I am hopeful that someone can help me understand New York State (NYS) Sales Tax with regards to a lease take over, in what seems to be paying tax twice.
So here is the scenario:
Person A leases a vehicle from BMW in NYS, and NYS sales tax is calculated as the monthly payment * NYS sales tax inspection * 36 month lease term. Instead of paying all of the sales tax up front, Person A opts to roll the tax into the monthly payments (increasing the per month price to cover the sales tax and any interest charges). BMW Financial fronts the NYS sales tax to NYS, and collects the repayment across 36 months.
After 12 months, Person A attempts to transfer the lease to Person B. Person B is informed that upon registering the car, Person B will need to pay Monthly payment (higher monthly payment which included the sales tax) * NYS Sales Tax * remaining term of 24 months.
BMW informs person B, that that is controlled by NYS DMV, and not in their control, and also informs person B, that BMW cannot reduce the monthly payment to remove sales tax as they still need to be paid for the original money they fronted, so person B will not only have to pay another sales tax (they will also continue to pay the higher monthly payment per month which includes the original sales tax).
To me this doesn’t seem right, and looking for official reasoning as to whether it is or not. The two big issues I have is:
- NYS will be getting double the tax, although the ownership of the vehicle doesn’t change, it is still BMW financial, this is just a lease transfer
- Even if the second tax needs to be made, it is calculated based on the monthly payment, which has a tax, so it is taxed on top of sales tax (triple tax? Is that a thing)
I did find a DTF-803 form from the NYS DMV, where line item 6 states tax will be paid to lessor. But not sure if that will fly.
The car is in NY leased by person A, and will remain in NY, taken over by Person B.
