Kevin Londerholm | April 21, 2020
Mike North, CPA & Partner at the accounting firm Katz, Sapper & Milller, serves in the firm’s Transaction, Buy Here – Pay Here and Dealership Services Groups and also has considerable experience in the equipment leasing industry. Mike has extensive experience advising clients in accounting, financial reporting, auditing, compliance, and internal control matters.
Listen as Mike presents one of the main reasons why an independent auto dealer chooses to transition from Buy-Here Pay-Here to Lease-Here Pay-Here: Sales Tax Advantage.
- BHPH: On a retail installment sales contract, the sales tax is paid at the time of the transaction on the sales price of the vehicle. This means the dealer will use the entire down payment for sales tax and is immediately cash-negative at the inception of the deal.
- LHPH: In “pay-as-you-go” states, the sales tax is calculated on the actual monies collected by the dealer (i.e. down payment, first payment). The dealer can pay sales tax over time, rather than all up-front. The dealer can start each loan on a cash-positive basis.