Did Florida credit upfront New Jersey tax after a leased vehicle moved into Florida?

Subject

Motor Vehicle Lease

Plain-English summary

Florida did not credit the upfront New Jersey lease tax. New Jersey treated the lessor as the taxable end user, so the tax was legally imposed on the lessor rather than the lessee. A contractual requirement that the lessee reimburse the lessor did not change legal incidence.

Monthly payments were not Florida-taxable while the vehicle remained outside Florida. Once it was brought into and used in Florida, Florida sales tax applied to the remaining monthly lease payments.

What this means for you

The credit followed who legally owed the other state's tax, not who ultimately bore its cost. The vehicle's Florida-use date determined when monthly taxation began.

Common questions

Q: Did Florida allow a credit for the New Jersey tax? No.

Q: Did lessee reimbursement change that? No.

Q: When did Florida tax start? When the vehicle was brought into and used in Florida.

Citations and references

• Fla. Stat. § 212.05(1)(c) — tax on leases
• Fla. Stat. § 212.06(7) — credit for like tax
• Fla. Stat. § 212.06(10) — Florida vehicle registration and use presumption
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 00A-048

Original ruling text

SUMMARY

QUESTION: Is the sales tax paid up-front on the long term
lease of a motor vehicle to the State of New Jersey
recognized by Florida as a like tax for which credit can be
given for Florida sales tax due on the monthly lease

payments when the lessee subsequently moved to Florida?

ANSWER - Based on Facts Below: Under the New Jersey Sales

and Use Tax Law, long term leases are treated differently
than rentals for sales and use tax purposes. The lessor is
considered to be the end user of leased property and the
one responsible for paying use tax when the property is
leased. The lessor does not collect sales tax from the
lessee; however, nothing in the New Jersey law prohibits a
lessor from increasing the lessee's monthly payment to
recover this tax expense. Therefore, the department finds
that, because the New Jersey tax is lawfully imposed on the
lessor and not on the lessee (even though the lessee may be
contractually obligated to reimburse the lessor), credit
cannot be allowed as provided in s. 212.06(7), F.S. and the

lease payments are subject to Florida sales tax.

Sep 07, 2000

Re: Technical Assistance Advisement 00A-048
Sales Tax
Motor Vehicle Leased in XXX
Section 212.05(1)(c), Florida Statutes
Section 212.06(7), Florida Statutes
Section 212.06(10), Florida Statutes

Dear:

This is in response to your letter of April 24, 2000, in
which you request the issuance of a Technical Assistance
Advisement as to the taxability of the lease payments made ona
motor vehicle you leased in XXX. A Letter of Technical Advice

was issued to you on April 12, 2000 in response to your letter

of February 23, 2000 concerning this matter.

In your letter of February 23, 2000, you state that you
entered into a long term lease agreement of a motor vehicle in
the XXX on October 21, 1998, where you were required to pay the
XXX sales tax up-front on the full term of the lease. You
subsequently moved to Florida in September 1999, where the
vehicle is now registered, and the leasing company has been
charging you an additional Florida sales tax on the monthly
lease payments. A copy of the lease agreement was enclosed
showing sales tax paid to XXX for the full term of the lease.
Additionally, you have advised that this vehicle is used outside
this state by your daughter, who attends college in XXX, but the
vehicle had to be registered in Florida because the lease is in

your name.

As documentation that the vehicle is used outside this
state, you have provided a copy of your daughter's XXX driver's
license and student identification card from XXX, as well as a
repair bill from the local Jeep dealer in XXX, dated February
18, 2000, a copy of a work order dated April 11, 2000 to replace
the windshield from Safelite Glass Corporation located in XXX,

and a parking summons issued in XXX on April 11, 2000.

Statutory Authority

Section 212.05(1)(c)2., F.S., provides in part:

212.05 Sales, storage, use tax.

It is hereby declared to be the legislative intent that

every person is exercising a taxable privilege who engages
in the business of selling tangible personal property at

retail in this state, including the business of making mail
order sales, or who rents or furnishes any of the things or
services taxable under this chapter, or who stores for use

or consumption in this state any item or article of

tangible personal property as defined herein and who leases

or rents such property within the state.

