Last post on Dec 05, 2013 at 9:33 PM
You are in the Prices Paid - Buying & Leasing Experiences
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Honda Accord, Car Leasing, Coupe, Sedan
#5457 of 5554 Re: New York Tax [delta737h]
Aug 23, 2013 (9:49 am)
John, I noted this at your site "Adding tax, T, to the total payments, K, and then multiplying the sum by the sales tax rate, t, we have the formula…"
Well, if you do this calculation, you are taxing tax, but it appears that is your opinion of the necessary formula. I disagree. Now that you came up with a new payment, is there more tax on that?
I wouldn't bet my CPA license though I will never need to use it and it wouldn't surprise me if dealers calculate it your way, but I do not believe your interpretation is correct. Would have loved to talk to my college tax professor/tennis buddy whose accounting firm had most of the Long Island dealerships as clients but he passed away several years ago
#5458 of 5554 Re: New York Tax [huskerfan5]
Aug 23, 2013 (1:02 pm)
"I noted this at your site "Adding tax, T, to the total payments, K, and then multiplying the sum by the sales tax rate, t, we have the formula…" ... Well, if you do this calculation, you are taxing tax, but it appears that is your opinion of the necessary formula. I disagree."
Nope, not my opinion. Moreover, I would never consciously publish an article giving my opinion. I'm a math guy and was an Actuary for several years... so, you and I are kind of like cousins. There is no doubt that NY State computes tax on tax just by looking at the formula's derivation...
Plugging in the assigned values, we get total payments, excluding tax, of K = $17,444.81. Adding tax, T, to the total payments, K, and then multiplying the sum by the sales tax rate, t, we have the formula…
T = (K + T)t = Kt + Tt …. The term Tt reflects sales tax levied on sales tax
Solving for T, we get
T = K x t/(1-t)
This formula uses the same method that the NY State's Dealer's Guide to Sales & Use Tax on Long Term Vehicle Leases does described on P.16. Additionally, I have constructed several leases in NY and the dealerships all computed tax the same way I did which is part of the reason why I never pursued the methodology on P.17. Furthermore, the method described on P.17 is not only wrong but it's total non-sense and is why I chose to exclude this in my article as I have no proof that this is actually being used in practice. Of course the lessee is going to pay interest on capitalized tax. I also vehemently disagree that NY is entitled to tax interest on tax. That's beyond despicable. Anyway you slice it, I'm betting that NY methodologies are unconstitutional. I'm also betting that its never been challenged. There you go, Husker, sue 'em for me!!!
I also prove that tax on tax is being computed in NY at the very bottom of my article...
The $1,699.01 includes the additional tax on tax which amounts to $150.79. Here’s why…
We have the tax on the total payments of $17,444.81…
0.08875 x 17,444.81 = 1548.22 PLUS tax on the total tax, which is…
0.08875 x 1,699.01 = 150.79 (tax on tax)
Adding, we get 1,699.01.
Note, too, that (0.08875/(1-0.08875)) x 17,444.81 = 1,699.01 which complies with the P.16 methodology.
The are two payment figures. There is the taxable payment figure whose only purpose is to compute sales tax. K reflects the sum of the taxable payments for which sales tax is levied. The second figure, which I didn't disclose in the article, is the actual lease payment that includes the sales tax as well as all other non-taxable items capitalized in the lease. This payment is not subject to sales tax. Only the taxable payment is subject to sales tax. The taxable payment is just an intermediate calculation.
Frankly, I don;'t agree with any of this. I'm just presenting what NY actually does in terms of computing sales tax on lease vehicles. They do compute tax on tax (P.16) and, apparently, tax interest on the tax financed (P.17) which I haven't encountered with any NY dealerships that I've dealt with.
Am I making any sense yet?
#5459 of 5554 Re: New York Tax [delta737h]
Aug 23, 2013 (1:30 pm)
John, got it.
You better believe that I'll challenge it if I move back to New York and lease some Ferrrari's.
You're a better mathematician than I'm a CPA. Fortunately for everyone, I don't practice public accounting
#5460 of 5554 Re: New York Tax [huskerfan5]
Aug 23, 2013 (2:17 pm)
Ah, you deserve much more credit than that! The bet here is that you're one darn good CPA. Thanks for questioning my calculations and keeping me on my toes!
#5461 of 5554 Re: New York Tax [delta737h]
Aug 23, 2013 (7:56 pm)
We can tell that both you guys are outstanding at what you do now and have done throughout your careers. And after reading your discussion of how NY handles tax on leases, I'm glad that here in CA, we only pay sales tax on each monthly payment's depreciation and finance charge. On the other hand, we have a whole host of other unpleasant issues to deal with out here.
By the way John, a little off topic, but wanted to mention that I grew up not far from where you are, in Erie, PA.
#5462 of 5554 Re: New York Tax [gmanusmc]
Aug 23, 2013 (10:44 pm)
Had a few friends that went to Gannon University and, my niece graduated from Mercyhurst. I fly small planes and have landed in Erie several times. It's a real nice town. My parents are from Lewistown, PA. Still have relatives in Latrobe, Hershey, York, & Philly. My aunt was a nun with the Sisters of Mercy in Pittsburgh. So, I have a good excuse to root for the Steelers & Pirates. Love PA!!!
#5463 of 5554 Re: New York Tax [delta737h]
by kyfdx@Edmunds HOST
Aug 24, 2013 (4:10 am)
"So, I have a good excuse to root for the Steelers & Pirates. "
Well.. you need a good excuse, that's for sure...
#5464 of 5554 Re: New York Tax [kyfdx@Edmunds]
Aug 24, 2013 (8:38 am)
If you were a promising college FB and BB player, would you want to land in CleveLAND?
A few years before Randy Lerner sold the Browns, fans were begging him to sell the team because of his apparent lack of interest and participation. His response was "Be careful what you wish for". And now, we have Jimmy Haslem, with all of his legal problems; his trusted caddy, Joe Banner; and Banner's comical sidekick, Mike Lomdardi. It seems bad luck follows this franchise everywhere since Modell fired Paul Brown in 1963. This year's first round draft pick, Barkevious "KeKe" Mingo, may never play a regular season game as a result of coughing up blood and being winded last week against Detroit. Reminds me of the Browns first round pick, Earnie Davis, in 1962. He died of cancer in May 1963. God help KeKe. He's a class act and a fine young man.
#5465 of 5554 Re: New York Tax [delta737h]
Aug 24, 2013 (11:58 am)
The Elmira express.
I would of loved to see Davis and Brown in 1963 what a back field that would of been. Davis actually recruited Floyd little to come to SU he was a good player and really changed the Color barrier. Ernie set the bar took the abuse and paved the way..
#5466 of 5554 Re: New York Tax [brian125]
Aug 24, 2013 (1:25 pm)
I couldn't agree more with your assessment. Most of those players back then had class and played the game with dignity. I'd love to get my hands on some games film from the 50's, early 60's on DVD and play it next to my other TV broadcasting games played today so that my grandchildren can see how classy players were years ago compared to the classless crap playing today.. tattoos, bandannas, long hair, acting like juveniles... they look like street gangs; not a FB team. The NFL is way out of control which is why I don't watch it anymore. In fact, most of TV programming is garbage. Honestly, it appeals to those with low IQ's. The only thing I ever watch are movies from the 40's/50's, early 60's, and few later ones such as The Express, #42, Pearl Harbor, etc.. It's amazing how low this country has sank in the last 50 years. Truly incredible.