Out of State Dealer calculating BMW Taxes Incorrectly..Refund after?

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Hi,

I’m trying to lease a BMW from an out of state dealer and they’re saying the system is validating the deal only if they charge tax upfront on the entire selling price (not on lease amounts).
Note: this is not the tax law in the dealer’s state, nor any longer the law in my state

While this used to be the tax law in my state (GA)…the law changed and tax is now only on the sum of base lease payments and can be rolled into monthly.

–They said someone at their BMW retailer support center told them taxes are on full amount & due upfront (this is only true for finance/purchases…so not sure if they made it clear that this is for a lease)

–I question if they actually tried to “validate” the deal with tax just in sum of base lease payments; or if they haven’t even tried / it did validate but they’re scared of having deal funded and getting burned afterwards …is there even a “validation” process to begin with?

Everything else on the deal sheet is correct, and dealer has been great group of people to work with. I see their concern: they don’t want to proceed and then later find out that tax truly are due on full amounts and then they are stuck.

  1. Ideal scenario: tomorrow dealer speaks with my county Dept of Revenue/ Tax Commissioner office, and learns what the correct tax is, and everything is smooth.

  2. If for some reason dealer still insists on charging tax on full amount…would it be okay to proceed with the deal and expect a refund afterwards? Or is that a bad idea to expect refund after deal is funded? But refund would be from my state, right? (not from the dealer or BMW FS). Bc the tax money all gets sent to the county of registration, right?
    (for some reason it feels like refund from the County seems reasonable to expect; vs if it was counting on a dealer refund would be harder to chase down)

Thanks for any insight anyone can provide

@Ursus : did you have a similar situation leasing a car for someone outside of your state and you initially paid tax on full value, then get refunded by the state of registration?

@BMW_Dave

Edit: are there any consider with paying full taxes upfront and if car gets totaled? Does that get covered by Gap insurance?

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Is this a loaner? That would make a difference in GA tax laws. Apparently, loaners still fall under GA TAVT.

It is a loaner, but there was. a recent change (? July 1) which subjects leasing loaners to same tax as leasing new cars

see here:

Yes, but did you contact Ga as you indicated to confirm?

Edit: read further and saw others say the same.

I’d contact GA and ask your question about #2. It wouldn’t be a good idea to just assume a refund without some sort of confirmation from the source.

Waiting for tomorrow (Monday) for county offices to open

But 2 people leased loaners this month and only paid taxes on lease amount

Also salesman where I leased another car from confirmed the tax change for loaners; said they got memo from Dept of Revenue in beginning of July

So my assumption is that the change is true.

So wanted to gather insight / advice from people in case the County does confirm it is only on the lease amount, and yet for some reason dealer is saying deal wont validate unless tax on entire selling price

  • that way I’m prepared how to proceed bc if I have to make a game time decision or lose the car if they say they want to sell it to someone else

Thanks

“I’d contact GA and ask your question about #2. It wouldn’t be a good idea to just assume a refund without some sort of confirmation from the source.”

  • Good idea. thanks

I wouldn’t depend on other people, especially with such a recent change. That always leaves you open to getting socked with a tax bill later. Also, one clarification – GA goes not have the sales tax imposed on vehicles. Instead, there is a title ad valorem tax (TAVT).

So here’s what I have for all this (I also could not find a notice on this, either on the Department’s website or that my company has received):
Prior to July 1, 2019, the FMV for leased motor vehicles is computed by using the total amount of the base payments pursuant to the lease agreement. [Ga. Code Ann. §48-5C-1(a)(1)(E]

Beginning July 1, 2019, the FMV for a motor vehicle that is leased is the total of the base payments pursuant to the lease agreement plus any down payments.

The term “any down payments” means cash collected at the inception of the lease, including cash supplied as a capital cost reduction. It does not include rebates, noncash credits, net trade allowances, or any upfront payments collected at the inception of the lease, except for taxes or fees imposed by law and monthly lease payments made in advance. [Ga. Code Ann. §48-5C-1(a)(1)]

The Dept. of Rev. has a calculator for the tax here: https://onlinemvd.dor.ga.gov/Tap/Option1.aspx#message

This one is more comprehensive. Note that it really depends on whether the loaner is considered “new” or “used,” but the tax was the same whether I put in new or used and selected “leased”: https://eservices.drives.ga.gov/_/#6

Yea, I sent the dealer that TAVT calculator and even did a sample calculation and sent screenshot…and yes the tax amount due didn’t change if select new or used for a lease so that supports idea that loaners treated same as new

We’ll know tomorrow

But if anyone had any experience with paying extra taxes upfront (knowingly or unknowingly) and getting a refund thatd be helpful to know.

Thanks for all replies this far

Edit @AP919 : Do you work at a dealer? Was that text re: the FMV distributed to you?

Also I think the July 1 2019 change was specific to leasing loaners

The change for leasing new cars was Jan 1 2018 (House Bill 340 m; several dealer sites have pages highlighting that change when you google)

and I leased a car end of 2018 and I reviewed my contract yesterday and tax is only on sum of base lease payments

What changed is that you now have to add in down payments, as I noted here:
Prior to July 1, 2019, the FMV for leased motor vehicles is computed by using the total amount of the base payments pursuant to the lease agreement. [Ga. Code Ann. §48-5C-1(a)(1)(E]

Beginning July 1, 2019, the FMV for a motor vehicle that is leased is the total of the base payments pursuant to the lease agreement plus any down payments.

The big change going away from annual taxes (“birthday tax” as they called it) was back in 2013.

I’m not a dealer, and as I said, I can’t find any notices. I’m a tax attorney.

Yes. VA dealer charged tax on the full selling price instead of rental. Got a nice check back in a couple of months.