Consumer complaint received 2018-01-24
Company: AMERICAN HONDA FINANCE CORP
State: DC
Product: Vehicle loan or lease
Sub-product: Lease
Issue: Problems at the end of the loan or lease
Sub-issue: Problem extending the lease

Complaint:
This not NOT A DUPLICATE COMPLAINT - I am now blocked from extending my lease as a result of these incorrect charges.

On XX/XX/XXXX, I initiated a lease with XXXX XXXX XXXX for a XXXX XXXX XXXX. As part of the acquisition process I paid the NY sales tax for the portion of the purchase price I would be capitalizing. In XX/XX/XXXX I relocated to XXXX DC. In conjunction with registering the car in DC I had to request a change in the title to reflect the new address. When Honda processed the title change, they began to collect a 10 % use fee in DC. The fee is appropriately collected for leases of vehicles delivered to DC residents for the first time, but is waived for individuals who have paid sales tax in another jurisdiction. To repeat, the only change to the title in DC was to reflect our new address, in DC. HFAC has taken this 10 % each month from my payments, which has renedered my account past due. I have spoken with both the DC XXXX and the DC Dept. of Taxation and Finance and this tax does n't apply when tax was paid at delivery in another jurisdiction. At their suggestion I have provided HFA with the following information from the District : FR-800M Sales and Use Tax Monthly Return Booklet : Imposition of use tax : A use tax is imposed on the use, storage, or consumption of taxable tangible personal property and services in the District, unless the purchaser has paid a sales tax on the purchase of the taxable tangible personal property or service to the District, or another tax jurisdiction in the United States ( US ) or to a US territory. A retailer that did not resell goods purchased under a resale certificate is liable for use tax for those goods used as complimentary gifts. For additional information see DC Code XXXX XXXX XXXX. The transaction was exclusively an address change to the title related to an existing lease. I did not purchase the vehicle at this time, nor was there a lease origination. In response to providing this information, AHFC insisted I wasnt being charged Use tax ( their initial contention ), but sales tax. This is further infuriating as if this was the case sales tax in DC is 5.75 %. So misapplying the Use Tax law is being justified by misapplication of the Sales Tax law. From the same booklet, XXXX cited the following : Imposition of sales tax A person engaging in business in the District must collect sales tax from the purchaser on : 1. Sales of tangible personal property delivered to a customer in the District ; 2. Services listed in DC Official Code XXXX ( n ) ( 1 ) ; 3. Renting or leasing tangible personal property used in the District ; 4. Charges for rooms, lodging or accommodations located in the District that are furnished to transients ; 5. Admissions to certain public events in the District ; and 6. Charges for parking, storing or keeping motor vehicles or trailers in the District. To reiterate, there was no sale made in XX/XX/XXXXwhen these charges started : no property was delivered by XXXX to a customer in the District. I have spent far too much time with front line clerks who are simply executing company policy : the problem here is a flaw in the policy. What I believe happened : whenever a DC address appears in a lease record the 10 % tax is automatically invoked. This is appropriate for new leases but not when a DC address is added to an existing lease record.

It should be noted that a representative from AHF did call the Dept. of Tax and Finance but did not specify that this case involved a leased vehicle taxed in another jurisdiction and registered mid-lease in the District. I believe his question was simply is there a tax on cars leased in DC, which does n't relate to this situation.

I am reaching out to the District of Columbia for further information. It appears I will be forced to pay these fees collected in error to extend my lease. This is extortion.

If I pay these fees in order to extend the lease I am doing so only because I have no choice and in no way agree they are valid. In parallel I will also be raising this issue with the California Attorney General.

Company response to consumer: Closed with explanation