Man's monthly car lease increases $30 for moving to Arizona

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PHOENIX -- A Valley man says his car lease payments jumped $30 a month just because he moved to Arizona. So, he contacted 3 On Your Side to help figure out why.

Art Nilsen liked his Nissan Altima as soon as he saw it at a New York dealership two years ago. That's why he decided to lease it. Nilsen believes he gets more for his money if he leases.

"Yeah, it's great. It's very economical and it's good on gas," Nilsen said. "I think my payments are less on a lease than if I purchased it."

Nilsen signed a lease contract with Nissan back in 2010 and handed over nearly $4,700 in advance as part of the sign-and-drive agreement. A portion of that amount covered $1,005 for New York sales taxes, shown right on the contract.

However, after paying all that money and after agreeing to a monthly payment of $299, the terms of the contract apparently changed after Nilsen moved to Arizona.

"I called them up and I said, 'Well, we've been paying this for two years and now all of a sudden you want $30 more now?'" Nilsen explained.

As strange as it sounds, Nilsen's lease payment on his Altima went from $299 a month to $329, which is a $30 increase just for moving to Arizona.

"I don't think it's fair at all," Nilsen said.

3 On Your Side got involved and found out that the $30 montly bump is a sales tax for Arizona. Nilsen leased the car in New York and paid New York taxes. However, Arizona now wants a piece of the pie and is also taxing him.

"I paid the money upfront in New York, now Arizona wants it," he said. "I didn't make an agreement with Arizona. I made an agreement with New York."

3 On Your Side got a hold of the Arizona Department of Revenue, which claims Nilsen's $30 a month tax is legitimate.

In an email to 3 On Your Side, a spokesman writes "... tangible personal property located in this state is subject to the Arizona transaction privilege tax."

In other words, it doesn't matter that Nilsen paid New York taxes. Now, he has to pay $30 a month to Arizona until his lease expires, which is in a year.

"You know, it's for granted that you have to pay for irrigation, water, your electric -- that's what we anticipate," Nilsen said. "But, now here's $30 a month that I did not anticipate."

If you would like to read the Arizona Department of Revenue's statement regarding this matter, you can find it below.


A lessor with tangible personal property located in this state is subject to the Arizona transaction privilege tax on its gross receipts. In the case of a lessee moving into Arizona and registering a vehicle originally leased in another state, the Arizona transaction privilege tax applies to the income stream derived from the lease of a motor vehicle that is located in Arizona.

Several states, such as New York, charge tax upfront on auto leases, rather than on the monthly lease payments as they are billed to the lessee. Unfortunately, there is no Arizona statutory provision to allow a transaction privilege tax credit for taxes that were paid upfront on a lease in another state.

Hope this answers you questions.