Motor Vehicle Casual Sales Frequently Asked Questions
What is the Sales Tax rate on a motor vehicle?
As of January 1, 2018, the rate is 6.625% on the purchase price of a new or used vehicle.
Why did I receive this notice? I already gave the information to the Motor Vehicle Commission.
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.
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.
What will happen if I do not respond to a notice?
If you do not respond to a notice, we may charge you tax based on the vehicle’s value. Vehicle values are based on data provided by the National Automobile Dealers Association (N.A.D.A.).
Why did I receive a second notice?
A second notice is sent when no response is received from the first notice. 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.
How do I check the status of the paperwork I mailed in response to the notice?
Contact the Division of Taxation Casual Sales Unit by email taxation.casualsales@treas.nj.gov.
Please Note:Emails 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 we determine additional documentation is necessary to complete a review of your account, we will mail you a follow-up notice. If the documentation is complete a closed inquiry letter may be issued upon request.
My vehicle was a gift. What do I need to do?
Complete the questionnaire and have the donor complete the Seller’s Affidavit.
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 Seller’s 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, 2018: The vehicle was transferred to you, and you assumed a loan with a $5,000 balance due. You must pay 6.625% Sales Tax on the $5,000. Total Sales Tax due = $331.25. 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 balance due.
If you have questions pertaining to federal gift tax, contact the IRS at 1-800-829-1040.
A 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 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.
A 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.
I traded goods or services for the vehicle but did not make a monetary payment. Do I owe tax?
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.
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.
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 $25,000 boat for a 2015 Honda CR-V. This is a taxable transfer. The tax is based on the Fair Market Value of the Honda, which, because of the boat’s value, is determined to be $25,000. ($25,000 x 6.625% = $1,656.25 Sales Tax due).
Example #2: A person swaps a 2014 Jeep Grand Cherokee for a 2013 Ford F-150. In order to obtain the Ford F-150, the taxpayer gave $1,000 cash in addition to the Grand Cherokee. Tax is due on the Fair Market Value of the 2014 Jeep Grand Cherokee and the $1,000 in cash.
A vehicle was in poor condition when I bought it so I paid an amount less than the National Automobile Dealers Association (N.A.D.A.) value. What should I send as proof?
You may submit copies of:
- