PA 3% motor vehicle lease tax

[a2lease]

Hi,

I recently got my Payoff Quote for an early lease buyout of an VW ID.4 in PA.

It seems like the Residual/Payoff Tax is calculated as 9% of the Remaining Payments.
PA has a 6% Sales Tax and a 3% Motor Vehicle Lease Tax.
As I am buying out the lease early (after 1 months of the 36 months lease) it seems common sense, that I have pay the Lease tax only for the first month, as I won’t do any leasing for the other 35 months.
Does someone know, what are the rules for the lease tax for such early lease pay-off.

Thanks!

[HersheySweet]

That’s a great question. Usually, buyouts don’t include tax in PA, and you pay at the DMV - this was true for my TRX, Defender, 4xe, and M4 - all were sold in PA.

I see residual payoff tax is quoted using **, so they might just mistakingly use the sales tax + lease tax to calculate the buyout quote.

Here’s an example of a CC buyout quote.

[a2lease]

Thanks HersheySweet for sharing the example. So how did the DMV calculate the tax in your case? I assume they just charge sales tax on the current purchase price, correct?

Did you buy out after the full lease term (e.g. 36 months) or earlier. I assume if you buyout after the full runtime of the lease you already paid the lease tax with your 36 payments.

The footnotes on my quote state the following:

** Is nowhere to be found on the document.

[HersheySweet]

@a2lease

Thanks HersheySweet for sharing the example. So how did the DMV calculate the tax in your case? I assume they just charge sales tax on the current purchase price, correct?

Did you buy out after the full lease term (e.g. 36 months) or earlier. I assume if you buyout after the full runtime of the lease you already paid the lease tax with your 36 payments.

They charged 6% on my other buyouts that I actually paid tax on. The reason why is a whole nother can of worms.

No, all buyouts with tax were mid-lease.

[endeavorauto]

VW Credit uses some cut-and-paste formulas for their payoff quotes. Call up customer service and have them escalate to the appropriate department and they will give you an accurate buyout amount in a couple of business days and any tasks if need be.