Q: I leased a car in New Jersey. Lease term was 36 months. I moved to Texas during that time with the car. I decided the buy the car at the end of the lease term. I paid sales taxes in New Jersey with the purchase. Then, when I went to get the title transferred under my name, state of Texas wants me to pay sales taxes in Texas as well. Why am I being taxed in 2 states?
A: Here is the reason you are being taxed in both states. In New Jersey, when you exercise a lease buyout option, the state considers it a new taxable transaction. You paid New Jersey sales tax on the vehicle's purchase price at the end of the lease, regardless of where you reside. Texas requires payment of motor vehicle use tax when you bring a vehicle into the state and seek to title or register it.
You can try one of two things:
1) Request a refund in Texas: Request a credit from the Texas Comptroller’s Office for the Texas sales tax paid. Include documentation of the proof of sales tax paid in New Jersey (receipt from the dealership or leasing company showing the NJ sales tax amount) and a copy of the lease buyout agreement. OR
2) Request a refund in New Jersey: If you relocated and titled the car in Texas shortly after purchasing it in New Jersey, you may qualify for a refund of the New Jersey sales tax. Include documentation proving the vehicle was titled and taxed in Texas shortly after the New Jersey sale tax payment i.e., proof of payment for sales tax in New Jersey, proof of titling and registration in Texas, and a copy of the lease buyout agreement.