Lease Tax in Pennsylvania

[jcadwalader5]

Has anyone leased a Lucid with LFS from PA?
I am getting ready to take deliver of a Lucid Air Touring and taking advantage of the $28k+ of credits. I finally got the lease paperwork today, and LFS is applying a 9% PA tax on the credits. I have leased many cars in PA, and have always only paid tax on the downpayment and monthly lease amount. They are showing all of the incentives, including the "No Charge Pro Sound and Pro Driver Assistance" as taxable.

We just leased a Volvo from Volvo VCFS and they did not tax the $7500 credit they passed on. So I am 90% sure this is not the correct application of PA Sales Tax. The LFS supervisor said this is the way they have done every lease in PA. Looking for others who may have had this issue and if anyone has checked to see if this is legit.

 

[momo3605]

You usually do have to pay taxes on incentives in most states. Unless PA has some unique laws around EV sales tax, it’s probably right, and also why the December leases are downright deceptive. You see one payment in the calculator but $28k in taxable incentives creeps in there when you get the final numbers. usually dealers can get around taxable incentives by giving a straight discount off msrp, idk why lucid couldn’t have thought of something more creative.

Other than discounting, they could’ve also just made SSP/DDP $0 cost options which would’ve kept the msrp and taxable incentives down (and a lower residual would benefit lucid when they try to dump the cars after the leases are over)

Anyway, there are a lot of ways they could’ve made it more attractive, idk why they didn’t.

 

[jcadwalader5]

In PA you don't pay taxes on incentives.

Sales tax on cars and vehicles in Pennsylvania

www.salestaxhandbook.com

https://www.caranddriver.com/research/a32812896/pa-sales-tax-on-cars/

What New Car Fees Should You Pay? | Edmunds

What fees should you expect to pay when you buy a new car? This chart from Edmunds shows the most common ones you may encounter.

www.edmunds.com

PA charges 6% sales tax, and a 3% lease tax. Both apply to the downpayment and monthly payments.
The cost of the vehicle, incentives, rebates, etc. are not relevant. It is based on the money transacted from the buyer only. Trade-in credits are also not taxed.

If LFS is correct in saying they have taxed all leases in PA this way, they owe some money back to customers. I have to decide if I want to continue to fight this battle or walk and get a Tesla. I feel the Lucid is a better car, but frustrated with the lack of maturity on process and understanding of basic concepts like sales tax.

 

[hydbob]

Has anyone leased a Lucid with LFS from PA?
I am getting ready to take deliver of a Lucid Air Touring and taking advantage of the $28k+ of credits. I finally got the lease paperwork today, and LFS is applying a 9% PA tax on the credits. I have leased many cars in PA, and have always only paid tax on the downpayment and monthly lease amount. They are showing all of the incentives, including the "No Charge Pro Sound and Pro Driver Assistance" as taxable.

We just leased a Volvo from Volvo VCFS and they did not tax the $7500 credit they passed on. So I am 90% sure this is not the correct application of PA Sales Tax. The LFS supervisor said this is the way they have done every lease in PA. Looking for others who may have had this issue and if anyone has checked to see if this is legit.

The 7500 credit is different than Lucid incentives.

 

[hydbob]

In PA you don't pay taxes on incentives.

Sales tax on cars and vehicles in Pennsylvania

www.salestaxhandbook.com

https://www.caranddriver.com/research/a32812896/pa-sales-tax-on-cars/

What New Car Fees Should You Pay? | Edmunds

What fees should you expect to pay when you buy a new car? This chart from Edmunds shows the most common ones you may encounter.

www.edmunds.com

PA charges 6% sales tax, and a 3% lease tax. Both apply to the downpayment and monthly payments.
The cost of the vehicle, incentives, rebates, etc. are not relevant. It is based on the money transacted from the buyer only. Trade-in credits are also not taxed.

If LFS is correct in saying they have taxed all leases in PA this way, they owe some money back to customers. I have to decide if I want to continue to fight this battle or walk and get a Tesla. I feel the Lucid is a better car, but frustrated with the lack of maturity on process and understanding of basic concepts like sales tax.

All the sources you linked only cover sales and not leases.

 

[Andretex]

I think this is all related to Lucid wanting to show higher sales numbers. The reason volvo probably did not charge sales tax on the incentive is probably because it is showing the car leased at a lower sales price. Lucid could have shown those options at zero cost. but by making it an incentive that is taxable, lucid will show full sales value. I guess this helps Lucid show higher gross revenues.

 

[jcadwalader5]

Thank you for the input. I was hoping to get a response from those that actually had Leases in PA as the tax laws are all state specific.
I understand other states tax incentives, but PA should not.

In PA,
Per Pennsylvania Code: https://www.pacodeandbulletin.gov/D...acode/data/061/chapter47/s47.19.html&d=reduce
A Lease is taxed: "Full consideration paid or delivered or promised to be paid or delivered to the lessor for a lease period under a lease agreement, whether it is money or otherwise, even though the consideration is separately stated and designated as a payment for downpayment, service, maintenance, insurance, repairs, depreciation, excess mileage fees or similar charges.
Further defined: Credits or refunds which reduce the lease price reduce the amount subject to tax even though the credits or refunds are issued after termination of the lease.

