Lease Co. Charging Sales Tax On Property Tax (for sale, leasing)

[RAT]

Is it normal and OK for a leasing company to charge sales tax on the property tax they are charging for equipment leases?

[RodFarlee]

Yes, it's legal. That is, sales/use tax is due on the total lease payment, and no exemption is allowed for personal property tax that they have to pay on the leased equipment. It is legal for them to itemize and pass it on to you. Sleazy, but legal.

Is it legal to tax taxes in general? Oh yes, I'm afraid so.

Is it fair? Well, I long ago concluded that's an irrelevant question with regard to taxes.

However, it is sleazy indeed for a lease company to advertise one rate and then itemize a pile of add-on charges (mandatory insurance, their property taxes, cleaning/restocking fees, etc.) to get the true rate. It's false advertising. But that's also normal business, sigh.

To those who wonder "what's this doing in a relocation forum?" I can but ask "Why are you reading this topic?"

[the dufferz]

Originally Posted by RodFarlee

To those who wonder "what's this doing in a relocation forum?" I can but ask "Why are you reading this topic?"

Is this not the voice of the next Washington State forum Moderator!

Run Rod Run!!!!!

You know you want it!

[<<M>>]

Rod, or anyone else who might know...

My 'automaker' Financial Services car lease's latest bill has me billed for Sales Tax on the lease payment, but also has Sales Tax on my annual Property Tax issued by North Carolina. They are making no profit/sale, etc off of the property tax, it is only passed on by them to me.

On other items that I am charged property tax on directly from the state, there is never any sales tax... ??

[icainc]

Sale Tax is for tangible items, products or goods that you buy to own.

Use Tax is for business or consumers who buy intrastate tangible item(s), product(s) or goods and don't pay taxes on the tangible item(s), product(s) or goods they bought at wholesale, then using these intrastate tangible item(s), product(s) or goods within the state for their own use.

Services Tax is a tax that a business pays (not the consumer) on services they provide. Examples of services are: Warranties, Cell phone services, telephone service, labor, installations, repairs, and etc. Now this don't mean that businesses will adhere to this. Some businesses will charge the sales tax in order to avoid paying a higher B&O tax and no service tax at all. This is not legal, but they still do it and get away with it. Some Big Companies like AT&T, Sprint, Qwest, DELL, Hewlett Packard, and others charge sales tax on services. These services include telephone service, cell phone services, and warranties.

About 20 years ago I purchased two car warranties and was charged sales tax on these warranties. Well, someone filed a class action lawsuit about this practice. It went to court in Thurston County and after it was all said and done with, the court found it was unconstitutional to charge sales tax on services. The State of Washington and the businesses that charged the sales tax ended up having paying back everyone back that filed a claim and had paid sales taxes on their warranties.

The attorneys who sued made out like bandits, the State of Washington paid out millions in legal cost not to mention the sales taxes they had to give back, the business where held accountable for service and B&O taxes that they did not remit to the State of Washington, and the consumer well they gained back a fraction of their taxes. I was paid the sales tax back on only one of my warranties

[D Thompson, EA]

WA state DOR explains here:

[URL]http://dor.wa.gov/content/getaformorpublication/publicationbysubject/taxtopics/leaseproptax.aspx[/URL]

(posted June 2010)