New Jersey Administrative Code
Title 18 - TREASURY - TAXATION
Chapter 24 - SALES AND USE TAX ACT
Subchapter 7 - MOTOR VEHICLES
Section 18:24-7.15 - Leases and rentals of motor vehicles
Universal Citation: NJ Admin Code 18:24-7.15
Current through Register Vol. 56, No. 18, September 16, 2024
(a) A lease or rental agreement may include future options to purchase the property or to extend the lease or rental. The terms lease and rental may be used interchangeably.
(b) When the sales tax must be collected and remitted depends on whether the lease or rental agreement is for a term of six months or less, or for a term of more than six months.
(c) Leases and rentals of motor vehicles are treated according to N.J.A.C. 18:24-32.
1.
Customers are liable for sales tax on the leases or rentals of motor
vehicles.
2. If the rental or lease is
for a term of six months or less, the customer is charged sales tax on each periodic
payment, calculated based on either the lessor's original purchase price for the
motor vehicle or the total of the periodic payments required under the lease
agreement.
3. If the lease or rental is
for an original term of more than six months, the customer pays sales tax on an
accelerated basis, on either the lessor's original purchase price for the motor
vehicle or the total of the periodic payments required under the lease agreement.
The periodic payments include payments received at the inception of a lease (down
payments, rebates, etc.). Regardless of the method used, the full amount of the tax
is due on an accelerated basis, during the period when the lease or rental
begins.
4. Sourcing of receipts from
leases or rentals is governed by the following principles:
i. When the rental or lease is for a term of six
months or less, each periodic payment is sourced to the state that is the primary
property location of the motor vehicle, which is the address provided by the
customer and maintained in the lessor's business records in good faith;
and
ii. If the lease or rental is for a
term of more than six months, the accelerated payment is sourced to the state where
the vehicle was delivered to the customer, unless an exemption applies.
5. When a motor vehicle subject to a
lease for a term of more than six months is relocated to or from New Jersey before
expiration of the lease, the lease is treated in accordance with
18:24-32.5.
Disclaimer: These regulations may not be the most recent version. New Jersey may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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