Did you pay tax when you leased in Texas or was it zeroed out with sales tax credit?
Sales tax is listed under 11. ITEMIZATION OF GROSS CAPITALIZED COST on my lease.
You would think they would be correct, but it doesnāt seem rational to pay a sales tax twice on the same purchase. Form DR 0252 says:
A purchaser liable for use tax on tangible personal property is allowed a credit for any legally imposed sales or use taxes the purchaser paid in another state for the same property. Credit is not allowed if the tax paid to the other state was not legally due under the laws of that state. The credit may be claimed on line 4 of the Consumer Use Tax Return. The credit must first be applied against any Colorado use tax due, and any unused portion of the credit is then applied against any local use taxes due.
Good luck with this.
I saw that in DR 0252 as well and that was my reply to the CDOR email. Still waiting on a reply now.
But itās not a purchase. If it was, the reciprocity would be obvious and the clerk at the DMV would just check a box.
Never heard of a state that credits prior upfront taxes paid against future taxes on future monthly payments of a lease.
reply from CDOR:
The DR 0252 is not applicable to a leased vehicle.
The credit only applies to motor vehicle purchases not leases.
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Welcome to Colorado.
Yes, you will have to pay the CO state, applicable county and city taxes on your monthly payment regardless of what you paid up front in another state on a lease. Alternatively you could keep it registered in Texas and ride it out.
Iām not an expert on this, but I had one more thought pop into my head.
If anyone is making a mistake here I think it is Hyundai Financial.
Consider that Colorado is not simply a āpay sales tax per lease payment stateā. It is a āpay all tax up frontā state, unless the finance company has applied for permission to collect tax per payment.
You didnāt explicitly say who was charging you the tax but I suspect it is HMF applying it to your monthly payment. They are probably taxing you because they have opted to handle Colorado in that way, it is their standard. But they arenāt acknowledging that in this case you paid 100% of the sales tax to another jurisdiction up front and they should be treating this lease as āall tax paidā. They might not even be set up to handle that in Colorado.
Hopefully you find some resolution, but I wonder if that resolution has to be with HMF instead of the state or county.
Good luck!
You are mixing up tax.
There is tax on the lease
There is tax on the payment
TX takes all the lease tax and all payment taxes and lumps them in one prepayment. Sometimes the dealer gets tax credits but thats a different discussion
CO still makes you pay taxes on the payment like most states.
But it appears that TX wont give that prepayment to Colorado and therefore OP still has to pay a double tax, because he moved
But I think the argument is Colorado for a lease under 36 months one could have prepaid sales tax for a lease. Why doesnāt HMF do it that way and then itās apples to apples both both states.
Because TX doesnt want to share maybe?
I donāt think they share, in CO you would just get a credit on your income taxes for this the double payment? So in essence Colorado doesnāt get all the sales tax.
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This is not precisely correct. For leases of 36-months or less, Colorado gives the finance company the choice:
- Collect the entire sales tax on the vehicle up-front and roll it into the capitalized cost of the lease. No further tax will ever be collected on lease payments.
- Collect only the sales tax on the initial payment up-front, then collect additional sales tax on each lease payment.
Because practically all lenders do the second method, it is considered the āColorado defaultā, but it is really a choice for the lender. Texas and about ten other states only allow the first method.
Since the lender has the choice of which method to use for Colorado leases, it seems it is HMF that is deciding to treat OPās lease as method two. Iām curious why they arenāt treating it as method one.
Maybe OP is just stuck.
Related tax story. My tax rate in Colorado is 2.9%. But lots of e-vendors think they can figure out my tax just by looking at the city on my address. That doesnāt work and Iām frequently overcharged sales tax. Iāll go out of my way to fight it over just a few dollars just over the principle.
They have, per prior comments.
Ah! You are assuming once they have this permission they have to apply it to all leases. Iām assuming that even with the permission they have the flexibility to treat each lease as they like.
Perhaps youāre assuming OP can find anyone at HMF who understands the difference or cares enough to see it through.
Iām sure youāll tell me Iām wrong but just like the HMF employee Iām envisioning in my head, I have lost interest at this point.
GL to the OP. Either youāll get some money back or make peace with the fact that you moved for presumably good reasons and moves unfortunately incur costs.
Yeah, I am. Iām imagining that the tier one workers who answer the phone have no clue, but there is someone in the back end who would see the situation and address it. Maybe Iām wrong. But since OP has thousands on the line, itās the kind of thing Iād make a stink over if I were in his position.
Iāll admit that it might be a losing battle. But since Iāll make a stink over being charged a few dollars in excess tax, itās in my nature to want to see logic win out.
I sent a snail mail to HMFā¦ tried calling but figured it would be a waste of time but you would guess it their phone system was down (
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