tgdA4

Hopefully someone that has been through this can steer me in the right direction...I recently moved from New york to Chicago and am trying to register the car in Illinois now. I got the power of attorney letter from Audi FS and a copy of the lease agreement. However, the DMV is saying to prove that I already paid NYS sales tax on the car I need some kind of tax receipt letter proving that (even though it clearly says the sales tax on the lease agreement).

Does anyone know who I get this letter from...Audi FS, the dealer, NYS DMV??

any info would be appreciated. thanks.

snagitseven

In most states, I believe if you have a lease, you are only paying the sales tax with each payment, no? That would mean you have only paid sales tax for the lease payments you have already paid. Does Illinois have a different sales tax system re leases, i.e. you have to pay sales tax on the total value vs as you go with each lease payment? If so, you may have to fork over the tax in advance vs monthly.

tgdA4

I'm a little confused as well. On my lease agreement it shows a line item of $2481 as "sales tax" under the breakdown for my adjusted cap cost.

On my lease payments up until now sales tax has been $0. Now that I changed my address with Audi to chicago, I now get a seperate $67 in addition to my previous monthly payment, listed as just "sales tax".

markcincinnati

Audi Financial has always been very helpful.

tgdA4

Just talked to Audi FS, and they basically told me to screw off. "There is nothing we can do for you, sir" They were nice the first 2 times I called, but this time they were done with me

I guess I will have to press the dealer now. Not looking forward to that, since they were absurdly incompetent when I bought the car.

markcincinnati

Some states, Ohio (where I live), changed the way the taxes are collected on the lease -- the reason is to accelerate their tax revenue.

Here is how it works in both cases:

Real time case -

Lease payment: $500 per month/36 months
Sales tax (@6%): $ 30 per month
Total mo pay: $530

Advance payment case -

Lease term: 36 months
Lease Payment: $500 per month
Sales tax on $18K:$1,080
Total obligation: $19,080
Total mo pay: $530 (if you prepay the sales tax in advance out of pocket)

The difference is that the state got the $1,080 up front (and, if my memory serves, the total mo pay may actually be a bit higher if it is included in the lease.) In my case, I prepaid the sales tax, so there would be no finance charge -- but then there was an opportunity cost charge since I paid the tax in advance of the actual use of what I was "renting."

Gotta love government.

markcincinnati

If the state in which you live has NO sales tax, your paperwork would show, $0.00 sales tax. The only difference between leasing and buying is that with leasing you only pay tax on what you use.

If the car was $40,000 and the tax was 6%, you would pay $2,400. If the lease payment was $500 for 48 months and sales tax was 6%, you would pay ($500 x .06 x 48) = $1,440 in sales tax.

My lease payment IS a single line item on the AFS monthly statement. It USED to be two line items, until Ohio changed the way it collects taxes on auto leases. Same money -- it just goes into the state treasury quicker.

tgdA4

I never paid the tax seperately, it was just rolled into the financed amount. However sales tax was not listed seperately on the monthly statement.

So in this case, now registering it in a new state, is it possible that I am liable to pay the full Illinois tax?

Another awful fact: Illinois taxes the purchase price of car...even on leases!

markcincinnati

Why press the dealer? And AFS should have given you the "rules" that they abided by in your original lease. I am not a tax person, CPA or auditor of any kind -- BUT, it seems to me, if you leased a car in STATE #1 and prepaid 36 months worth of sales tax on the lease, and then, in month 13 (for example) you move to STATE #2 that you should get the tax you overpaid refunded to you from STATE #1; and, then you, commencing in month 13, begin paying STATE #2 a monthly sales tax amount based on the amount as a % they charge. Of course, there is at least a remote possibility that you could get credit for the amount you paid to STATE #1 (somehow) from STATE #2 -- but I doubt it.

You will actually have to get a refund from STATE #1 to avoid double taxation, because, I am 99.9% certain you already pre-paid the sales tax to STATE #1 for the entire term of the lease (based on your remarks.)

tgdA4

It appears sales tax was paid to NYS at 8% for the entire length of the lease. Now I'm moving (in month 15) to Illinois. Illinois wants tax paid on the entire purchase price of the car (they don't care if its leased), not just the period I lease it. Illinois lets you receive credit for tax previously paid to another state, but you have to provide proof in the form of a letter. Lease agreement and bill of sale wasn't good enough for them. Thats where I'm at now.

Aside from the issue, I'm getting "sales tax" of $67 added to my monthly bill just by telling audi that I moved. I haven't even registered the car, so it can't be related to this other tax I'm facing. LOT OF TAXES!!

I'm trying not to cry thinking about the fact that I'm now paying $912 a month for an A4.