I think you might be able to prorate the taxes.
Ex. $2020 taxes total for 36 months…
$2020/36= $56.11 per month
23 months remain
23*$56.11 = $1290 refund??
But I haven’t paid made those 23 payments yet right. So would the prorate work?
I haven’t done this before, but my guess is that it would here’s why:
you owe the payments to BMWFS. BMWFS paid the entire tax on the sum of your lease payments upfront to the state because that’s how it works in NJ. BMW paid it upfront, and broke it down into monthly payments for you since it was rolled in. Therefore, since the tax was paid upfront for 36 months, when you have only used 13, they should be returning 23 months worth of taxes back you.
This works out because by refunding you the tax, the monthly payment actually stays the same, however when you give the tax refund to the transferee, they have a net effect of zero, meaning even though they are paying the monthly payment that includes the NJ tax, they aren’t actually paying the tax because they were paid the tax upfront. Which they can then pay to New York +/- the difference. Hence the net effect of NJ tax on them being zero.
The way you broke it down makes sense to me.
Now, in order to do this, would I have to contact BMWFS or would I have to fill out the Tax Form as mentioned here?
I think you’ll have to loop BMWFS in.
I was re-reading your logic again.
As you mentioned, BMWFS paid NJ the tax. I inturn am paying BMWFS back for the tax they paid NJ. So if a tax refund were to be filed, based on this wouldn’t BMWFS get the money back and not me?
Or did I not understand the logic as intended?
Not really. BMWFS paid the tax, and rolled it in your lease payments, making you essentially pay for the tax. BMWFS will be made whole regardless.
Using rough numbers here
Your payment is $748. Tax component is $56
Pre tax it is $693.55
1- $693.55 x 36= $24,967.8
2- $56.11 x 35= $2020
3- $748 x 36 = $26928
As you can see (1 &2) = (3)
$24,967 goes to BMW and $2020 goes to the state.
BMW has you on the hook for $26928, so even though they paid the taxes upfront in your behalf, they will still be paid. You however will be refunded for your taxes. Because even once you get the taxes back, the payment still remains at $748.
The transferee would have to pay NYS tax on the remaining 23 payments.
If you give the tax refund to the transferee, then they are breaking even because even though the $748 they are paying includes NJ tax, they received the tax upfront from you, which allows them to pay NYS tax and still break even.
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Thanks for that breakdown. That makes a lot more sense to me now.
I’ll call BMWFS tomorrow and try to start this process.
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Called BMWFS. They said they don’t help / assist in getting a sales tax refund. They said I’ll have to do that myself once the entire lease transfer is complete.
I’ll start looking into all the paperwork I need to get done and hope for the best.
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Car lease has been transferred. Listing can be closed.
Thanks for all the help and advise.