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Motor Vehicle Casual Sales
Frequently Asked Questions

Motor Vehicle Casual Sales Notices

What is the Sales Tax rate on a motor vehicle?

As of January 1, 2017, the rate is 6.875% on the purchase price of a new or used vehicle. The rate was 7% before that date.

Why did I receive this notice? I already gave the information to the Division of Motor Vehicles.

By law, the Director of the NJ Division of Taxation must certify that the correct amount of Sales Tax has been paid on the actual purchase price of the vehicle. If a Sales Tax exemption was claimed, the Director must certify that no Sales Tax was due.

What will happen if I do not respond to the notice?

If you do not respond to the notice, the Division may charge you tax based on the vehicleís value based on data provided by the National Automobile Dealers Association (N.A.D.A.).

How do I check the status of the paperwork I mailed in response to the notice?

To check on the status of paperwork previously submitted, contact the Division of Taxation Casual Sales Unit at 609-984-6206 or by email at taxation.casualsales@treas.nj.gov.

Please NoteEmails sent to the above-referenced address are not secure.  No confidential information, such as Social Security or Federal Tax Identification numbers, dates of birth or bank account numbers should be included in your email.  Do not attach documents that include confidential information to emails.

Why have I received a second notice?

A Second Notice is sent when no response is received from the first inquiry. If you have received a second notice for the same transaction, and you previously sent in correspondence, contact the Division of Taxation Casual Sales Unit by email at taxation.casualsales@treas.nj.gov or by phone 609-984-6206.

Please NoteEmails sent to the above-referenced address are not secure.  No confidential information, such as Social Security or Federal Tax Identification numbers, dates of birth or bank account numbers should be included in your email.  Do not attach documents that include confidential information to emails.

Will I be notified that the documents I mailed were sufficient and no further Sales Tax is due?

If the Division determines additional documentation is necessary to complete a review of the account, a follow-up notice will be mailed to you. If the documentation is complete a closed inquiry letter may be issued upon request.

Do I have to complete the Affidavit at the bottom of the Questionnaire?

Yes. When completing the Questionnaire, it is required that the Purchaser’s Affidavit be completed. Based on the type of vehicle transfer the Seller’s Affidavit may also need to be completed.

The vehicle was a gift. How do I show proof of that?

The Division may request additional documentation to verify that you did not offer any consideration for the vehicle such as a payment, barter, exchange, or service. This type of transaction does not qualify as a gift, and you must pay Sales Tax on the fair market value of the vehicle.

Note: You may be required to report the transaction on your individual and/or business tax return(s) whether or not any consideration is involved.

If the vehicle given as a gift was free and clear of any lien:

Check the appropriate box on the Questionnaire and have the previous owner complete the Sellerís Affidavit. There is no Sales Tax due. However, you may have an Income Tax liability from receiving the gift.

If the vehicle given as a gift was transferred with a lien:

If you were a co-owner on the original title, there is no Sales Tax due. Check the appropriate box on the Questionnaire and submit a copy of the original title.

If you were not a co-owner on the original title, Sales Tax is due on the principal loan amount assumed.

Example as of January 1, 2017: The vehicle was transferred to you, and you assumed a loan with a $5,000 balance remaining. You must pay 6.875% Sales Tax on the $5,000. Total Sales Tax due = $343.75. You must remit the Sales Tax due, with a copy of the Transfer of Equity paperwork from your lending institution to document that you have assumed the $5,000 debt.

If you have questions pertaining to GIFT TAX, contact the IRS at 1-800-829-1040.

The donor who gave me a vehicle as a gift is now deceased. What documentation should I submit?

You should check the appropriate box on the Questionnaire and complete the Purchaser’s Affidavit. The executor (trix) should complete the Seller’s Affidavit on behalf of the deceased donor and provide a copy of their surrogate certificate and the donor’s death certificate.

This vehicle was left to me in a will. What do I need to send in?

You should check the appropriate box on the Questionnaire (Gift), complete the Purchaser’s Affidavit, and enclose a copy of the will. If there is a lien on the vehicle then tax is due on the principal loan amount assumed.

The vehicle was in poor condition when I bought it. How do I prove that?

You may submit copies of major repair bills, estimates for repairs, accident reports, photographs, and complete the Questionnaire and Purchaser’s Affidavit. You may also have the seller complete the Seller’s Affidavit confirming the purchase price.

