FAQs - Sales & Use Tax: Motor Vehicles & Watercraft

If a motor vehicle dealer accepts cash down payments, must the motor vehicle dealer charge sales tax when the vehicle is to be leased? If yes, how is the tax paid?

Cash down payments are subject to the sales tax.    

Prior to Feb. 1, 2002, if a down payment was collected by the leasing dealer, the leasing dealer would also collect the sales tax. The leasing dealer would then remit the tax to the State of Ohio, like any other sales tax payment.

If a down payment is paid to the motor vehicle dealer, the motor vehicle dealer will also collect the sales tax and either remit it directly to the State of Ohio on the dealer's transient sales tax return or forward it to the leasing dealer so that the leasing dealer can remit it to the State of Ohio.

Note:  In either of these situations, tax is not remitted to Clerks of Courts because the motor vehicle will be titled in the leasing company’s name under the "Resale - leasing" exemption.

As of Feb. 1, 2002, the dealer collects the cash down payment as part of the price paid for the lease of the motor vehicle, watercraft or outboard motor. It is charged at the rate in the lessee’s county of residence, and remitted to the State of Ohio on the dealer’s transient vendor’s license. For more information on leases, please see FAQ #10, above.