N.J. Admin. Code § 18:24-32.3

Current through Register Vol. 56, No. 17, September 3, 2024

Section 18:24-32.3 - Tax base and calculation of tax

(a) The tax base and method of calculating the tax, which depend upon whether the lease or rental agreement is short-term or long-term is as follows:

1. Agreements for a term of six months or less. The tax base for these short-term rentals and leases is either the total of the periodic payments due under the agreement, that is, the amount of rent due, or the lessor's original purchase price of the property; and

2. Agreements for a term of more than six months. The lessee pays the sales tax to the lessor either on the lessor's original purchase price of the leased property or on the total of the periodic payments required under the lease agreement.

(b) Interest or finance charges are included in the tax base when calculating the amount of tax due.

(c) The treatment of trade-ins is as follows:

1. The value of a trade-in of the same kind of property, accepted in partial payment for the lease, will reduce the tax base.

2. Reduction of the tax base through trade-in credit is available only when the lessee trades in property that is owned and not merely leased.

i. Reduction of the tax base through trade-in credit is not allowed if the lessee turns in leased or rental property for credit.

ii. Reduction of the tax base through trade-in is not allowed if the property traded-in will not be held for sale (including lease or rental) by the lessor.

(d) Charges for delivering the leased property to the lessee are included in the tax base.

(e) Manufacturers' rebates and the value of manufacturers' coupons are included in the tax base.

(f) The treatment of special charges in motor vehicle leases for terms of more than six months is as follows:

1. The portion of the lease payment attributable to capitalized sales taxes is not included in the tax base;

2. The portion of the lease payment attributable to the payoff of a prior loan on a trade-in vehicle (negative equity) is not included in the tax base;

3. The portion of a lease payment attributable to the buy-out of a prior lease is not included in the tax base;

4. Acquisition fees are included in the tax base;

5. Capital cost reduction payments are included in the tax base;

6. Fees commonly known as motor vehicle fees, which are imposed by the State, including title and registration fees, are not included in the tax base;

7. Reimbursed coupons or rebates, regardless of whether directed toward payment of up-front fees or credited as a capital cost reduction payment, are included in the tax base;

8. The allowed value of a trade-in vehicle, which was owned by the customer and is taken by the dealer for resale is not included in the tax base for purposes of computing the sales tax;

9. Gap coverage sold by and the premium collected by the leasing company is included in the tax base;

10. Gap coverage sold to the buyer directly by a third-party insurer is not included in the tax base; and

11. Other lessor charges, unless specifically excluded by rule, are included in the tax base, regardless of their designation.

N.J. Admin. Code § 18:24-32.3

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