N.J. Admin. Code § 18:24-7.14

Current through Register Vol. 56, No. 24, December 18, 2024

Section 18:24-7.14 - Taxability of motor vehicles withdrawn from inventory of motor vehicle dealer; computation

(a) Vehicles actually sold to a salesperson, partner, or other official of the dealer's company are subject to sales tax on the purchase price, or, if there is a trade-in, on the purchase price less the trade-in allowance.

(b) Retail dealers of motor vehicles who withdraw such vehicles from inventory or stock prior to the sale thereof, shall be required to pay a compensating use tax on such uses unless the vehicle is assigned to and used by a full-time motor vehicle salesperson employed by the dealership.

1. The tax shall be computed and paid monthly by the retail dealer as part of the regular monthly report of taxes due on the sale and use of taxable property or services.

2. The basis for tax shall be determined by multiplying.25 times the sum of the manufacturer's suggested list price of the new motor vehicle plus $ 500.00. If the motor vehicle is used, the basis for tax shall be determined by multiplying.25 times the sum of the average retail price listed for the vehicle in the N.A.D.A. Official Used Car Guide or similar N.A.D.A. official guides for other categories of used vehicles, for the year and month of withdrawal, plus $ 500.00.

3. In computing the tax, the basis for tax as computed in (b)2 above shall be divided by 12 and the result multiplied by the current tax rate to effectuate the use tax imposed under N.J.S.A. 54:32B-6.

(c) There shall be no compensating use tax imposed on the use of a motor vehicle by a retail dealer during a period when the motor vehicle is assigned to and used by a full-time motor vehicle salesperson employed by the dealership.

1. For purposes of this subsection and (b) above, a full-time motor vehicle salesperson employed by the dealership means any individual who:

i. Is employed by a retail dealer of motor vehicles;

ii. Customarily spends at least half of a normal business day performing the functions of a floor salesperson or sales manager;

iii. Directly engages in substantial promotion and negotiation of sales to customers;

iv. Customarily works a number of hours considered full-time in the industry, but at a rate not less than 1,000 hours per year; and

v. Derives at least 25 percent of his or her gross income from the motor vehicle dealership as a direct result of the activities listed in (c)1i through iii above.

2. The use tax exemption shall apply to motor vehicles assigned to and used by such full-time motor vehicle salespersons employed by the dealership, regardless of whether or not the salesperson uses the vehicle exclusively for the promotion of the dealership's business. There is no exemption for motor vehicles other than motor vehicles that are withdrawn from inventory for the use of a full-time salesperson.

(d) In order to be entitled to the exemption provided in (c) above, a dealer shall file together with the quarterly return, a certification wherein the dealer certifies the type, assignment, and usage of all company-owned motor vehicles withdrawn from inventory or stock, on a form prescribed by the Director of the Division of Taxation.

N.J. Admin. Code § 18:24-7.14

Amended by 48 N.J.R. 824(a), effective 5/16/2016

Amended by 50 N.J.R. 907(a), effective 2/20/2018