Did prior New York tax prevent Florida sales or use tax on a leased car later registered and garaged in Florida?

Subject

Lease of Motor Vehicle

Plain-English summary

Florida tax applied to the monthly lease payments after the car was registered, garaged, and used in Florida, even though New York tax had already been paid when the lease began. The lessee had signed a 36-month New York lease, paid New York sales, use, or excise tax up front, and continued working and paying from New York. His wife and sons later moved to Florida with the car.

Florida distinguished ordinary imported property from rented or leased property. The statute provided a credit framework for like tax paid elsewhere and a six-month presumption for some property used out of state before import, but expressly said rentals or leases used or stored in Florida were taxable without regard to prior use or tax paid on an out-of-state purchase.

The Department therefore approved the lessor's addition of Florida tax to the monthly automobile lease payments.

What this means for you

For the law applied in this ruling, where the lessee signed the contract or sent payments did not control. Actual Florida use and storage of the leased vehicle triggered Florida tax.

The advisement also noted a 1998 legislative amendment for certain noncommercial vehicles leased longer than 12 months, but said it did not help this lessee because the vehicle was registered and used in Florida. Current long-term-lease rules should be checked separately.

Common questions

Q: Did paying New York tax eliminate Florida tax? No. The specific lease rule made Florida use or storage taxable regardless of tax paid outside Florida.

Q: Did it matter that the lessee still worked and paid from New York? No. The vehicle itself was registered, garaged, and used in Florida.

Q: Did more than six months of prior out-of-state use exempt the lease? No. The ruling said the six-month presumption did not override the separate rule for rented or leased property used or stored in Florida.

Q: Does this 1998 ruling state today's treatment of every multistate vehicle lease? No. The source itself discussed a contemporaneous amendment, and current statutes, sourcing, credits, and lease terms may differ.

Citations and references

• Fla. Stat. § 212.06(7) — treatment of like tax lawfully imposed and paid elsewhere
• Fla. Stat. § 212.06(8)(a) — Florida use tax and the specific rule for rented or leased property used or stored in Florida
• Fla. Admin. Code r. 12A-1.007(14) — Florida use or storage of rented aircraft, boats, mobile homes, and motor vehicles
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 98A-037

Original ruling text

SUMMARY

A lease or rental of motor vehicle used and stored in
Florida is taxable irrespective of its prior use or prior
taxable status in another state. The lessor was correct in
charging tax on the automobile lease, despite the fact that
tax had previously been paid to the State of New York.

May 15, 1998

Re: Technical Assistance Advisement 98A-037
Sales and Use Tax
Lease of Motor Vehicle
Section 212.06(7) & (8), F.S.

Dear :

This Technical Assistance Advisement is in response to your
letter of February 16, 1998, in which you seek advice as to the
taxable status of an automobile lease in which you are the
lessee. Your letter provides in pertinent part:

1. Under a New York Motor Vehicle Lease Agreement dated
   December 12, 1996 (the lease agreement), I am currently
   leasing a 1997 Toyota Avalon... XXX [the "Lessor"]....

2. As per the terms of the lease agreement, I paid to the
   State of New York $1,211.81 (assessed at 8 1/2%)
   representing "Sales/Use/Excise Taxes". I made this payment
   concurrent with the signing of the lease agreement.

3. My wife has been the driver of the leased vehicle since
   inception of the lease agreement. My wife and 2 sons
   relocated to the State of Florida during November 1997;
   this necessitated my garaging (and registration) of the
   leased vehicle in Florida for her continued use.

4. I presently work in New York and as the lessee under the

lease agreement, I continue to make my monthly lease
payments from New York.

5. Commensurate with my garaging and registration of the
   leased vehicle in Florida [Lessor] has assessed an
   additional 6% tax on my monthly lease payment representing
   Florida Sales/Use Tax. [Lessor] states that the additional
   tax is pursuant to Section 212.06(8)(a), F.S. of the
   Florida Sales and Use Tax Act.

6. After carefully reviewing applicable sections of the
   Florida Sales and Use Tax Act, I have concluded that the
   additional assessment is incorrect and accordingly, I have
   formally disputed the assessment with the lessor.

You also provided a copy of your lease agreement which shows a
lease term of thirty-six (36) months.

DISCUSSION

Section 212.06, F.S., provides in part:

(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.... 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.

(8)(a) Use tax will apply and be due on tangible personal
property imported or caused to be imported into this state
for use, consumption, distribution, or storage to be used

or consumed in this state; provided, however, that,..., it
shall be presumed that tangible personal property used in
another state, territory of the United States, or the
District of Columbia for 6 months or longer before being
imported into this state was not purchased for use in this
state. The rental or lease of tangible personal property
which is used or stored in this state shall be taxable
without regard to its prior use or tax paid on purchase
outside this state. (emphasis supplied)

Rule 12A-1.007(14), F.A.C., provides in part:

(a) The rental or lease of an aircraft, boat, mobile home,
or motor vehicle, which is used or stored in this state,
shall be taxable without regard to its prior use or tax
paid on the purchase outside this state.

It is the Department's position that the statute is clear in
providing that a lease or rental of tangible personal property
used or stored in Florida is taxable irrespective of its prior
use or prior taxable status in another state. Therefore, your
lessor is correct in charging you tax on your automobile lease.

Although it will not be of assistance, it may be of interest to
you that the Florida Legislature in the 1998 legislative
session, which ended on May 1, 1998, amended Section 212.06,
F.S., to remove from the imposition of sales and use tax certain
non-commercial motor vehicles leased in excess of twelve (12)
months. To avoid taxation, the motor vehicle must be used in
another state and tax must be paid in the other state. Since
your leased vehicle is registered and used in Florida, the lease
payments continue to be taxable in Florida.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S. which is binding on the department only
under 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 and our request are
public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of s. 213.22, F.S.
Your name, address, and any other details which might lead to
identification of the taxpayer must be deleted by the Department
before disclosure. In an effort to protect the confidentiality
of such information, we request you notify the undersigned in
writing within 15 days of any deletions you wish made to the
request or the response.

Sincerely,

Jonathan E. Swift
Tax Law Specialist
Technical Assistance and Dispute Resolution
(850) 922-4840

Control #33319

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