Did Florida sales tax apply after a New Jersey-leased vehicle was moved to and registered in Florida?

Plain-English summary

Florida sales tax applied to the monthly lease payments from the time the vehicle was brought into Florida and registered here. Florida registration created a presumption of in-state use.

The lessee did not receive credit for the New Jersey use tax embedded in the lease economics. The Department reasoned that New Jersey legally imposed that tax on the lessor, not the lessee, even though the contract allowed the lessor to recover the expense through the monthly payments.

What this means for you

Moving a long-term leased vehicle into Florida can create Florida tax on later payments. A credit for another state's tax depends on who legally owed and paid that tax, not only on whether its economic cost was passed through.

Common questions

Q: Did Florida treat the result as impermissible double taxation? No. The Department found that the other state's tax was imposed on a different party.

Q: When did Florida tax begin? When the vehicle was brought into Florida and registered in the state, according to the ruling.

Citations and references

• Fla. Stat. § 212.05(1)(c)2. — long-term motor-vehicle lease payments
• Fla. Stat. § 212.06(7) — credit for a like tax imposed and paid elsewhere
• Fla. Stat. § 212.06(10) — registration presumption
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 03A-007

Original ruling text

SUMMARY

QUESTION: Should sales tax be imposed on a motor vehicle
lease, when the vehicle was leased in New Jersey and later
brought into and registered in Florida?

ANSWER - Based on Facts Below: Yes. Section
212.05(1)(c)2., F.S., provides that no tax is due if a
taxpayer documents use of a vehicle outside Florida and tax
is or was paid on the lease payments in another state.
Section 212.06(7), F.S., provides that tax does not apply
if a like tax equal to or greater than Florida tax has been
lawfully imposed and paid in another state. However, under
New Jersey law, tax on the lease of a motor vehicle is
lawfully imposed on the lessor, not the lessee. The lessor
may choose to collect the tax from the lessee, but is not
required to do so. The Department's position, therefore,
is that credit cannot be given for any tax paid by the
lessee on the lease.

Feb 07, 2003

Re: Technical Assistance Advisement 03A-007
XXX ("Taxpayer")
Sales and Use Tax
Motor Vehicle Leased in New Jersey
Section 212.05(1)(c)2., F.S.
Section 212.06(7) and (10), F.S.

Dear :

This response is in reply to your January 15, 2003 petition
requesting the Department's issuance of a Technical Assistance
Advisement pursuant to s. 213.22, F.S., and Chapter 12-11,
F.A.C., regarding the referenced matter and parties. An
examination of your petition has established that you have
complied with the statutory and regulatory requirements for
issuance of a TAA. Therefore, the Department is hereby granting

your request for issuance of a TAA.

Stated Facts

In your letter you state the following facts:

On October 5, 2001[,] I leased an automobile in New
Jersey[,] where I resided at the time. Upon relocating to
Florida and registering my automobile in this [s]tate, my
leasing company added Florida sales tax to my monthly
invoices. It is my position that this is "double taxation"
and not in accord with the intent of the Florida Statutes.

The New Jersey statutes require that the lessor pay the use
tax when the property is leased. In essence[,] taxes were
paid to the [s]tate of New Jersey for the lease between me
and the dealer. I further believe that one would be naive
if they did not realize the tax was paid, albeit
indirectly, by myself.... [quote from Section 212.06(7),
F.S.]

Since the section of the Florida statute[s] is silent
regarding the entity paying the tax in the other
jurisdiction, I believe that the tax paid by the lessor at
the time of entering into the lease with me should fulfill
the requirements of this statute. Requiring Florida taxes
from me should be considered "double taxation" and not
compatible with the intent of the Florida statutes.

I have previously written the Florida Department of Revenue
regarding this matter and have enclosed a copy of their
"unofficial" response.... [Emphasis in original]

In response to a request for documents by the Department, you
submitted your lease agreement, motor vehicle retail order, New
Jersey leased vehicle registration, Florida vehicle
registration, and copies of cancelled checks showing your
monthly payments.

Taxpayer's Position

Taxpayer feels that he is being inappropriately taxed twice on
the lease of a motor vehicle.

Applicable Authority and Discussion

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

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 of 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:

The provisions of this chapter do not apply in respect to
the use or consumption of tangible personal property or
services, 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., provides:

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.

Taxpayer's lease agreement contains the following language
relating to tax:

I agree to pay when due or reimburse Lessor for the

following estimated amount (which may vary if I change the
Vehicle's garaging address) for title/license/registration/
official fees and taxes over the term of my Lease, whether
paid at lease signing, included in my monthly payments or
assessed otherwise: $1,155.45. The actual total of fees
and taxes may be higher, or lower,depending on the tax
rates in effect, or the value of the Vehicle at the time
a fee or tax is assessed.

Taxpayer's retail order form also provides:

9. PAYMENT OF SALES AND USE TAXES. The price for the motor
   vehicle specified on the face of this Order includes
   reimbursement for certain Federal Excise taxes but does not
   include sales taxes and use taxes (Federal, State or Local)
   or Luxury Tax, unless expressly stated. Customer assumes
   and agrees to pay, unless prohibited by law, any such
   sales, use or occupational taxes imposed on or applicable
   to the transaction covered by this Order, regardless of
   which party may have primary tax liability. In the event
   Customer elects to lease the motor vehicle covered by this
   Order, Dealer acknowledges liability for the upfront
   payment of New Jersey Use Taxes, which amount shall in turn
   be factored into the amount of the monthly lease payment
   charged to the Customer.

The Department cannot determine from the lease agreement the
exact amount of tax assessed on the lease of the vehicle.
However, for the reasons detailed below, the amount of tax paid
by Taxpayer, or even a determination that the Taxpayer paid any
tax at all, on the lease is not necessary for our determination
of the issue.

Under 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 the leased
property and the one who is responsible for paying use tax when
the property is leased. The lessor is not required to 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 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 Section 212.06(7), F.S.

Under Section 212.06(10), F.S., there is a presumption of use in
this state if a motor vehicle is registered in this state and
thus becomes subject to Florida sales tax. Based on the facts
presented in your letter, Florida sales tax is due on the
monthly lease payments from the time the vehicle was brought
into this state.

Advisement

Florida sales tax is due on the lease of a motor vehicle entered
into in New Jersey, when the vehicle is subsequently brought
into Florida and registered in this state.

Closing Statement

This response constitutes a Technical Assistance Advisement
under Section 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 Section 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 Section 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.

If you have any further questions with regard to this matter and
wish to discuss them, you may contact me directly at (850) 4889669.

Sincerely,

Tammy S. Manke
Technical Assistance & Dispute Resolution

TSM/
Control No: 53420