West Loop Law: Texas drivers hit with double taxation on lease buyouts--banks and dealers under fire
HOUSTON, May 23, 2025 /PRNewswire/ -- Tens of thousands of Texas drivers may be eligible for significant tax refunds after unknowingly overpaying sales tax on leased vehicles they chose to purchase. A growing legal investigation led by West Loop Law, a Houston-based consumer protection firm, reveals that banks and dealerships may be unlawfully retaining state tax credits that rightfully belong to consumers.
At the center of the issue is a little-known provision in Texas tax law: when a driver leases a vehicle and later chooses to buy it, they are typically entitled to a sales tax credit based on the taxes they already paid during the lease. However, new findings suggest that financial institutions and dealerships are improperly claiming these tax credits, leaving consumers to foot the bill—twice.
"Texans are being taxed twice, while banks and dealerships keep the credit," said attorney Nhan Nguyen of West Loop Law. "It's not just unfair—it's a massive consumer rights violation that could total thousands of dollars per driver."
How the Scam Works
Under Texas law, lease-to-own buyers are supposed to receive a credit toward sales tax when purchasing the vehicle at the end of the lease. But in many cases:
- Banks are secretly claiming the tax credit through a third-party entity—L&M Lenders and Members—without disclosing it to the consumer.
- Some dealerships are encouraging consumers to complete the lease buyout through the dealership rather than the bank, which voids the tax credit entirely.
- In some transactions, false trade-ins are listed on official paperwork to manipulate tax liability—despite the customer never trading in another vehicle.
These tactics can result in Texas drivers paying thousands in unnecessary taxes, while the institutions quietly keep the credits or use fraudulent reporting to reduce their own tax liability.
Who Is Affected?
You may be owed money if:
- You leased a vehicle in Texas and later purchased it through a buyout agreement.
- You were encouraged to process the buyout through a dealership instead of directly through the leasing bank.
- Your final paperwork shows a trade-in that you never actually made.
- You paid sales tax again when buying out your lease, despite already paying tax during the lease period.
What Should You Do?
If any of these situations apply to you, West Loop Law encourages you to take action immediately:
Complete the quick Lease Purchase Tax Credit Questionnaire to see if you qualify.
The firm is offering no-cost evaluations for affected drivers across the state.
Help raise awareness by sharing your experience on social media or contacting local and national news outlets.
Call for Justice
"This isn't a clerical error—it's a system-wide practice that has gone unchecked for years," Nguyen emphasized. "If you've ever purchased your leased vehicle, check your paperwork. You may be owed thousands."
West Loop Law is committed to holding banks, dealerships, and financial intermediaries accountable for deceptive and unethical behavior. The firm aims to file individual claims and potentially pursue class-action litigation on behalf of affected drivers.
About West Loop Law
West Loop Law is a Houston-based legal firm with a focus on protecting consumers from deceptive business practices, especially in the auto finance industry. Known for tackling complex cases and advocating for financial transparency, West Loop Law is helping Texas drivers uncover hidden losses and demand justice.
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SOURCE WestLoop Law