Are You Paying Sales Tax on Loaners?
According to New Jersey Sales Tax Regulations, when you title a loaner vehicle with New Jersey Motor Vehicle you should be paying sales tax instead of checking the box that the vehicle is for re-sale. This is because you are using the vehicle for use in your business, just as you would buy equipment for use in your business. This is considered customer goodwill and the vehicle is not being held for resale.
Once you pay sales tax on a loaner vehicle and then replace it with another unit, you can use the replacement as a trade-in to reduce the sales tax expense. In this case, sales tax would be paid on the difference between the invoice price of the new vehicle and the wholesale price of the loaner vehicle being replaced. This requires some additional record keeping but can save you some money.
If you have any questions, please contact your Withum accountant or consultant.
Ask Our ExpertsTo ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.
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Teresa Alessi, Team Member, Automotive Services T (732) 828 1614 [email protected] |
