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I have a vehicle that I'm leasing and in the state of Virginia you pay sales tax on the full purchase price of the car when you are leasing.

I have now moved to Florida and the lease company has started charging me Florida state sales tax monthly on the lease payment (in Florida you would only pay sales tax on the payments).

Is there a way to stop this or to recover the double tax I'm being charged?

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The problem is that the tax paid in Virginia was actually paid by the lessor and the lessor required that I pay it back to them. So I never actually paid any tax directly to the state of Virginia for the car. Now, Florida is charging me monthly sales tax on the lease payments and since I didn't pay any tax in Virginia, I am not due any credit.

The answer is yes, in this situation you are unfortunately double taxed for the lease.

According to Florida Tax rules 12A-1.007 section (13) Lease or Rental. In order to receive a credit by the state of Florida the following condition must be met (and was not met in my case):

The tax must be lawfully imposed on the lessee. A credit will not be allowed for tax paid to another state, territory of the United States, or District of Columbia when the sales or use tax is lawfully imposed on the lessor, even though the lessee may be contractually obligated to reimburse the lessor;

  • How do you figure you're being "double taxed" if you "never actually paid any tax to the state of Virginia"? – CactusCake May 11 '17 at 15:41
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    @CactusCake Because the lease company forced me to pay the tax to them, and they paid it to the state of Virginia. Though I did not directly pay the tax, I paid the cost of it. – Luke May 11 '17 at 19:52
  • @CactusCake It's not an official tax, but the effect is the same if he had to repay the lessor for the sales tax they paid. It would be interesting to know if FL would waive the tax if you could get proof from the lessor that you in fact paid (indirectly) the tax owed in VA. – chepner May 11 '17 at 19:53
  • In that case, the lessor should be eligible for the credit, and should not need to be billing you (as much) monthly sales tax. You can't be the first of their customer's to have made such a move. I used to work for a leasing company; tax issues are complicated but we would never try to profit off of a situation like this. You might be able to get them to give you a credit on your account if you can figure out getting a credit to them from the state. – CactusCake May 11 '17 at 20:01
  • @chepner I updated my answer with the specific clause that says no to your question. – Luke May 11 '17 at 20:05
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This bulletin from the Florida Department of Revenue provides guidance on your situation, and also has more information specific to Virginia in the table. You may also find this Stack Exchange post helpful about a similar situation, in which someone else's lease payment went up after moving from Kentucky to Ohio.

Florida use tax of 6% generally applies to motor vehicles purchased in another state, territory of the U.S., or the District of Columbia, and subsequently titled, registered, or licensed in Florida.

Section 212.06(7), F.S., allows a credit to be given on motor vehicles brought into Florida where a like tax has been lawfully imposed and paid in another state, territory of the U.S., or the District of Columbia. Credit against Florida use tax and any discretionary sales surtax is given for a like tax paid in another state, whether the tax has been paid to that state, or to a county or city (local taxes) within that state. If the amount paid is equal to or greater than the amount imposed by Florida, no additional tax is due. If the amount is less than the amount imposed by Florida, only the difference between the two is due.

In addition, Section 212.06(8)(a), F.S., provides a presumption that motor vehicles used in another state, territory of the U.S., or the District of Columbia for six months or longer before being brought into Florida were not purchased for use in Florida. When documentary proof establishes such prior use no Florida tax is due.

  • That all looks good, except I didn't purchase the vehicle, I leased it. I'm not sure the same rules apply. I haven't been able to find anything about leasing specifically. – Luke Nov 25 '16 at 3:01
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    Yep, I suppose the Florida Department of Revenue would be able to confirm if these rules apply to leasing. – Karl Weinmeister Nov 25 '16 at 3:12
  • It looks promising, the department of revenue is sending me an official response, but verbally they told me that I need to tell Volvo to stop charging me the tax. The official response they send me should be enough to get them to stop the tax. I'll reply back here and accept when it's official. – Luke Nov 29 '16 at 18:31
  • The applicable code for Leases is 12A-1.007 section (13) Lease or Rental. It does say that you can get a credit, but the lease company is arguing stating that the sales tax is imposed on the lessor, not the lessee, which is specifically called out in (b) and states that I do not qualify for a credit. I'm still skeptical about their interpretation of who the tax is imposed on. – Luke Dec 19 '16 at 16:32
  • Took forever to run this to ground, but unfortunately I do have to pay double tax. Details are in my answer. – Luke May 11 '17 at 12:32

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