BILL NUMBER: S1602

SPONSOR: RITCHIE
 
TITLE OF BILL:

An act to amend the tax law, in relation to the taxable price for the
sale of a motor vehicle

 
PURPOSE:

To provide for the calculation of sales tax for the purchase of a motor
vehicle after a manufacturer's rebate is applied to the purchase price.

 
SUMMARY OF PROVISIONS:

Section 1 amends § 1105 of the Tax Law by adding a new subdivision
providing that any rebate offered by a retail dealer of a motor vehicle
to a consumer at the time of sale shall be excluded for the purposes of
calculating the taxable price of such motor vehicle sale.  The rebate
must also be excluded for the purposes of calculating any local sales
and compensating use tax that may be applicable.
              

Section 2 provides the effective date.

 
EXISTING LAW:

Section 1105 of the Tax Law provides for the imposition of sales tax of
four percent upon the receipts from every retail sale of tangible
personal property, except as otherwise provided in this article.
Section 1210 of the Tax Law relates to the taxes of cities and counties
administered by the state tax commission and provides, notwithstanding
any other provision f law to the contrary, but subject to the limita-
tions and exemptions as set forth part II of this article, any city or
county in this state, acting though its local legislative body, is
authorized and empowered to adopt and amend local laws, ordinances or
resolutions imposing in any such city or county sales and compensating
use taxes.

This bill provides that the state sales tax and local sales and compen-
sating use tax shall be imposed after the rebate is deducted from the
price of the vehicle.

 
JUSTIFICATION:

New York State requires that sales tax be paid on the purchase of a
motor vehicle prior to the deduction of a manufacturer's rebate.  Howev-
er, claiming that rebates are a form of payment from the manufacturer
and therefore do not affect the purchase price of the car fails to
acknowledge the fact that the purchaser, on whom the sales tax is
imposed, is paying a sales price after the rebate is applied. The
"manufacturer's payment" is not subject to any tax. Thus the purchaser
bears the cost for the tax on a payment not actually paid by them. For
example, a consumer who purchases a vehicle and receives a $2500
manufacturer's rebate that is applied toward the purchase price will pay
an additional sales tax of $200 or more, depending on their county of
residence. This is unwarranted and unfair to the purchaser.

To remedy this unfairness, this legislation provides that all state and
local sales taxes imposed on the purchase of a motor vehicle shall
reflect the post rebate price of the vehicle. This measure ensures that
the purchaser pays sales tax only on what he or she actually pays as the
purchase price.

 
LEGISLATIVE HISTORY:

2018: S.2774

 
FISCAL IMPLICATIONS:

To be determined.

 
EFFECTIVE DATE:
This act shall take effect immediately.