Transfer Tax in NY

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1

Hey was hoping someone could clear up the “transfer tax” in NY for me.

Is this tax tacked on to the person who assumes the lease for every single type of lease transfer (regardless of the financial institution)? I remember I transfered out of an Escalade last year and once the transfer was almost complete, the new buyer has received a document that he owed almost 3k in taxes to NY, even though my NY taxes I paid when I initially leased it were already rolled into the payment. It was basically like being charged tax twice. I had thought it was just a GM thing, but now I’m realizing it may just be a NY thing to register it.

Anyone else go through this and has it killed any potential deals?

Lastly, to confirm, it is a NY sales tax just on the remaining total of lease payments, right?

Seems like this would ruin a lot of decent deals when looking into assuming anothers lease.

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If it’s a transfer within NY, I wouldn’t expect the tax to be paid twice. @AP919 probably knows better.

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It’s happened to another person doing a swap through GM who couldn’t believe it during the process…I just did some searching the internet and found someone with the same question but he may have explained it better so I will paste it down here if you feel like reading it lol …

"I am hopeful that someone can help me understand New York State (NYS) Sales Tax with regards to a lease take over, in what seems to be paying tax twice.

So here is the scenario:

Person A leases a vehicle from BMW in NYS, and NYS sales tax is calculated as the monthly payment * NYS sales tax inspection * 36 month lease term. Instead of paying all of the sales tax up front, Person A opts to roll the tax into the monthly payments (increasing the per month price to cover the sales tax and any interest charges). BMW Financial fronts the NYS sales tax to NYS, and collects the repayment across 36 months.

After 12 months, Person A attempts to transfer the lease to Person B. Person B is informed that upon registering the car, Person B will need to pay Monthly payment (higher monthly payment which included the sales tax) * NYS Sales Tax * remaining term of 24 months.

BMW informs person B, that that is controlled by NYS DMV, and not in their control, and also informs person B, that BMW cannot reduce the monthly payment to remove sales tax as they still need to be paid for the original money they fronted, so person B will not only have to pay another sales tax (they will also continue to pay the higher monthly payment per month which includes the original sales tax).

To me this doesn’t seem right, and looking for official reasoning as to whether it is or not. The two big issues I have is:

NYS will be getting double the tax, although the ownership of the vehicle doesn’t change, it is still BMW financial, this is just a lease transfer

Even if the second tax needs to be made, it is calculated based on the monthly payment, which has a tax, so it is taxed on top of sales tax (triple tax? Is that a thing)

I did find a DTF-803 form from the NYS DMV, where line item 6 states tax will be paid to lessor. But not sure if that will fly.

The car is in NY leased by person A, and will remain in NY, taken over by Person B"

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The only justification I can see for NY to collect the tax again is that they based it on the registrant of the vehicle, not who owns it.

When buying a used car, the tax has been paid on it possibly numerous times, but if you decide to register it, you’ll pay it again and again.

I was looking for a different scenario concerning out of state transfers to NY, however, it seems like the same situation would apply. Regardless who paid tax prior, NY will want their cut.

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The above is something noted in the official transfer paperwork from BMW. It is a bit nebulous, but it does make mention of the fact that there are likely to be additional taxes due for transfer into certain states.

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I always wanted to ask this…compared to rest of nation…how does nys compare with leasing cars?? No msds…tax on tax rolling it into payment…seems ny is very lease unfriendly

8

NYS is very everything unfriendly.

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9

didn’t we just pass a law giving illegal aliens driving licenses :thinking:

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10

When I assumed a lease on an bmw m3 2 years ago in nys I had to pay the taxes to bmw.

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Paging @AP919 10101010

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Sorry, I just saw this. Generally, you do have to pay the sales tax when assuming the lease. It’s partially because “sales” tax is commonly referred to as “sales and use tax” (and to make this less complicated, I will tell you that use tax is usually a separate item, but let’s not worry about that now) so you can think of it as a use tax on using the car.

From one of the publications from the state:
The following charges and fees associated with a long-term motor vehicle
lease are also subject to sales tax. However, the tax is due at the time the
charge or fee is actually paid by the lessee:
• excess mileage or use charges;
• excess wear charges;
• damage, repair and similar charges;
• lease transfer or lease assumption fees;
• the charge to purchase the vehicle at the end of the lease term, if the
*lessee decides to purchase the vehicle; and *
• any disposition fee or any other fee if the amount of the fee is charged
at the end of the lease term.

Also:
"Any tax due after the lease and sale/assignment (for example, tax due on the lessee’s payment of a lease transfer or lease assumption fee, or excess
wear charges) must be collected and remitted by the finance company."

This is why BMW collected the tax on a lease assumption.

This is taken from a case I mentioned in another post on sales tax in NY:
When the original lease is subsequently assumed by an assignee, this is a separate
taxable transaction. As stated above, title or possession of tangible personal
property has been transferred for a consideration. In this instance, the
consideration is the assumption of the lease payments and tax is due on the
remaining payments on this lease as indicated above.

Simply put, NY courts consider the original lease and the assumption of the remaining term separate and distinct retail sales under Tax Law § 1105 (a).

I can’t find anything that says you can provide proof that the tax is already rolled into the payments, but I’m also guessing that this is partially because NY assumes the tax is paid upfront and therefore already paid in full. It sucks for the person assuming the lease, but one reason leasing companies can charge tax on the finance charge and finance charges themselves is because they encompass a “transaction,” and the finance company is lending you the money, as it has already paid the sales tax (I just got a note that the tax on my car was paid full, for instance). The opposite to this is when you lease a car in another state and you can prove the tax was already paid, and therefore, either you only pay the difference between that rate and NY’s rate, or the rate exceeds that of your jurisdiction in NY. This is also dependent on how much of the lease has elapsed prior to bringing a car here, as well as how much time is left on the lease.

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13

Hours later and nothing? Kind of disappointed that I spent time on this and not even a like!

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Happy now? :grin:

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16

Sorry at a wedding…but basically NY sucks … Thanks for helping me understand it much better … Doesnt look sensible to take over a lease unless the terms were incredibly better than what I can do at a dealer, since depending on the amount I can factor another 50-100 dollars per month

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Sorry that’s incorrect. It would be better to say “assumed,” which is technically when someone transfers his or her lease to you.

As I mentioned, if you transfer your registration to NY (this is where the wording is important and you can’t generalize with “all transfers”), depending on how far you are into the lease and how much time is left, you may be able to prove tax paid to another jurisdiction. You may owe nothing, or you may owe the difference between that rate and the NY rate, such as moving from NJ (6.625%) to Westchester County (7.375%, except for White Plains and Yonkers).

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Again, that is only if it is your own car that you transfer in from another state and register in NY. If you assume someone’s lease, it’s pretty clear you’ll owe tax, because NY considers it a separate transaction.

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Got it, thanks. I assumed we are specifically talking about lease assumptions here.

21

Say I were to assume an out of state lease (DC) while living in NY (where the car will be registered). Car has 15 months left on the lease through BMW. Would I be paying sales tax on 15 months worth of payments or would it be on the full 36 months? Will the taxes be due at the DMV the day I register the vehicle or would I get a nice bill in the mail ?

Thanks in advance!

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It should only be on the remaining term, as that is the remaining balance of the loan.

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