy and calling the California Board of Equalization. The info I found about the sales tax not being due on the Lessor sale if flipped within 10 days is directly from the CA Board of Equalization's own publication:

 

http://www.boe.ca.gov/pdf/pub61.pdf

 

Sure wish I could convince US Bank leasing dept to abide by it, and not collect it in the first place!

joekim01

I know this is not sales tax question but didn't know where to post.

 

I paid $450 estimated license fee in CA when I purchased a Nissan Titan in Nov. 04. I just received the registration card and it says Actual Paid $325. Where do I go to collect the overpayment? Do I go back to the dealer or DMV? Help!

trommelprof

Situation: I work in Wisconsin, own a 2nd home in WI, remain a legal resident of Illinois, and want to display WI plates.

 

 
If I lease a vehicle from a local WI dealer, and garage the car mostly in WI, will it come with WI plates?

 

 
Thanks.

 

Trommelprof

jbaer

kcram or car_man

 

I've been looking into the car sales tax in washington state and it appears its a whooping 9.9%. As we will be buying 2 new cars that will amount to approximately 5k in taxes. My question is this. Since I will be leasing the cars for only 36 months it doesn't seem right that I have to pay taxes on the full amount of the vehicle. It seems more appropriate to pay taxes on the amount that I used the car (36 months). Do they figure this in when doing taxes on a leased vehicle?

 

Also it appears there is no sales tax on cars in Oregon. Is it possible to buy a car in oregon and bring it to washingon without having to pay taxes? Somehow I know the answer to this is no ;-) Thanks in advance.

jbaer

I think I have answered my own question. Apparently in washington state you just pay tax on your monthly lease payment. So in effect you only pay taxes on the "portion" of the car that you used during your lease rather then the entire price you paid for the car. Hope that is helpful for anybody else in washington.

CarMan@Edmunds

Hey jbaer. The exact method for calculating sales tax on leased vehicles varies from state to state. Many states do indeed only charge sales tax on vehicles' lease payments. Others use the unfair method of charging the consumer sales tax on the entire price of the vehicle, like you mentioned. Thanks for sharing what you have found out about Washington's specific policy on this matter.

 

Unfortunately you would not be able to purchase your new vehicles in a state, like Oregon, which does not charge sales tax and get away with not paying any on vehicles that you intend to use in Washington. When you go to register your new vehicles in your home state you will be assessed tax on them.

 

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beliver

For those of you that live in states that have NO state income tax the goodfellows @ the irs have a deal for you (and me in florida) for the 2004 and 2005 tax yeas. Since we pay no state income tax and thus no tax deduction for that we will be able to deduct all state sales tax (6 to 7%)from our 2004 federal Tax returns. Determined by tax tables according to income and family size. Any provable tax paid over and above the IRS allowable amounts can be deducted as well as ALL sales tax paid on vehicle purchases (new or used).

 

Since I bought two new cars in 2004, the tax amounting to over $2000.00, is very nice indeed.

 

Just one of the bebefits to living here in Florida. How many other states have NO state income tax? I think Alaska and Texas do but are there any others ?

isellhondas

I'm in Washington and, yes, you did answer your own question. It is NOT O.K. to buy a car in Oregon and bring it here. They watch this very closely. If I sell a car to an Oregon resident, I have to copy at least three pieces of positive I.D. in case of an audit. If they have ANY connection to Washington such as owning a piece of property, they pay tax.

 

But, where do you get the 9.9% rate? It varies a bit by county but here in King Co. which is the highest, it's 9.1%. An extra .3% was added after the Tim Eyman inititive went through but, of course license fees went WAY down.

 

No free lunch. At least we don't have a state income tax...yet.

jbaer

Thanks for your post. I saw the 9.9% on some washington state website...not sure if it was accurate or not. Is it true though that you only pay the tax on your monthly lease payments rather then the total price of the car?

jbaer

Washington state also has no income tax so this new deduction for 2004/2005 can be used by washingtonians as well. Since I never really pay that much attention to deductions, itemizing, etc I have no idea how much this new deduction can actually save you in terms of total dollars. Was it worth saving all of your receipts?

isellhondas

Yes, on a lease, you pay sales tax as you go, added to the monthly payments.

billsbuddie

This rebate business seems to generate lots of "unearned sales tax for states. The product is actually being "discounted" so the amount of the sale is what goes out the door. I know that politicians are always looking for more but this is really taxing a "ghost sale".

  

Does anyone know the origin of taxing rebates, or why car manufacturers continue this ruse rather than be honest and level with the customer just offering discounts for different groups that they want to attract instead of this rebate business? I sure hate paying taxes on "smoke and mirrors".

