Double Taxation in immediate lease buyout in NJ?

Ask the Hackrs
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1

I am strongly considering doing an immediate buyout of a lease on a NJ-registered Volvo. I went with a lease due to the $7,500 lease-only credit. I received the buyout quote and see that I will be charged NJ sales tax of 6.645% on the buyout price. The issue is that the buyout price already reflects the portion of the remaining payments that was due to capitalized sales tax on the total lease payments plus the capitalized cost reduction tax.

Is this unique to New Jersey? Any way to get the duplicative sales tax refunded? It totals about $3,500.

2

NJ taxes the sum of the base payments upfront. So that amount was already due to NJ and has been paid. If you decided to roll in the taxes, essentially your dealer paid the taxes and then added that to your net cap cost.

So yes, you’ll be charged 6.625% on the sales tax amount of the lease if you rolled it into your monthly.

3

Lol you want the government to give you back tax money? What do you want next, roads that aren’t covered in potholes? Please.

It’s not unique to NJ, NY does it too!

4

Nope. It’s done in NJ and Ohio as well as several other states.

Nope. The leasing transaction and the buyout transaction are considered two separate and distinct transactions.

5

I found an old forum post where someone describes failing when trying to get a refund from NJ. However I did just find this encouraging PDF from NJ: Unsupported Browser | Adobe Acrobat

"22. If the lease agreement is cancelled before the expiration of the term, is the lessee entitled to a refund of any portion of the Sales Tax paid?

Yes. For a long-term lease, for which the dealership collected and remitted Sales Tax at the inception of the lease (based on the entire lease amount), the lessee may seek a refund for the Sales Tax paid for the remaining portion of the lease. The lessee may seek a refund from the dealership or from the Division of Taxation. The lessee may request a refund from the Division of Taxation by filing a Claim for Refund (Form A-3730). The claim and all supporting documents must be filed within four years of payment of the tax. "

6

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