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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Persons needing an accommodation to participate in any proceeding before the Tax Policy and Dispute Resolution Office, should contact that office at 904-488-0717 (voice), or 1-800-DOR-8331 (TDD), at least five working days before such proceeding. You may also call via the Florida Relay System at 1-800-955-8770 (voice), or 1-800-955-8771 (TDD).