The NYSC, Appellate Division, Third Department, has affirmed the Tax Appeals Tribunal's opinion finding that the transfer of automobile titles from a parent company to an automobile dealership was a taxable sale.
The taxpayer, an automobile dealership, was part of an automotive sales and service group (parent company) that was comprised of the taxpayer and 11 dealerships, each of which was wholly owned by the parent company. The parent company transferred certain vehicle titles to the taxpayer, which the taxpayer used as loaner cars for its clients. The Third Department found that there was sufficient basis in the record for the Tax Appeals Tribunal to conclude that the title transfers were retail sales. But, the Court observed that the "Tribunal's determination may result in an unwarranted windfall to the state, which will ultimately receive sales tax from petitioner - which in most cases held title to the vehicles for only 6 to 12 months and from the ultimate consumers who purchased the vehicles when they were rotated out of loaner status and placed in the dealerships' used car inventories." However, the Court concluded that due to its limited scope of review, it had to uphold the Tribunal's decision. The Court also upheld the Tribunal's method of determining the trade-in credit. (In the Matter of CLM Associates, LLC v. N.Y.S. Tax Appeals Tribunal et al., N.Y. S.Ct., Third Dept.,Dkt. No. 526656, 03/05/2020.)