A lessor remits applicable sales and use tax directly to your state s department of revenue, and bills you accordingly. In addition to any local, county or state sales and use tax, you are responsible for paying your annual personal property taxes. In most states and some local jurisdictions, the lessor is required to pay a use tax on each monthly payment. In certain states, the full amount of taxes is due at the inception of the lease, and the responsibility to do so falls on the Lessor. In these situations, the tax is added to the equipment cost to calculate the monthly payment.
Many states also charge an annual tax on tangible personal property.
Since the Lessor is the legal owner of the equipment, they are required to pay this tax. The Lessor passes this cost on to you in either a lump sum or spread over 12 monthly payments. Closing costs, documentation fees, commitment fees may be required, depending on the transaction. During the lease process there has been incurring expenses such as credit reporting fees, lien searches, overnight delivery, administrative fees, UCC filings, and papers required to be processed with your local or federal locality. A nominal documentation fee is charged to help offset the expenses for your transaction.