New Jersey Administrative Code
Title 18 - TREASURY - TAXATION
Chapter 40 - DOMESTIC SECURITY FEE
Subchapter 1 - PROVISIONS
Section 18:40-1.3 - General application; rental time periods

(a) On rental agreements entered into on and after July 8, 2006, the $ 5.00 per day rental fee applies to the first 28 days of a rental agreement for a rental motor vehicle with the same renter; thus, the maximum rental fee in the aggregate is $ 140.00 even if the actual rental extends beyond 28 days. The rental fee does not apply to any period of a lease agreement.

Example 1: A rental company rents a motor vehicle to a renter for 30 days. A rental fee for 28 days is owed by the rental company.

Example 2: A rental company rents a motor vehicle to a renter for 20 days. The renter returns the vehicle on the 15th day of the rental agreement and is not charged by the rental company for the remaining five days. The rental company owes a rental fee for 15 days. The agreement was modified by the parties to one of 15 days duration. If the rental company charged the renter for the full 20-day period, then a rental fee of 20 days, however, would be owed by the rental company.

Example 3: A rental company rents a motor vehicle to a renter for 60 days but breaks up the rental period into two 30-day intervals. If there are separate rental agreements entered for each 30-day period with any terms different (other than for duration), then 28 days of fees must be paid by the rental company on each agreement. If just one agreement covers the 60-day period, then the $ 5.00 per day fee covers only the first 28 days.

Example 4: A rental company provides a rental agreement that includes an option to renew. The original agreement requires that either or both of the parties to the agreement exercise the right of renewal before it can go into effect. The new renewal agreement is considered an agreement that was entered into as a result of an option to renew a previous agreement as well as an original agreement in and of itself. Both situations are treated the same for the purposes of the Domestic Security Fee law. The 28-day time period commences from the beginning date of each rental agreement, renewal or otherwise. If, however, the option is automatically renewable (for example, the agreement renews without the need for either party to take any action to put the renewal into effect, whether or not any terms change), then the fee would only be owed for up to the first 28 days of the original agreement.

Example 5: A rental company rents a vehicle to a customer which is returned before or at the end of the rental period, at the rental company's request, because the renter needs extended use of the vehicle. The rental company requires the return of the vehicle so that it can physically inspect the vehicle to ensure that it is in good condition; it prefers to collect payment up to that point in time, and because of computer system restraints and the rules surrounding the taking of authorizations and the recording of sale by a credit card company. In order to process payment, the company must close the rental agreement. Once the vehicle is inspected and payment processed, the rental agreement is then renewed/extended under the same terms (although not necessarily the same time period) as the original agreement. Here, the renewed/extended rental agreement is merely a part of the original agreement. Where a motor vehicle rental agreement contains an option to renew/extend automatically during or at the end of the rental period, or where a renewal/extension agreement merely continues the terms of the original agreement without any time interruption from the end of the original agreement, then the fee would only be due and owing for up to the first 28 days of the rental, whether the rental period falls entirely within the time period of the original agreement or the original agreement plus some additional time under the renewal/extension agreement for a total of 28 days. If, however, the parties to the original agreement enter into a new agreement with different terms (other than for duration), a new 28-day period starts to run.

Example 6: A rental motor vehicle company replaces a rented motor vehicle with another. If the replacement vehicle is covered by the original agreement, there is no additional fee due other than what would have been required under that agreement. However, if a new agreement is entered into to cover the rental of the replacement vehicle, then the 28-day period would run anew from the beginning of the new agreement term for that vehicle.

(b) The rental fee is due for every rental day or part thereof. Any extension of rental time into a part of a day, whether due to an agreement or unilateral extension by either party, as long as billed by the rental company, shall result in an additional one day's fee being due from the rental company, up to 28 days of total rental.

Example 1: A rental agreement entered into on or after July 8, 2006, provides for a motor vehicle rental of only five hours. A $ 5.00 fee is due on the rental agreement.

Example 2: A rental agreement provides for a five-day rental period with a penalty for late return. The renter does not return the vehicle until two hours into a sixth day and pays a penalty to the rental company. The rental company owes six days of the rental fee.

Example 3: Same as Example 2 but the rental company waives the penalty. Only five days of the rental fee are owed by the rental company.

Example 4: A rental agreement executed in September 2006 provides for a motor vehicle rental of one day and one hour. A $ 10.00 fee is due on the rental agreement as it was entered into on or after July 8, 2006.