Help with Sales Tax GA - Signed a deal... Dealership saying "we made a mistake, monthly payment will be $102 higher"

Ask the Hackrs Buy/Finance
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21

Finally got the tax setup properly on the cost of the lease instead of the value of the car. Here’s the steps I took, and big thanks to folks that helped me out through DMs.

  1. Went to the Tag Office to validate the 2 options are viable with a cross state deal
  2. Called the dealer to let them know I validated that GA tax on lease cost is possible
  3. Wrote a polite but direct email to the GM/Owner of the dealership after the Sales Manager still said they couldn’t do it.
  4. Called ATC (the company that processes state taxes) and validated that there is no reason the TN dealer can’t use tax on lease cost method for a GA resident
  5. Wrote another email to the GM/Owner letting him know I talked to ATC and they said it can be done. I also shared the ATC employees name and phone number with the Dealership.
  6. They called me back and said they somehow magically were able to tax the cost of the lease ($490 in tax) and not the value of the car ($2667 in tax).

Once that was settled, the cost of the lease came back to almost exactly what it was when i originally signed. Effective monthly cost was around $3 more.

Thank you all for your ideas and support! I love the Leasehackr community!

9 Likes
22

Very well done. :clap: :clap: :clap:

23

Sounds like you owe @IAC_Scott a beer. Glad it worked out!

1 Like
24

No sir, I owe @IAC_Scott a case of beer!

5 Likes
25

This is how you do it! Be as close to 100% sure you’re right as you can be before you push, be polite but firm, and you (usually) get the results you want.

Good lesson for other people.

5 Likes
26

Although it may be too late, I believe it is less than 490. Here’s what I believe is a very compelling argument…

Per the GA Tax Code as it relates to tax on vehicle leases…

  1. In the case of a motor vehicle that is leased to a lessee for use primarily in the lessee’s trade or business and for which the lease agreement contains a provision for the adjustment of the rental price as described in Code Section 40-3-60, the agreed upon value of the motor vehicle less any reduction for the trade-in value of another motor vehicle and any rebate;
  2. In the case of a motor vehicle that is leased other than described in division (i) of this subparagraph , the total of the depreciation plus any amortized amounts pursuant to the lease agreement plus any down payments; and
  3. The term “any down payments” as used in this subparagraph shall mean cash collected from the lessee at the inception of the lease which shall include cash supplied as a capital cost reduction; shall not include rebates, noncash credits, or net trade allowances; and shall include any upfront payments collected from the lessee at the inception of the lease except for taxes or fees imposed by law and monthly lease payments made in advance

Accordingly, GA TAVT Tax is computed as follows…

Tax Rate x [(S – R) + M - C + X]

S = Sell Price = 45015.00

R = Residual Value = 36309.90

M = Capped Fees (amortized amounts) = 1501.60

C = Rebates/noncash credits/Net Trade Allowance = 7500.00

X = Taxable lease inception fees = 0

Based on your posted lease agreement and a reading of the GA Reg. as is pertains to personal leases, it appears that your GA tax liability should be…

7% x [(45015.00 – 36309.90) + 256.60 + 595.00 + 650.00 – 7500.00) = 189.47

Observe that…

Gross Cap = 45015.00 + 256.60 + 595.00 + 650.00 = 46516.60

So that…

7% x [(46516.60 – 36309.90) – 7500.00) = 189.47

The (46516.60 – 36309.90) difference captures the 9827.43 cap reduction including the 7500 rebate as well as the depreciation. So, we need to deduct the 7500-rebate cap reduction. The remaining 2327.43 cap reduction is taxable and, again, is captured by the (46516.60 – 36309.90) difference.

Let’s look at the (46516.60 – 36309.90) difference….

46516.60 – 36309.90 = 10206.70

46516.60 – 9827.43 = 36689.17 (adj. cap)

36689.17 – 36309.90 = 379.27 (depreciation)

9827.43 + 379.27 = 10206.70

Thus, the (46516.60 – 36309.90) difference captures both the total cap reduction and depreciation. However, the 7500 rebate is not subject to tax which is why it is deducted in the formula above.