Dealer sales rep called 3 days later and said “we put the tax in the wrong place when writing the lease. you’re payment should be $195/mo not $93/mo. same money DAS of $2,992”. I got this car in a different state (I live in GA) so they said they would airmail a new lease for me to sign. Just for reference, another person on LH got the same car, same discounts from same dealership for $500 upfront, $216/mo so I’m thinking the difference is the taxes.
I could really use some help to make sure they are writing the lease correctly for GA. I don’t think I should have to pay nearly $3k in driveoffs. I think it should be more like $2k. When I populated the calculator, I had to add $850 as a down payment (that I didn’t pay) to get the DAS and payment in line. I did the calculator after I left the with the car, but that should have been my first clue something was off.
They wrote the lease with me paying TAVT (GA tax) on the total value of the car, but i’m under the impression I only need to pay tax on the base payment of the lease per HB 340 (2017).
In section 14 of the lease, it says $3,990.14 in ESTIMATE OFFICIAL FEES AND TAXES. They used this ATC system to figure out the sales tax. Do I really need to pay this much in taxes?
If anyone could provide any help so I can make sure my lease is written properly, i would greatly appreciate it.
On the DOR website, it states that “The dealer should use the calculation method selected by the lessor and lessee”. Maybe I needed to specify more emphatically.
The method for calculating TAVT on leases changed on January 1, 2022. The TAVT on leases is now calculated based on the total of Depreciation Plus Any Amortized Amounts, including any down payments.
The Form MV-7L linked below explains how the TAVT is currently calculated.
It appears to not be correct for GA leases post January 1, 2022.
As of 1/1/22, the lease tax is based on the total of Depreciation Plus Any Amortized Amounts, including any down payments. So the tax appears to be lower than in the calculator, since tax is no longer charged on the rent charge portion of the monthly payments.
In your case, the tax should be 7% of the total depreciation and amortized amounts, which comes out to a total of $26.55. ($379.27 x .07) You also owe tax on the down payment, which is defined as cash collected from the lessee at the inception of the lease, including (1) cash supplied as capital cost reduction and (2) any upfront payments by the lessee. Down payments shall not include (1) rebates, noncash credits, or net trade allowances, (2) taxes or fees imposed by law, and (3) monthly lease payments made in advance.
Based on this definition, it appears that your taxable down payments is $2992.72. So you would also owe 7% of that amount, or $209.40. So the total tax should be about $236.04 ($26.55 plus $209.40).
Can we all just take a minute and recognize this MF in the finance office hand wrote this lease contract after being unable to lineup a machine that could not be easier?
I’ve run into similar problems with GA taxation. At the beginning of the EQS craze, I tried to lease one from a FL dealer. We agreed to terms but they were taking forever to pull the paperwork together. I thought they were intentionally trying to delay (either an issue with the car or waiting to see if they could sell for more). I eventually canceled the deal and tried to lease one from a AR (?) dealer. They were having issues calculating GA taxes properly and were upfront about the issue. Similar to your situation, their system was taxing the entire sales price instead of just the depreciation. I sent them the same official document that showed the 2 ways to calculate tax but their system wouldn’t let them change the auto-generated tax. It turns out the AR dealer was owned by the same dealer group as the one in FL…both using the same desking software. Eventually, I gave up waiting and canceled the AR order. Unfortunately, I think that experience led them to no longer lease to GA residents.
You are right and I validated this at the Tag office in my county. They said I could should be able to choose the method based on these 2 options.
Here are the descriptions.
TAVT Base Value: LEASE:
Depreciation Plus Any Amortized Amounts Method: The TAVT Base Value is the total of Depreciation Plus Any Amortized Amounts, including any down payments. (“Down payments” means cash collected from the lessee at the inception of the lease, including (1) cash supplied as capital cost reduction and (2) any upfront payments by the lessee. Down payments shall not include (1) rebates, noncash credits, or net trade allowances, (2) taxes or fees imposed by law, and (3) monthly lease payments made in advance.)
Agreed Upon Value Method: The TAVT Base Value is the vehicle value plus taxable fees specified in the lease agreement. Agreed Upon Value can only be used when (1) the vehicle is leased for business use and (2) the lease agreement states the rental price can be adjusted. The taxable fees include labor, freight, delivery, dealer fees and similar charges, tangible accessories, dealer add-ons and
I let the dealership know I would to select method 1. They responded by saying they have to use the ATC system and it only allows them to calculate tax on the Agreed Upon Value, not the cost of the lease. I estimate tax on the lease to be around $700 and the ATC system is saying $2,667.
Does anyone have experience to know if this is accurate that a dealership would not be able to tax the lease only?
As I wrote above, I had the exact same experience. The GM read the GA tax options I sent to him and agreed that the lease should be taxed on depreciation. But their software didn’t give them the ability to choose that option. He called the regional manager who then contacted the regional finance office. In the end, they couldn’t override their software and I gave up trying.
