HF 1495

as introduced - 87th Legislature (2011 - 2012) Posted on 04/18/2011 09:12am

A bill for an act
relating to taxation; clarifying the timing of tax collection for rent-to-own
or lease-to-own used vehicles; amending Minnesota Statutes 2010, section
297A.815, subdivision 1.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2010, section 297A.815, subdivision 1, is amended to
read:

Subdivision 1.

Motor vehicle lease price; payment.

(a) In the case of a lease of a
motor vehicle as provided in section 297A.61, subdivision 4, paragraph (k), clause (2), the
tax is imposed on the total amount to be paid by the lessee under the lease agreement.
new text begin Except as provided in paragraph (e), new text end the lessor shall collect the tax in full at the time the
lease is executed or, if the tax is included in the lease and the lease is assigned, the tax is
due from the original lessor at the time the lease is assigned. The total amount to be paid
by the lessee under the lease agreement equals the agreed-upon value of the vehicle less
manufacturer's rebates, the stated residual value of the leased vehicle, and the total value
allowed for a vehicle owned by the lessee taken in trade by the lessor, plus the price of
any taxable goods and services included in the lease and the rent charge as provided by
Code of Federal Regulations, title 12, section 213.4, excluding any rent charge related
to the capitalization of the tax.

(b) If the total amount paid by the lessee for use of the leased vehicle includes
amounts that are not calculated at the time the lease is executed, the tax is imposed and
must be collected by the lessor at the time the amounts are paid by the lessee. In the case
of a lease which by its terms may be renewed, the sales tax is due and payable on the
total amount to be paid during the initial term of the lease, and then for each subsequent
renewal period on the total amount to be paid during the renewal period.

(c) If a lease is canceled or rescinded on or before 90 days of its execution or if a
vehicle is returned to the manufacturer under section 325F.665, the lessor may file a claim
for a refund of the total tax paid minus the amount of tax due for the period the vehicle is
used by the lessee.

(d) If a lessee's obligation to make payments on a lease is canceled more than 90
days after its execution, a credit is allowed against sales tax or motor vehicles sales tax
due on a subsequent lease or purchase of a motor vehicle if that lease or purchase is
consummated within 30 days of the date the prior lease was canceled. The amount of the
credit is equal to (1) the sales tax paid at the inception of the lease, multiplied by (2)
the ratio of the number of full months remaining in the lease at the time of termination
compared to the term of the lease used in calculating sales tax paid at the inception of the
lease. The credit or any part of it cannot be assigned or transferred to another person.

new text begin (e) For rent-to-own or lease-to-own used vehicles where the lessee may purchase or
return the vehicle at any time for any reason without penalty, the sales tax is imposed:
new text end

new text begin (1) on the amount of the down payment and is collected at the time the down
payment is paid by the lessee; and
new text end

new text begin (2) on each periodic lease payment and is collected at the time of each periodic
lease payment.
new text end