Lease maturity: Disposition Fee + Sales Tax?

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QuakingLeaf

Member
Joined
Sep 20, 2013
Messages
5
Location
Fremont, CA (East Bay, SF area)
NMAC statement, at end of lease, indicates Disposition fee ($395) + Sales Tax. Was aware of the former, but not the latter. There is no mention of sales tax, at lease maturity, in the contract either.

I was under the impression that the monthly payment included the Base Monthly Payment + Monthly Sales Tax. If so, why would there be yet another sales tax after 36 monthly payments have been made?

Please enlighten.

Thank you.
 
I don't live in Ca, but it's unusual (impossible?) here for sales tax to be collected at the end of a lease. Usually it's collected upfront based on the amount of the lease, with any additional tax only being owed if you buy the car. If you extend the lease, you pay the extra tax per month on the payment.
 
I do live in California and unless the sales tax laws changed for 2016 (and IIRC it hasn't), all you owe NMAC at the end is the dispo fee and any excess wear/tear charges as determined by the pre-return inspection. I was not charged any sales tax whatsoever.

Also, NMAC will send you a final bill about a month or so after the car is turned in to a dealer. Unless you're buying another car from that dealer at the same time, you don't need to pay them anything.
 
I meant to write that owing sales tax at the end is UNusual, of course. I corrected it.

They may be trying to collect tax on the disposition fee, but that too seems to not be the way it's done.
 
Side note, they waive that disposition fee if you buy or lease another Nissan. That along with extra $1k loyalty incentive was a factor in my decision to get the Sentra. It made a cheap car even cheaper from the perspective of expense avoided.
 
According to a search on-line, there should be NO TAX on disposition fees in the state of California. To paraphrase the law, "we can tax on everything except the following: blah blah we won't tax you on taxes blah blah we won't tax you on fees to refurbish your lease at the end of the lease or the early termination of the lease blah blah." The actual text below (and the link below that), and the bolds are mine.

...
The "rentals" subject to the tax include any payments required by the lease, including amounts paid for personal property taxes on the leased property, whether assessed directly against the lessee or against the lessor, but does not include amounts paid to the lessor for:

(A) Collection costs, including attorney's fees, court costs, repossession charges, and storage fees; but tax does apply to any delinquent rental payments, including those collected by court action;

(B) Insuring, repairing or refurbishing the leased property following a default;

(C) Cost incurred in defending a court action or paying a tort judgment arising out of the lessee's operation of the leased property, or any premiums paid on insurance policies covering such court actions or tort judgments;

(D) Cost incurred in disposing of the leased property at expiration or earlier termination of the lease;

(E) Late charges and interest thereon for failing to pay the rentals timely;

(F) Separately stated optional insurance charges, maintenance or warranty contracts;

(G) Personal property taxes assessed against personal property where a bank or financial corporation is the lessor.

(H) "Customer facility fees" collected pursuant to Civil Code section 1936, or any other law whereby a local agency operating an airport requires a rental car company to collect a facility financing fee from its customers.


The link (with the above excerpt about a quarter of the way down):
http://www.boe.ca.gov/lawguides/business/current/btlg/vol1/sutr/sales-and-use-tax-regulations-art15-all.html

I should say, I'm not a lawyer, just an internet searcher who, like anybody, really does not want to pay tax on fees... :mrgreen:
 
So it turns out there ARE taxes on fees... argghh. I sent back my lease disposition fee payment minus the tax and was advised that any FLAT disposition fee is still considered part of a :roll: rental and thus taxable by state of California. Only if they charged individually as direct pass-through costs to the customer for disposing of vehicle would they not be taxable. The nice thing was they waived the balance (my unpaid tax) because it's such a "small" amount. Which makes me wonder why I bothered in the first place but hey it's enough to buy myself and somebody else a nice lunch.. with tax (and maybe even tip).
 
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