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You're paying a use tax for the item. It is still a sale. You are buying the privilege to use that item. The bank is basically buying the vehicle for you since they are extending the credit. At the end of the agreed usage time you can buy or walk. Since its a more personal item and it's not a house you are the REGISTERED owner due to liability reasons. The item you are leasing is not stationary immovable and due to factors up to and including the occupant it can be totaled, used in a vicious malicious manner or stolen, vandalized. A house can't be used in that manner as a car can.
You can't steal a house or use it to wreck into another house.
The leasing company is transferring it's liability to you. This way YOU insure, repair, maintain the item. That's why they don't put their name on it. You own the car with conditions. They don't have to unlike a house.
As the lease holder you CAN purchase and even sell the vehicle. If you lease a car and say in three years the car is popular, and your buyout is 12k but the market pays 18k and you can get it and flip it
There are so many holes in your post, I don't know where to begin.
I guess your first sentence is as good as any other place to start.
The only sale here is the bank bought the vehicle from the dealer.
They alone should be the one paying the sales tax, not the person who rented the vehicle from the bank.
The bank did not sell the vehicle to the lessee.
Te lessee did not buy the vehicle, but rented it for a fixed amount of time.
What it cost the bank in sales tax should be absorbed by the bank as the cost of doing business.
If the bank wants to recoup that money, they can inform the lessee that the monthly payment will reflect what it cost the bank in taxes to buy the vehicle from the dealer, but don't disguise, or try to collect it as an illegal sales tax.
Charging a lessee sales tax on an item that was not purchased by the lessee is wrong, and lessee's that fall for, and pay the sales tax up front, are just plain stupid.
The vehicle is bought and paid for by the bank, the bank has the title, so again, the registration and insurance are their responsibility.
Not doing so would be like me registering my neighbors vehicle, and registering it in my name.
I don't have clear title to the vehicle, so why would I register and insure it in my name?
As for a liability issue, the bank, as the owner of the vehicle would have to assume all liability for the vehicle.
Why should that be passed on to someone who doesn't own the vehicle?
The bank transferring liability to the lessee is just wrong, again, because the lessee does not own the vehicle.
Now you are going to have to show me just how a lessee is able to sell a vehicle he/she is leasing.
They can't sell something they don't own.
I don't think it would take a rocket scientist to actually find all the flaws in current vehicle lease agreements, and bring it before state courts.
The leasing company is buying the car from the dealer. The leasing company is the owner of the car and must pay tax on the sale.
However, the lessee (you) will find in the fine print of the lease agreement, that you are responsible for payment of all taxes on the vehicle. Most leasing companies will figure this into the monthly lease payment.
If you buy the car at the end of the lease, you will pay tax on that sale as well.
I would ask a revision so that lease means exactly what it is , and that is a rented item that voids a sales tax.
They are going to collect it one way or the other, if not charging the consumer directly then whoever was leasing it to the consumer would have to pay. They would pass it on to the consumer with a higher lease rate. What they are doing here is preferable because the tax is exposed to the consumer instead of hidden in the cost.
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Dealers and financial institutions are pulling a scam, and this should be taken seriously by state legislatures.
How is it a scam if the tax is in black and white on the lease?
It's funny you would say state legislators should take this seriously.... they are the ones that wrote the law.
What it cost the bank in sales tax should be absorbed by the bank as the cost of doing business.
If the bank wants to recoup that money, they can inform the lessee that the monthly payment will reflect what it cost the bank in taxes to buy the vehicle from the dealer, but don't disguise, or try to collect it as an illegal sales tax.
The bank is not going to absorb anything,any tax or fee a business pays is always passed onto the consumer. If they are responsible for it they will just include it in the cost of the lease. Do you want it in black and white on the lease so you know X amount of dollars is a tax or do you want it hidden in the cost of the lease?
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As for a liability issue, the bank, as the owner of the vehicle would have to assume all liability for the vehicle.
Why should that be passed on to someone who doesn't own the vehicle?
You the consumer will always pay the costs. If the bank was liable then they would have to get insurance on the vehicle and since they have some very deep pockets for the "have you been hit by a truck" lawyers to pick that insurance would be substantial. That would drive up the cost of the lease substantially.
There are so many holes in your post, I don't know where to begin.
I guess your first sentence is as good as any other place to start.
The only sale here is the bank bought the vehicle from the dealer.
They alone should be the one paying the sales tax, not the person who rented the vehicle from the bank.
The bank did not sell the vehicle to the lessee.
Te lessee did not buy the vehicle, but rented it for a fixed amount of time.
What it cost the bank in sales tax should be absorbed by the bank as the cost of doing business.
If the bank wants to recoup that money, they can inform the lessee that the monthly payment will reflect what it cost the bank in taxes to buy the vehicle from the dealer, but don't disguise, or try to collect it as an illegal sales tax.
Charging a lessee sales tax on an item that was not purchased by the lessee is wrong, and lessee's that fall for, and pay the sales tax up front, are just plain stupid.
The vehicle is bought and paid for by the bank, the bank has the title, so again, the registration and insurance are their responsibility.
Not doing so would be like me registering my neighbors vehicle, and registering it in my name.
I don't have clear title to the vehicle, so why would I register and insure it in my name?
As for a liability issue, the bank, as the owner of the vehicle would have to assume all liability for the vehicle.
Why should that be passed on to someone who doesn't own the vehicle?
The bank transferring liability to the lessee is just wrong, again, because the lessee does not own the vehicle.
Now you are going to have to show me just how a lessee is able to sell a vehicle he/she is leasing.
They can't sell something they don't own.
I don't think it would take a rocket scientist to actually find all the flaws in current vehicle lease agreements, and bring it before state courts.
Bob.
Yeah you're gonna get the bank to absorb costs and liabilities. Good luck with that. You can argue the tax liabilities till you're blue in the face, but banks are smart enough to transfer additional costs to the end user which is you. It's a lease by definition with its own conditions which you agree to at the time you sign.
A lease is nothing more than a purchase/right of use of a item for a set amount of time with a surrender or buyout option. Bank is just a middleman.
Last edited by Electrician4you; 03-02-2015 at 06:47 AM..
The OP sounds like one of the same people that scream that our Tax Laws are illegal and that the Constitution say's we don't have to pay taxes. As you see, a lot of those people have ended up in Jail.
As someone mentioned, if you don't lease a car, then this won't be a problem for you.
The Tax Man is always going to get his. Even if the dealers "paid it", I am sure it would get built into the price some how.
The leasing company is required by law to collect the use tax from you, the lessee. Contact the CA Board of Equalization and hear it from the horse's mouth.
I want to see OP sue the state he lives in for "illegally" collecting sales tax on a leased vehicle. Please laywer up and make this happen. I need some good entertainment.
My brother in law just leased a 2015 Nissan Altima SV and was able to roll the taxes and fees right into his monthly payment. Wasn't aware that you can do that. He literally swiped his debit card for the first month's payment on the lease which was $290 and drove off. Had he paid the taxes and fees upfront it would have reduced his monthly payment by $60.
Once again, with a lease, the vehicle is NOT being purchased by anyone, it is being leased.
Leased is another term for rented.
Rented is usually on a month to month, while a lease is for long term.
The vehicle is not being purchased.
It is being leased,or rented, so why any sales tax?
Bob.
Look up your state, most states it is called a SALES and USE tax.
The vendor will collect tax on whatever the state says tax must be collected on. Do you think the vendor is pocketing the tax and not turning it into the state? If so, report them.
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