Help understanding my lease and Sales tax, US bank charged me tax again on lease extension

Ask the Hackrs
1

Hi all, hoping to find some clarity in my lease agreement that shows my monthly lease payments already included Sales tax.

To frame the background, I am a NYS resident (8.875%) that bought the car from NJ dealer. Usually NY collects the sales tax upfront but in my deal structure I asked the dealer to roll it into the monthly which they claim to have done so. To my understanding it is $539 per month all in, taxes rolled into monthly.

If you look at the lease details it does say monthly sales tax is N/A, the gross cap cost includes $1705.71 of sales tax, then the breakdown for the monthly payment to be $539/month. I can’t really pinpoint the $1705.71 of tax however. I also wasnt given a clear breakdown of the upfront $2147.00

When I extended my lease for 6 months, US bank collected the base $539 + 47.84 of tax per month. I called to dispute it but the rep said it was not clearly stated in the lease that the tax is already calculated in the $539.

I admit my accounting is not very good, and I think this lease detail was very fuzzy to begin with. But if anyone can take a look and see if I have a strong case to argue for a tax refund, please advise!!

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2

Yup, this is what happens in NY. You paid upfront for tax for tge period of the lease. Now that you have extended it, you owe tax for that usage.

3

Yes but my understanding was that the 539 includes tax. So the extension is double taxed.
I just don’t know how to prove it, or if I was tricked into believing it

4

In NY, you pay the tax upfront. The monthly payment isnt taxed, except the extention.

5

The extension isn’t double taxed, you requesting an extension gave US Bank some free funds which HAPPENS to be the taxable amount.

The new tax is remitted to NY.

6

It included tax for the duration of your lease term at inception.

So tax for 36 months was paid, not 42.

7

I’m looking at 11B sales tax $1705.71 which makes up the Gross Cap cost 11M $48.965.34, which is then used in 8A to determine the monthly payment 8i of $539.00 … so this means (to me) the sales tax is effectively rolled into the monthly.

Keep in mind I only paid 2147 DAS which is supposed to be first month, bank, title, doc (again fuzzy on the details here, nothing quite adds up correctly)

I think the part that is messing up is that it was not broken down into monthly base + monthly tax. This number should be something like $495.06 + 43.94 = 539/month

So, at this point I just want to know if my math and understanding are actually correct, but the accounting details were screwy.
OR if I just still don’t get it.

8

the 43.94 was prepaid to NY by Hyundai, and they generously loaned you 43.94 to cover it.
You asked for an extension and they granted it by basically raising your rate by 43.94.

You have 2 choices

  • Return Car
  • Pay them 43.94 extra to keep it past your 36.

That’s all. Hyundai is under no contract to reduce your loan by 43.94

9

It wouldn’t be broken down like that because that’s not how NY taxes leases. Any lease term for less than 12 months, whether it’s an extension or you brought the car in from out of state, is taxed on the monthly. You’ve paid down the depreciation already, and you paid tax on that. Now, you’re paying on “new depreciation” for the extension, and NY essentially thinks of that as a new lease, which is why there’s tax imposed.

10

No, it shouldn’t. You live in NY which is a tax upfront state. It is not a monthly tax state.

The bank pays the tax upfront and adds the cost of the tax to your capitalized cost. You don’t have a base payment plus tax payment. You have a base payment only.

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