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NYC buyer be warned....

Attention NYC buyers:

I am seriously considering cancelling my Model S order. I just found out that I am responsible for the full NYC sales tax amount (rate of 8.875%) on the full MSRP price of the vehicle which is approximately $9,000. Tesla does not offset the amount of sales tax collected by the value of your trade in vehicle.

In this particular situation for example using a $100,000 MSRP and a trade in value of approximately $50,000 (from AutoNation Tesla's partner), Tesla does not reduce the sales tax due to $4,500; ALL NYC customers are still requited to pay the FULL sales tax amount, $9,000 on the MSRP price and not on the difference.

Has anyone else experience this and what were the results?

Unfortunately, that's the way product based business have to handle that due to state regulations, not their own policies. That's the way it is here in CA. For example, when mobile phone retailers sell an iPhone at a discounted rate we still pay the sales tax for the full cost of the phone.

The tax agencies expect to get their full cut of the goods. When a manufacturer creates a product they don't pay sales tax on any of the components used to create that product- the tax for each of those components gets passed on to the consumer in the final form as sales tax through the resale (and repackaging) of those components as a single product. Cutting the potential gains from the taxes for each of those components is not something the tax agencies like to do.

There's more to it but there's probably a tax expert on here somewhere who can add to this but I believe it's not a Tesla policy but a state policy.

Are your really trying to compare the sales tax on an iPhone to a Tesla that is over $102,000!? Tesla is out of touch, we are talking about how Tesla indirectly is forcing ALL NYC customer to pay more because they do not directly take in the trade in vehicle.

In NJ we are exempt from paying sales tax on our Tesla.

mvitarelli@high...You wrote this as though you think Tesla is pocketing the money. It isn't Tesla that is charging the full amount, it is NY State. I live in NY and I am not happy that I will be spending thousands more than others for the same car just because of my address. But thats the way it is.

(Oh and way to rub it in, Abby :)

Sounds like it is time to talk to the politicians on NYC.

Heck the money you made from the sale/trade in of your old car might be considered income! lol

@mvitarelli- Yes. I am simply giving you an example of why your problem exists. Sales tax is sales tax no matter on a phone or vehicle and it's up to your state's tax agencies to dictate the policies, not because you don't want Tesla to charge you. I don't like the taxes in CA, sales tax is 9.75%, so I can understand the frustration. Good luck and I hope you're able to get the car.

I canceled my reservation.

@Big Tex: Great explanation.

@mvitarelli: This is ridiculous that you would cancel the reservation based on a state tax law - not a policy that Tesla made but is forced to abide with to sell in that state.

@mvitarelli: What was your res Number?

One of the reasons I really hate 'blue' states. 'Progressives' (lefty hypocrites) say they care about the planet and pretend they support EVs yet they do not put their money where their mouth is and do not give you you something as simple as a sales tax exemption as incentive. I am from New York and I remember getting a cash rebate from the state to trade in my crappy old AC for a new energystar one. That policy was created and passed under Republican Governor Pataki with a Republican run State Senate - even back then NYSERDA was funding the wind power resources survey and providing exemptions and incentives for recycling businesses and alternate power projects. Now the Senate and Governors Office fell to the Democrats, they love making big deals about nonsense social issues but could can not give a hoot about encouraging people to do the right thing with their own hard earned money!

Reminds me of that stupid two faced crap in Washington State where the Democratic controlled state government gives incentives for EVs from 2007 and then slaps a punishing tax on EV drivers this year, commieland Oregon wants to follow suit.

Bloomberg is supposedly a progressive business person, he could pass a NYC exemption if he wanted or actually cared about doing the smart or right thing. It disgusts me...

Mvitarelli - you ought to consider following roughly 2 million fellow New Yorkers and migrate to Florida, Sales Tax is only 6% in Broward county and 7% in Miami-Dade county... You probably will not miss paying all that State and NYC income tax either! And do not blame Tesla for obeying the law, blame Bloomberg and Andy Cuomo!

I don’t blame Tesla for the law. I blame Tesla for not disclosing they don’t directly take in non Tesla cars in on trade, where typically I would only be liable for the sales tax on the difference between the two.

However if I was to trade in a Tesla Roadster they would directly take it in on trade and I would only pay the sales tax on the difference between the two Tesla’s. Why have two different policies on a trade in? Is that even legal in NYS? They are licensed by Consumers Affairs and the DMV.

I don’t agree with a trade in policy that hurts new customers trading in a non Tesla vehicle.

Tesla isn't a car buyer! They're a manufacturer! What the hell is Tesla gonna do with a bunch of rusted old ICEs?

Sell it yourself, or give it to Autonation, but don't blame Tesla for not wanting the junk they've replaced with something better.

I don't see how Tesla can reduce the price of the Model S because of a transaction of which it was not a part! If you sold your car to your brother-in-law, would you expect Tesla to give you credit? Tela has nothing to do with the sale of your car. Would you expect Tesla to tell you about the problems of selling your car to your brother-in-law? Or to your neighbor?

