When it comes to processing the tag and title work for leases to DC customers, there can be a lot of confusion in your tag & title office. This is understandable, given that your staff is generally acquainted with dealing with DC DMV and the tax associated with leases is a “sales and use tax” that is collected by the DC Office of Tax & Revenue (OTR), not DC DMV.
You may also have knowledgeable electric vehicle (EV) customers who believe that their lease is exempt from all taxes since the DC DMV exempts EVs from the excise tax associated with a purchase. On a lease, however, there are no exemptions: regardless of the gas mileage or powertrain, a leased vehicle in the District is always subject to the use tax.
For further reference, the code section that specifies that leases are exempt from excise tax, but subject to the use tax is D.C. Code § 50-2201.03(j)(3)(F). The leasing or rental of vehicles, as defined in D.C. Code § 50-1505.01, is subject to District sales tax at a rate of 10.25 percent as specified in D.C. Code § 47-2002(a)(4B).
If you, your staff, or your customers have any questions on these matters, please contact Joe Koch, Vice President of Operations, at 202-821-5824 or firstname.lastname@example.org.Download Bulletin PDF