  

Anyone think that the dealers association is getting some "pork" for allowing this to continue

montanafan

The origin of taxing rebates, is in the taxing of the sale price of an item. You are buying the car for the sale price. The rebates are part of the settlement of the sale price. Many rebates do not have to be used to cover part of the purchase price, they can be received as a check from the dealer. Right or wrong, depends on each states previous tax rulings and definitions in their laws, but yes as a buyer it doesn't feel right.

 

Massachusetts changed in the Spring of 2000 to a system that lowers the taxable price by the amount of rebates used to lower the purchase price.

 

As far as some states taxing the entire purchase price of a car being leased, this only looks unfair. The leasing company is buying the car from the dealer at that price, so taxing it does fit those states' requirements.

rjbpa

In Pennsylvania, when you purchase a car you pay sales tax on the price paid less any trade-in. If you are leasing a car and trade it early when making a purchase, it works the same way. What happens it you turn in the car at the end of the lease and turn around and purchase something else? Is the sales tax calculated on the entire purchase price of the new vehicle?

arizonajoe

Hi all,

 

I was led to believe that you don't pay sales tax when you lease a vehicle. Is this the case in Arizona?

 

Joe

jchristopher

Can anyone point me to a California DMV URL that explains what the necessary fees are when purchasing a new car? I'm just trying to make sure my dealer doesn't pile on or charge more than the actual DMV costs.

 

From what I can gather, the "actual" fees in excess of the vehicle price are:

 

Sales Tax (7.75% for my county)

Registration $31

 

Vehicle License fee - unclear here. Do I pay this at the point of purchase, or directly to the DMV after the fact after the vehicle is registered?

 

California DMV has a boatload of other fees, listed here: http://www.dmv.ca.gov/vr/fees/miscellaneous.htm - are any of those applicable at the purchase of a new vehicle?

 

Thanks for any info.

michaellno

It's been over a decade since I lived in CA, but I seem to remember that you pay all fees to the dealer, including the DMV fees; several weeks later, you can pick up your plates from the dealer.

chris66

My brothers and I are going to buy my mom a car. She lives in NY and we live in MA, NY & TX. I live and work near NH. If say my brother from TX and I buy my mom a car in NH and gift it to her (remember, she lives in NY), could we avoid sales tax? I found this form online:

 

http://www.nydmv.state.ny.us/forms/dtf802_01.pdf

 

Also, I assume if my brother and I buy a car worth $20 and jointly give it to my mom, we would be within the $11K a piece gift tax exemption...right?

 

Further, if we financed a portion of the car and remained the ones liable (not my mom), would we be able to transfer ownership to her, so long as we retain the liability and the finance company retains the lien?

 

Any CPAs out there???

danf1

Sorry for the late answer, but yes you will pay tax on the entire new vehicle purchase.

sandinj

I am in process of preparing to lease a new Pathfinder. The price they gave me has tax due at signing and then again on the montly payment. Is this normal? From what I understand the tax in the down payment is on the total cost of the car - can they charge me tax again on each payment?

I appreciate your response.

montanafan

Would help if you posted the state you are leasing the car in. Also are both taxes being called "sales tax" or are they being called different names?

kyfdx

If you make a "downpayment" or "cap cost reduction", you will have to pay sales tax on that amount at signing.

Then, you pay sales tax on the monthly payment.. but, that payment should be lower because of the downpayment, so you aren't paying twice.. How much is the tax due at signing?

cadillacmike

"But, where do you get the 9.9% rate? It varies a bit by county but here in King Co. which is the highest, it's 9.1%. An extra .3% was added after the Tim Eyman inititive went through but, of course license fees went WAY down. "

And they used to call Massachusetts "Taxachusetts"
Sales tax in MA is 5% no tax on food or clothing (single item limit up to $175.00 after that 5%tax).

No wonder WA went to the democrats!

Down with starbucks! We like dunkin donuts coffee better!

thankthepasser

Hello, I'm looking at purchasing a new Z4 in Los Angeles, where I am currently on a business trip.

My plans are to then bring my wife out here, so we can take a few weeks and drive up the PCH to Vancouver, stopping to do whatever we want.

We are both legal residents of Louisiana, wherein our primary (and sole) legal residence resides.

After the trip to Vancouver, we would then drive home to Louisiana.

The dealer with whom I'm working out here has told me about a "one-way pass" available, which is essentially a temporary registration that would allow me to purchase the vehicle here and then drive home to Louisiana. The problem with this is that there are certain time restrictions with this (I believe one only has 7 days from time of issuance). Additionally, he told me that if I am stopped and my car is pointed in any direction other than East (driving from Los Angeles to LA) - or any easily explainable reason why it's not pointed East (e.g. pulling off the interstate for gas) - then I could be seriously screwed.

So, what I'd like to do is buy the vehicle in Los Angeles, get it Titled & Registered in LA, all without taking it back to LA (or purchasing it in LA), until I return from vacation. Any ideas how to do this?

Thanks for the help.