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A couple of years ago, someone posted here about the amount of sales tax that had to be paid on a leased vehicle, and though some tried to explain, I still don't understand the need to charge a sales tax on a leased vehicle.
One is not buying the vehicle,so there is no sale, they are in fact, renting it for a period of time,
Similar to leasing a house or apartment.
Sales tax is not charged when renting living quarters, so why, when one is leasing a vehicle are they paying a sales tax?
Correct me if I'm wrong, but a lease is a contract to rent something for a designated period of time, not a sale of the vehicle.
Sales tax rules vary from state to state. A rental in many tax areas is still a taxable transaction in the states I've rented equipment in.
All hard goods I've leased in CO & WY has had a sales tax collected on it. Shop equipment, farm equipment are my two big leased items.
RE: "Sales tax is not charged when renting living quarters" ... not so in all the states I've stayed in motels/hotels. I've always had "sales taxes" charged renting living quarters in a motel/hotel, too. That included several long-term stays of 3 to 4 months when we've had long term projects and needed lodging for our various subcontractors through the course of a project.
Not charging sales tax appears to be the exception, such as on food items or similar exemptions.
In, and of itself the word"sales" designates a passing of goods, not services, for some enumeration, usually cash.
A lease is a contract to rent something, not a sale of any kind.
Perhaps it should be changed to lease tax, that would make more sense.
If I were a practicing attorney, I would take on the state to have the tax illiminated, or changed to a lease tax.
When no sale has taken place, how can a sales tax be added on?
It’s not just a “sales” tax. It’s a sales/use/excise tax. In a lease you just pay the tax on the lease amount rather than the whole price.
Quote:
Washington state imposes an excise tax (commonly known as "sales" tax) on purchases and an equivalent use tax on leases. Under state law, the sales/use tax on the stated value of a trade-in is deducted from the tax that would be assessed on the total price or monthly lease payment of the new vehicle. Use tax on a lease is paid one month at a time on the amount of the monthly lease payment. Washington state provides for the sales tax exemption for a trade-in to be credited on the lease to the use tax on monthly payments. The lease contract should indicate in which months the use tax is excluded and when the payment will increase when the sales tax exemption is exhausted.
In, and of itself the word"sales" designates a passing of goods, not services, for some enumeration, usually cash.
You're quibbling over definitions of a taxable event.
If the state with the taxing authority says that a lease or rental or whatever is a taxable event, then it's a taxable event. If the state calls it a "sales tax", so be it.
Here in Wyoming, even service sales are a sales taxable event. You will pay sales tax on the labor portion of a car repair work order, for example.
If your state says that a car lease is a sales taxable event, then it's a sales taxable event. End of story.
...and although you may be "renting" the car, it is bought by whoever is leasing it to you. Ford isn't leasing the car to you, it's Ford Credit, Citibank, or some other financial entity - the sales tax they pay has to be recouped.
...and although you may be "renting" the car, it is bought by whoever is leasing it to you. Ford isn't leasing the car to you, it's Ford Credit, Citibank, or some other financial entity - the sales tax they pay has to be recouped.
^^ The correct answer. When you lease, the dealer is selling the vehicle to the company that is leasing it to you. The sales tax is passed onto the consumer.
A couple of years ago, someone posted here about the amount of sales tax that had to be paid on a leased vehicle, and though some tried to explain, I still don't understand the need to charge a sales tax on a leased vehicle.
One is not buying the vehicle,so there is no sale, they are in fact, renting it for a period of time,
Similar to leasing a house or apartment.
Sales tax is not charged when renting living quarters, so why, when one is leasing a vehicle are they paying a sales tax?
Correct me if I'm wrong, but a lease is a contract to rent something for a designated period of time, not a sale of the vehicle.
Bob.
You get it. You just do not like it. A state can tax about anything they want to tax and call it anything they want. MA calls it Excise Tax on a car each year. SC calls it Personal Property Tax. One way or another, you pay it.
And the tax treatment on leases varies wildly. There are states that tax the total cost of the lease at time of purchase (middle ground solution- nj,ny), states that only tax the monthly payment (ideal solution-ca, nc) and states that tax the entire cost of the vehicle (most draconian solution-md, va, ga-for rest of 2017).
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