I believe it was a New York judge who once said "the law is stupid." Yeah, but we have to live with it. The law is the problem. Not Tesla.

Tesla should promise to buy any car for scrap value. Even a Ferrari!

FLSports I don't see the tax issue as being left or right. I think it realistically has more to do with governments being disorganized. Having worked in a government job for many years, I have firsthand experience how the left and right hands don't speak. This leads to many situations (such as my current situ.) that don't make sense.

I am going to pay 6.1% import duty, but I get an EV rebate of 8,500.00. Essentially I will end up getting about 2,500.00 back. Why bother on a 100,000+ car. Serious disincentive.

I should point out that in my case, it is our (highly) conservative government who is imposing the 6.1% duty on an electric car. Clearly the taxation issues cross political lines.

Jewsh;
The 6.1% is not "imposed"; it is built into general import and duty laws and treaties, especially NAFTA. It would require a (possibly illegal) special exemption to rescind it.

I would have been more understanding if the trade in policy on combustion engine vehicles (non Tesla) was disclosed. The real issue is if I didn’t ask the question about the taxes I would have finalized my order and I would have been subject to the cancellation fee of up to $10,000.

Tesla must know that most people are trading in vehicles and should provide a competitive, convenient method for customers to trade in a vehicle without causing an additional tax burden because they want to buy a Tesla. While this additional money does not go to Tesla it does however increase the overall amount of money paid by a customer.

"The 6.1% is not "imposed"; it is built into general import and duty laws and treaties, especially NAFTA. It would require a (possibly illegal) special exemption to rescind it."

Apologies, you are right about my wording. The intent of my comment was to point out that there will be no attempts to create an exception for EVs, despite the government's insistence that it is responsive to environmental concerns. (I have no legal expertise so the validity in making such an attempt is indeed dubious.) Even if there is no way to exempt EVs, the reply I got to my letter to the PM was totally unsympathetic and was majorily composed of a cut and paste response full of conservative platform rhetoric:

"The Government of Canada is committed to protecting the health and
environment of Canadians. We have passed a series of measures to reduce emissions from vehicles and engines addressing both air pollutant and greenhouse gas emissions. The emissions standards in place provide regulatory incentives to the manufacturers and importers of vehicles equipped with plug-in hybrid and all electric technology. As a result of the regulations, it is anticipated that the market penetration of hybrid and electric vehicles will increase."

To paraphrase: "We aren't going to do anything for you since we've already done what we think is necessary to satisfy our environmental commitments with regard to fuel efficient vehicles."

** Regardless of what your political leanings are it's clear that all parties are capable of becoming barriers to EV adoption. **

In case anyone is interested:

http://www.cbc.ca/news/story/2010/04/07/f-cross-border-shopping-duty-exe...

(Section labeled "What other goods face special restrictions?")

http://www.crossbordershopping.ca/auto-import-guide/vehicle-duties-taxes...

(55% of the car's materials must be made in Mexico, US or Canada to be avoid importation duties. In addition since the Model S is 4700 lbs (I believe), we may need to pay a weight penalty as well. (Weight must be below 4425 lbs.))

Apologies for going off course with this. I hope that you can get your situation sorted, mvitarelli.

@FLsportscarenth...

Wow. I'm not even going to address the flaming inaccurate generalizations you have made laying waste to the integrity of what appears to be a large proportion of Americans. You seriously could use a healthy dose of tolerance.

I would hardly call a $100 per year tax on EV's to make up for the loss of road-repair revenue that's collected as part of a gas tax in our state "punishing."

In Washington State, we also don't have sales tax on EV's, which is nice.

Tesla is a new car company. We are early adopters. Early adopters need to have a larger ability to roll with the inevitable glitches that occur early on in any process.

@mvitarelli@high... Come back in 5 years and purchase a Tesla then. More kinks will be ironed out. You'll still have to pay sales tax, though, unless you move to NJ or Washington State!

What's the fuss about? You are responsible for the bill, that is goods plus tax. Then you pay for a part of it with your trade-in. How is it supposed to lower the tax rate?

Tiebreaker;
Obviously they want the nominal value of the goods reduced by the nominal value of the trade-in.

It was a rhetorical question...

@mvitarelli: I am sympathetic towards your situation - I think Tesla could have been a bit more clear on it's ICE trade in policy. I would chalk it up to them being new to mass sales and tax on trade in disclosures should be reviewed for accuracy by state and province by legal staff. If Tesla told you clearly what the trade in tax consequences were, you would not assign the blame on Tesla I think.

New York shafting its EV buyers is a serious problem for market penetration there, but remember Tesla does not profit from it and probably does not like it either - Tesla wants to see as low as possible final prices to encourage wider adoption. The problem is that the politicians in New York do not give a crap about the environment or the people there, they made the taxation and regulatory environment there so unpleasant for both citizens and businesses that millions have left... Voting with their feet because the deadlock and stupidity in Albany make voting ineffective.

Obviously you are not going top move out of state just to buy a car but this one more reason you might consider throwing in the towel and moving to a more friendly state.

