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BMW i3 REx not tax exempt in NJ

BMW i | May 28th, 2014 by 6
2014 BMW All-Electric i3

It what can only be categorized as a major misstep, BMW of North America has announced that the i3 with Range Extender is not tax …

It what can only be categorized as a major misstep, BMW of North America has announced that the i3 with Range Extender is not tax exempt in the state of New Jersey as what was previously reported.

Back on January 27th, BMW of North America told their client advisers that the i3 REx would be treated as a zero emission vehicle in New Jersey, and qualify for the state’s Zero Emission tax exemption. That was big news at the time for New Jersey residents including myself, and was one of the final deciding factors for me to actually choose the REx version over the BEV i3.

BMW i3 REx not tax exempt in NJ

“The sales tax exemption in NJ only applies to zero-emission vehicles–and as such, does not apply to the i3 with range-extender as it does not apply currently to any vehicle with an internal combustion engine,” said Dave Buchko, BMW’s product and technology communications. “Any assumption that the i3 with Range Extender would qualify was premature.”

Now that BMW has begun delivering i3s with the Range Extender in the NJ State since last week, the dealers haven’t been collecting sales tax on the cars since they were instructed that they didn’t have to. I’m one of the people that took delivery already and didn’t pay sales tax. It’s unclear if BMW is going to now ask me to go back to the dealer and pay the additional $3,900.00 I’ll owe for sales tax. I love the car, and I think the REx is a great option, but this will effectively double the cost of the range extender. Instead of it costing $3,850, it will now actually cost about $7,750! It really is a great option and so far I have loved how well it works, but it’s just not worth $7,750 in my opinion.

The range extender has been a very popular option in New Jersey and my client adviser informed me that eleven of the thirteen i3 orders he has taken so far has the REx. What will these people do when he now has to tell them the car is now $3,200 to $4,000 more depending on how well optioned it is? After negotiating deals, signing contracts and being told they do not have to pay sales tax they find out the car is now costing them considerably more. It’s unknown how many will cancel their order when they are made aware of this but I would venture to guess about half of them end up doing just that. Then there is the issue of what happens to the people like me that have already taken delivery? Will BMW step in and make good for their mistake? People made their buying decision based on the cost they were told it would be and already negotiated deals and signed contracts.

If there is any good news to this it’s the fact that i3 REx deliveries only began last week so it’s unlikely more than a dozen or so cars have been delivered in New Jersey, and at least this error was realized quickly.

Perhaps BMW will offer a rebate to offset some of the surprise extra tax expense for the existing customers that have i3s on order. Some kind of goodwill effort may be indeed necessary to keep the orders from turning into cancellations.

  • JRobUSC

    So, you think the manufacturer should be responsible for state sales tax laws? Quite a slippery slope there. What would stop people in other states where the cars were never tax exempt in the first place from filing a class action lawsuit to get BMW to pay their sales tax too? Taxes are paid to the state, not the manufacturer, and not the dealer (even though they usually collect them for legal reasons). If there’s a tax issue, It’s between you and the state.

    • Tommolog

      I don’t believe the article makes any claim that BMW should be responsible for paying anyone’s tax, but clearly they need to do something to make the situation some people now find themselves in, right. The crux of the issue is people ordered cars with the condition that it was indeed tax exempt. Some have been waiting five months for the car to arrive and now that the cars are here and they are told. “We made a mistake, the car actually costs $3,900 more”. That is indeed a problem. The dealers shouldn’t have been told the car qualified for sales tax exemption until BMW was 100% certain.

      They should have said: “The vehicle may qualify for the NJ’s Zero Emission Tax Exemption, we will notify you when we get official confirmation”. It was explained that the process was complete and the car was indeed tax exempt and all of the sales contracts written didn’t account for sales tax. Now everyone had to have new contracts, with new monthly payment calculations, etc and the owners that already picked up their cars will need to go back to the dealers and figure out how to refinance the car with sales tax included this time.

      • JRobUSC

        Uh, yes, it totally does say that.

        “Will BMW step in and make good for their mistake? Perhaps BMW will offer some sort of rebate to offset some of the surprise tax expense.”

        Why should the manufacturer be responsible for a state deciding a car doesn’t qualify for a tax credit? That’s the states decision. And by the way, BMW has been telling dealers for months NOT to promise any specific tax credits, either state or federal. If your dealer didn’t listen, that’s not on BMW.

        • Tommolog

          That is different from saying they should pay the tax. The customer has to pay the tax, but why do you find it unreasonable to expect a good will credit in this situation? BMW has not been telling dealers for months not to promise a tax exemption in New Jersey. On January 27th, there was a conference call for client advisers and with about 300 of them listening they were told the i3 REx was tax exempt in New Jersey. The CA’s then told their customers that and wrote up the sales contracts accordingly.

          So now some people have already paid for their cars, others have taken possession and agreed to a payment schedule which now needs to be torn up and modified and their monthly payments will be about $100 more per month. Do you think that’s fair?

  • CDspeed

    In my state we get an exemption for certain surcharges in our auto insurance, thats it, aside from the federal tax credit. But really I don’t care if I get any incentives, driving electric is all I need.

    • Sophia Buscemi

      my dad just got his BMW i3 from the bmw dealer greensboro and he didn’t have to pay any additional costs, it may be is the laws emission in NC are different, or the dealership hasn’t realized it yet!

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