This is summarized by the PA Department of Revenue as:
Tax is applied to the total lease payment including down payment and accelerated lease payments.

 

[jcadwalader5]

The 7500 credit is different than Lucid incentives.

You would have to elaborate how they are different. Volvo is offering $7500 EV Lease Bonuses to consumers. They are doing this based on the fact that the EV Tax credits are given to the leasing company as they are considered a business purchase by the leasing company. Those credits are not going to the consumer so they are passing on the savings in the form of a "Bonus or Credit". That is exactly what Lucid is doing so please explain why they are different.

 

[stevelitchfieldpark]

Thank you for the input. I was hoping to get a response from those that actually had Leases in PA as the tax laws are all state specific.
I understand other states tax incentives, but PA should not.

In PA,
Per Pennsylvania Code: https://www.pacodeandbulletin.gov/D...acode/data/061/chapter47/s47.19.html&d=reduce
A Lease is taxed: "Full consideration paid or delivered or promised to be paid or delivered to the lessor for a lease period under a lease agreement, whether it is money or otherwise, even though the consideration is separately stated and designated as a payment for downpayment, service, maintenance, insurance, repairs, depreciation, excess mileage fees or similar charges.
Further defined: Credits or refunds which reduce the lease price reduce the amount subject to tax even though the credits or refunds are issued after termination of the lease.

This is summarized by the PA Department of Revenue as:
Tax is applied to the total lease payment including down payment and accelerated lease payments.

Maybe you should notify Dep of Revenue that they didn't tax you enough on your Volvo.

 

[drdallen]

I am cross shopping BMW i4 and these are taking $10,500 off MSRP and they aren’t taking any of the incentive. Their financial department states there is no tax on incentives if car is registered in PA. I prefer the lucid but them insisting on adding $3300 tax to an 18 month lease affectivpelt adds $183 a month to the lease

 

[Adnillien]

I am cross shopping BMW i4 and these are taking $10,500 off MSRP and they aren’t taking any of the incentive. Their financial department states there is no tax on incentives if car is registered in PA. I prefer the lucid but them insisting on adding $3300 tax to an 18 month lease affectivpelt adds $183 a month to the lease

Be sure to use a referral code to get another discount.

 

[jcadwalader5]

I was able to get them to not charge the tax. It was extremely painful process, with many back and forth conversations, multiple versions of the lease contract etc.
I had an I4 M50 and I can say I feel the Lucid is a much better car. Not even close.
However, they need to figure out how to sell cars efficiently. It was the worst buying experience I have ever had. I still don’t have plates, registration, or inspection. No communication from lucid on what happens next.

 

[drdallen]

Thank you, if I can get them to drop the tax on incentives I'll come back for referral code- appreciate it. Then I'll have to decide between the 19s which make most sense in PA or the 20s

 

[drdallen]

I was able to get them to not charge the tax. It was extremely painful process, with many back and forth conversations, multiple versions of the lease contract etc.
I had an I4 M50 and I can say I feel the Lucid is a much better car. Not even close.
However, they need to figure out how to sell cars efficiently. It was the worst buying experience I have ever had. I still don’t have plates, registration, or inspection. No communication from lucid on what happens next.

Yes

 

[drdallen]

Sorry, accidentally hit done on last response- I did think the software on i4 seemed better and it's reassuring knowing my bmw dealer is close- lucid doesn't seem to know what is going on. Couldn't get a response from financial for weeks despite calls and emails. Lucid response was , "we usually don't respond to emails". That is worrisome for future problems

 

[Babyrocko1908]

I was able to get them to not charge the tax. It was extremely painful process, with many back and forth conversations, multiple versions of the lease contract etc.
I had an I4 M50 and I can say I feel the Lucid is a much better car. Not even close.
However, they need to figure out how to sell cars efficiently. It was the worst buying experience I have ever had. I still don’t have plates, registration, or inspection. No communication from lucid on what happens next.

You will receive paperwork to sign via overnight delivery about 4 weeks after taking delivery. You sign and send back to them via pre-paid overnight delivery. They process with Penn Dot and you'll receive your plates within 60 days. I'm in Harrisburg and had my Touring delivered last Valentine's Day. Finally, take the car to your usual inspection station. They'll affix the safety sticker only but ONLY after you receive you plates and registration from Lucid. Enjoy the car. This is small stuff not to fret over.

Congrats and welcome!

 

[SonofaBish]

jcadwalader5 - would you mind talking about how you got lucid to drop the tax on the incentive?

I've never done a lease before (I'm in PA) so I took it for granted maybe when they said that the incentives are taxed... but if I've got a leg to stand on and go back at them before taking delivery next week, then I'll fight it

 

[Lucy Pure]

I was able to get them to not charge the tax. It was extremely painful process, with many back and forth conversations, multiple versions of the lease contract etc.
I had an I4 M50 and I can say I feel the Lucid is a much better car. Not even close.
However, they need to figure out how to sell cars efficiently. It was the worst buying experience I have ever had. I still don’t have plates, registration, or inspection. No communication from lucid on what happens next.

Hello, how were you able to resolve this? Currently facing the same situation. Thanks!

 

[jcadwalader5]

I basically said I would walk from the deal.