I deleted an earlier post when I thought I had answered your question with exact figures…turns out this stuff is more complicated than it looks.
I googled “NY lease tax laws” and this LH post was the first result
Using his formula, I calculated the tax amount to be $2,405.57, or about 10 bucks from the Leasematic sales tax figure (you’ll be able to see how I got there below, but I used a total lease cost of 24,684.15 (Line item 7 below) * (0.00875/(1-0.00875)), as per the formula he provided. You can also see the language he references in Publication 839: A Dealer’s Guide to Sales and Use Taxes on Long-Term Motor Vehicle Leases in New York State on page 17.
I then used my own worksheet to reach an equally close, yet incorrect value of $2,392.35 by calculating the tax as if it were paid upfront, and then adding that up-front tax value back into a new tax calculation in which that tax is capitalized and then taxed again. In both cases, the doc fee is excluded as per the above dealer’s guide. Here’s what I got:
In the relatively simple example @IAC_Scott posted, I’m equally dumbfounded that we cant arrive at the same number, given how few inputs there are here.
Leasematic has since revised its tax figure… it now matches the formula outlined in the NY tax guide, although @IAC_Scott said Leasematic’s original figure matches the dealer’s? Is the dealer using Leasematic too?
@Rsantoro12 for your “NY - Upfront Tax”, you didn’t subtract the $2000 rebate and capitalize the acq fee in item #2?
As for the purpose of calculating the tax only, you would ignore the taxable rebate (I.e. taxed on the full gross cap cost before the rebate), no?
“Manufacturers’ rebates (e.g., a rebate on the purchase of a car or an appliance) are not deductible from the amount of the taxable receipt. This is so whether the rebate is assigned to or paid to the seller at the time of sale, or later paid directly to the purchaser by the manufacturer. Even though the purchaser’s out-of-pocket expense is reduced by the amount of the rebate, the price paid to the seller is not. In effect, the manufacturer is subsidizing the consumer’s purchase, and the full sales price is subject to sales tax.” (Source: NY Tax)
I apologize if it was unclear, but my goal was to use the numbers to show how I arrived at the taxable figure and subsequent taxes, per your question below
Line 18 and 19 come fairly close to that answer, but something is clearly wrong.
In the Final Lease section, you can see that I accurately subtract the rebate in line 2, as well as add DAS costs to land at the total lease cost of ~$25,250 that Scott posted in his original screenshot
Your leasematic calculation sheet of NY sales tax in the amount of $2,217.74 assumes that the tax on the 2000 rebate is paid upfront. Leasematic’s calculation methodology has not changed from the OP’s original post wherein rebate tax and dealer fee tax is capped. . Your leasematic sales tax calculation was done as follows……
Pre-tax payment = 0.00082 x (55650 + 35722.20) + (55650 - 35722.20) / 36 = 628.48
NOTE: 55650 is the net cap before adding capped sales tax.
total pre-tax payment sales tax = 36 x 628.48 x 0.008875 / (1 - 0.08875) = 2203.56
sales tax levied on dealer fee = 0.08875 x 160 = 14.20
Total capped sales tax = 2203.56 + 14.20 = 2217.76
2 cents off probably triggered by rounding.
Here’s the problem… Assuming the above is true, then the DAS should be 851.90 + 177.50 = 1029.40 as the 2217.74 does not capture sales tax on the 2000 rebate which is 177.50 and so, it must be paid upfront.
[edit - add] It seems to me that the 2000 was entered as a non-taxable incentive.
The rebate was taxed and the tax capped in the OP’s original post. However, in @littleviolette’s post above, it was apparently entered as a non-taxable incentive.
Referring to @delta737h’s memo, K should equal to the tax base listed above, since acquisition fees, dealer fees, and manufacturer’s rebates are generally taxed (unless things are different in NY).
Leasematic separates out the taxes on rebate and upfront fees from the tax base as you stated. It makes more logical sense to include them in the tax base (K) but I am not sure how it is normally done in NY?
Leasematic ,based on what I’ve seen, does seem to be in full compliance with NY tax calculations (i.e., pub.839). The tax base is just the total of the pre-tax payments plus taxable rebates/incentives plus taxable fees paid upfront. One way to incorporate this into a lease calculator program is by using nested conditional statements.
If the taxable upfront fee is capped in the lease, then the pre-tax payment captures this fee. Otherwise, the pre-tax payment doesn’t capture it and so, tax would be levied on this fee in addition to the tax levied on the sum of the pre-tax payments which wouldn’t include this taxable fee in this instance. .
Taxable rebates/incentives are always taxed separate from the sum of the pre-tax payments and, as you know, can be capped or paid front. I’m reasonably certain that this is the way it is done in NY unless their methodology has changed recently.
I hope I’m making sense. If not, let me know.
As you suspected, rounding the pre-tax payment results in the 2 cent error.
No need to divide by 36 and then round, only to then multiply again by 36 before applying the tax.
However, per the handbook, you need to round the formula to three digits before multiplying it by the total taxable amount of the lease, and then multiply by the tax rate, as seen on line 4
I built a Punnett square of sorts showing the tax difference achieved by rounding both the pretax payment and the formula:
Funny enough, it seems like the answer from Leasematic and the dealer sheet use unrounded figures in all cases, which seems to go against the handbook. Based on my read of the handbook, the answer should actually be the bottom right quadrant, as the payment is unrounded and the formula is rounded to 3 digits.
Forgot all about the rounding convention used in example 9 on P.16 of pub 839 and for some reason thought each calculated result was rounded which I didn’t agree with. So, it’s not as bad as I thought.
You did an outstanding job of bringing this to light and providing a very detailed explanation of this issue. Numerical purists would say don’t round until the very end and I couldn’t agree more. as that would provide the most accurate result. So, I have to disagree with pub 839’s rounding convention. But, maybe they have a reason although I can’t imagine what it would be. Anyway, I cast my vote for the lower left quadrant as that provides the most accurate result.
Hi John, Long time; hope all is well! As you may recall, you previously helped me compute a lease back in 2019. I tried e-mailing you at diffeq@zoominternet.net, but the e-mail did not go through. Can you please kindly e-mail me; I sent you a private message via this forum / site. Thanks so very much. My best regards, Jared.
Drop down results for Hyundai Ioniq 5 SEL does not match February HMF package as reported by Edmunds. Edmunds reports .00252 MF, 55% RV, $2750 lease cash.
hmmmm
which multiplied by 8.875% is $2,395.243…