N.J. Admin. Code § 18:24-7.15

Current through Register Vol. 56, No. 21, November 4, 2024

Section 18:24-7.15 - Leases and rentals of motor vehicles

(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.

N.J. Admin. Code § 18:24-7.15

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