@Jewsh: I agree that politicians on both sides can be retarded and hypocritical, left and right are political ideals and not followed by individual human office holders. I mentioned in the other thread that PM Harper is really missing out on a chance to show himself to be a really Progressive Conservative not just in name but in deed and really impress all Canadians with some truly visionary leadership on EVs. But also, even if PM Harper fell in love with Tesla and bought one himself and had the every minister issued one as an official car there is still the issue of the imported batteries - I think Panasonic could do better by its north american customers industrial and consumer and set up a factory here, would help their profit margins as well...

@Epley: For the tiny percentage of cars that EVs make up I really do not think that the loss in fuel tax is that significant... The EV registration surcharge is just another kick in the teeth for early adopters and products and are having a tough early start due to a crippling recession. Tesla buyers are doing the smart thing for themselves and the right thing for North America and the environment as a whole, do not punish them, reward them! If states like Washington and Oregon are having road construction fund shortfalls then they should slightly raise the fuel tax, not beat up on EV buyers. What is next a tax on bicycles or bus fares? Come on, this is stupid!

I could see a law passed requiring the the EV surcharge after registered EVs pass 20% of the total of registered passenger cars, then you could argue about fairness and EVs not needing an incentive anymore...

FLsports, a great post. Thanks

@FLsports

Now we're talking! Great, thoughtful post! For the record, I agree with you about the surcharge for fuel tax.

@Epley: I lived in Tacoma for about a year so am very familiar with Washington State, beautiful state, friendly people, many good memories there... So glad for them that they rejected the state income tax... Just sad to see that the EV surcharge rule was not drafted in a more friendly way, at least it not is an invasive mileage tax with GPS trackers violating our freedoms and privacy like Oregon is considering. Will those dumb-dumbs make EVs go for emissions testing in King and Pierce Counties? Man I hated that crap... "Duh - sir, I can not find your tailpipe..." eheh

@Mel: Thank you, hope my postings inspire critical thinking and action to reform, I hate to see backwards thinking retarding the spread of innovation...

I live in California, and we do not get any breaks on sales tax for trade ins and when you resell your used car the new buyer has to pay sales tax on that transaction as well - and pay sales tax a 2nd time on that car essentially - once when you bought it and again when the new buyer purchases it, and on and on until the car is scrapped.

Here are the details on what states have different laws:

When trading in: All states will allow a deduction of sales tax on purchases with trade ins except California, the District of Columbia, Hawaii, Maryland and Michigan allow no deductions for trade-ins when calculating sales tax and Alaska, Delaware, Montana, New Hampshire, and Oregon have no sales tax on autos at all.

However, title transfer fees at a dealership are often taxable and document fees are not.

In a private party sale, in every state except Alaska, Delaware, Montana, New Hampshire, and Oregon the buyer will pay sales tax on a car bought from a For Sale By Owner seller and then pay sales tax on their new car purchase.

I think it's a little silly that you cancelled your reservation over a few thousand in sales tax - your buying a $100,000+ car - is your purchase really driven by sales tax or love of the car!!!???

FL;
Historical: the "Progressive" part of the PC label has sinister forebears. Like the Fabian Society, intellectual eugenicists like GB Shaw. But what's in a name?

Brian H@ I actually love history.

For the guy who called me a 'GOP bigot', Republicans are the party of Lincoln and was the first main party to be sympathetic to the abolitionist cause. In the 1840's and 1850's abolition of slavery was a rather radical position, the Republicans disliked slavery and actively sought to curb its spread into the west, we all know what happened in the Civil War, the Democrats were the party of the southern slaveholders and corrupt urban political machines in the North, even as late as the early 20th century the 'solid south' faction of the Democrat party protected the racist Jim Crow laws. The first black office holders were Republicans back in the 1870's and 1880's and it was the Republican President Eisenhower Administration the desegregated Little Rock High School...

As for progressive policy, it was Republican Theodore Roosevelt who created the first national parks and consumer protections. Do not confuse him with his distant cousin Franklin Roosevelt the 'silk stocking' socialist who became president a few decades later who ran up the national debt, addicted millions to welfare (thus effectively buying their vote with public moneys), circumvented the constitution by packing the Supreme Court, enacted wage and price controls, provoked war with the Axis powers (in of itself hypocritical as we were selling war material to them while aiding the Allies!), refused to admit large numbers of Jews from Germany in the late 1930's even though he knew they were being killed and a host of other abuses of executive power and outright crimes against democracy and decency.

So yeah I am Republican and proud of it! I support commonsense ecological conservation measures like Theodore Roosevelt did, I abhor hatred and bigotry like Lincoln and Eisenhower and I am a champion of the freedom of the common man to succeed or fail in a free marketplace like Reagan. Tesla makes economic and ecologic sense so every good Republican should be interested in the company as a fine example of what an american company can do right... But I am crazy for sports cars so love Tesla even more!

Very well said FLSports... I'm proud to be on the same political team with someone that thinks like you!


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