(1) For the exercise of such privilege, a tax is levied on

each taxable transaction or incident, which tax is due and

payable as follows:

(c) At the rate of 6 percent of the gross proceeds derived
from the lease or rental of tangible personal property, as
defined herein; however, the following special provisions

apply to the lease or rental of motor vehicles:

2. Except as provided in subparagraph 3., for the lease or
   rental of a motor vehicle for a period of not less than 12
   months, sales tax is due on the lease or rental payments if
   the vehicle is registered in this state; provided, however,
   that no tax shall be due if the taxpayer documents use of
   the motor vehicle outside this state and tax is being paid

on the lease or rental payments in another state.

Section 212.06(7), F.S., provides:

(7) The provisions of this chapter do not apply in respect
to the use or consumption of tangible personal property, or
distribution or storage of tangible personal property for

use or consumption in this state, upon which a like tax
equal to or greater than the amount imposed by this chapter
has been lawfully imposed and paid in another state,
territory of the United States, or the District of

Columbia. The proof of payment of such tax shall be made
according to rules and regulations of the department. If
the amount of tax paid in another state, territory of the
United States, or the District of Columbia is not equal to

or greater than the amount of tax imposed by this chapter,
then the dealer shall pay to the department an amount
sufficient to make the tax paid in the other state,

territory of the United States, or the District of Columbia
and in this state equal to the amount imposed by this

chapter.

Section 212.06(10), F.S., states:

(10) No title certificate may be issued on any boat, mobile
home, motor vehicle, or other vehicle, or, if no title is
required by law, no license or registration may be issued

for any boat, mobile home, motor vehicle, or other vehicle,

unless there is filed with such application for title

certificate or license or registration certificate a

receipt, issued by an authorized dealer or a designated
agent of the Department of Revenue, evidencing the payment
of the tax imposed by this chapter where the same is
payable. A presumption of sales and use tax applicability

is created if the motor vehicle is registered in this

state. For the purpose of enforcing this provision, all

county tax collectors and all persons or firms authorized

to sell or issue boat, mobile home, and motor vehicle
licenses are hereby designated agents of the department and
are required to perform such duty in the same manner and
under the same conditions prescribed for their other duties
by the constitution or any statute of this state. All

transfers of title to boats, mobile homes, motor vehicles,

and other vehicles are taxable transactions, unless

expressly exempt under this chapter.

Discussion/Conclusion

In the Letter of Technical Advice issued on April 12, 2000,
the determination was made that credit would be allowed for the
tax paid up-front to the XXX. However, since the issuance of
that letter, it has come to the attention of the department that
under the XXX Sales and Use Tax Law, long term leases are
treated differently than rentals for sales and use tax purposes.
The lessor is considered to be the end user of leased property
and the one responsible for paying use tax when the property is
leased. The lessor does not collect sales tax from the lessee;
however, nothing in the XXX law prohibits a lessor from
increasing the lessee's monthly payment to recover this tax
expense. Therefore, the department finds that, because the XXX
tax is lawfully imposed on the lessor and not on the lessee
(even though the lessee may be contractually obligated to
reimburse the lessor), credit cannot be allowed as provided in
S. 212.06(7), F.S.

Under s. 212.06(10), F.S., there is a presumption of use in
this state if a motor vehicle is registered in this state and
consequently subject to Florida sales tax. However, this

presumption does not apply if it is documented that the vehicle

was purchased or leased outside this state and intended for use

outside this state.

Per our telephone conversation of July 31, 2000, it was
learned that your daughter moved to Florida around the end of
June 2000 and the vehicle is now being used in Florida. Based
on the facts presented, during the time the motor vehicle was
not being used in this state, those monthly lease payments are
not subject to Florida sales tax. You advised that there is
approximately 1 1/2 years remaining on the lease of the vehicle.
Therefore, Florida sales tax is due on the monthly lease

payments from the time the vehicle was brought into this state.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the Department only
under the facts and circumstances described in the request for
this advice as specified in s. 213.22, F.S. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment than

expressed in this response.

You are further advised that this response, your request
and related backup documents are public records under Chapter
119, F.S., and are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department

within 15 days of the date of this letter.

Sincerely,

Bonnie Everton

Senior Tax Specialist

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