How are leases taxed?
Effective Feb. 1, 2002, Ohio changed the way sales tax was charged and collected on leases. The new method applies to many items, but this question will focus on motor vehicles, watercraft and outboard motors. There is one exception to motor vehicles that are designed by the manufacturer to carry a load of more than one ton. Those vehicles will be taxed on the old method, on each monthly lease payment. The new law provides that the tax will now be collected up front, on the amount to be paid by the lessee over the term of the lease. The tax is to be collected by the dealer, based on the rate in the lessee’s county of residence. The dealer remits the tax directly to the State of Ohio on a tansient vendor license. The tax is not paid to the Clerk of Courts at the beginning of the lease. When the vehicle is titled in the name of the leasing company, no tax is paid as the leasing company has an exemption based on resale. At the end of the lease, the customer may choose to purchase the vehi
Effective Feb. 1, 2002, Ohio changed the way sales tax was charged and collected on leases. The new method applies to many items, but this question will focus on motor vehicles, watercraft and outboard motors. There is one exception to motor vehicles that are designed by the manufacturer to carry a load of more than one ton. Those vehicles will be taxed on the old method, on each monthly lease payment. The new law provides that the tax will now be collected up front, on the amount to be paid by the lessee over the term of the lease. The tax is to be collected by the dealer, based on the rate in the lessee’s county of residence. The dealer remits the tax directly to the State of Ohio on a transient vendor license. The tax is not paid to the Clerk of Courts at the beginning of the lease. When the vehicle is titled in the name of the leasing company, no tax is paid as the leasing company has an exemption based on resale. At the end of the lease, the customer may choose to purchase the veh