The vehicle was in poor condition and I made the repairs myself. What type of documentation can I submit?

If you are unable to contact the seller to complete the Seller’s Affidavit, you should complete the Questionnaire and Purchaser’s Affidavit. In addition, you should prepare a statement indicating the purchase price and condition of the vehicle. You should also indicate what repairs you made and why there are no receipts for the repairs. You can include receipts for parts you may have purchased as well as photographs you may have of the vehicle before and after the repairs.

I did not report the correct purchase price when I registered the vehicle, however, I paid less than the National Automobile Dealers Association (N.A.D.A.) value listed on the notice. What should I do?

You should have the seller complete the Seller’s Affidavit. If the seller is not available, you should submit a letter stating the correct purchase price and provide any information that will verify the purchase price along with the completed Questionnaire and Purchaser’s Affidavit. Your information will be reviewed, and, if we determine additional tax is due, we will mail you a Notice of Adjustment.

I paid cash for the vehicle and do not have a receipt. How can I prove the purchase price?

If you can produce a bank statement that documents the withdrawal, you can attach a copy to your completed Questionnaire and Affidavit. Your information will be reviewed. However, without proper proof of the vehicle purchase price, you may be assessed Sales Tax based on the National Automobile Dealers Association (N.A.D.A.).

I cannot locate the seller to have them fill out the Seller's Affidavit. What should I do?

You should enclose a copy of the cash receipt, cancelled check or money order. You should provide a detailed letter regarding the transaction and provide the sellerís name and contact information, if available. Your information will be reviewed. However, if you cannot provide acceptable proof of the vehicle purchase price, you may be assessed Sales Tax based on the National Automobile Dealers Association (N.A.D.A.).

Can I fax the completed Questionnaire and/or the sellerís Affidavit to the Division?

Yes. The fax number is (609) 292-9266.

I am a sole proprietor and I transferred this vehicle from my name to my business name. Is Sales Tax due on that transfer?

No. As a sole proprietor you would not have to pay any additional tax on that transfer. Complete the Questionnaire and Affidavit along with attaching any supporting documentation of the transfer.

The vehicle was purchased from a leasing company at the end of the lease period. What documents should I submit?

You should submit a copy of the lease purchase agreement which indicates the buyout figure and the amount of tax paid by the lessee.

I swapped vehicles with my friend. Is this taxable?

Yes. Swapping vehicles between two private parties is taxable. The tax is based on the Fair Market Value of the vehicle. Trading anything of value for a car is taxable.

Example #1: A person swaps a $5,000 boat for a 2006 Ford Focus. This is a taxable transfer. The tax is based on the Fair Market Value of the Ford, which, because of the boatís value, is determined to be $5,000. ($5,000 x 6.875% = $343.75 Sales Tax due).

Example #2: A person swaps a 2008 Ford Focus for a 2009 Chevrolet Cruze. In order to obtain the Chevrolet, the taxpayer gave $1,000 cash in addition to the Ford. Tax is based on the Fair Market Value of the 2008 Ford Focus and the $1,000 in cash.

I transferred the vehicle from my corporation to myself. Is this taxable?

Yes, if there was any payment, barter, exchange, or service for the vehicle. This type of transaction does not qualify as a gift, and you must pay Sales Tax on the fair market value of the vehicle. If there was a lien on the vehicle, then Sales Tax is due on the loan amount assumed.

No tax is due if the corporation was dissolved before the transfer and the vehicle was transferred to a stockholder as a liquidating dividend. If that is the case, submit a copy of the tax clearance certificate.

Note: You may be required to report the transaction on your individual and/or business tax return(s) for income tax purposes whether or not any consideration is involved. If you have questions pertaining to FEDERAL GIFT TAX, contact the IRS at 1-800-829-1040.

How can I obtain proof of sales tax paid to the dealer when the vehicle was purchased?

This information can be found on the documents you received from the dealer when you purchased the vehicle. If you are unable to locate these documents, you may complete a Title Search (Form DO-22A) with the Motor Vehicle Commission. There is a $15 fee for this search which will provide you with proof of sales tax paid along with other information regarding the vehicle. You can request Form DO-22A by calling 1-609-292-6500. You can also get a copy of the form at the following link: MVCFormDO-22ah.

Last Updated: Wednesday, 12/13/17



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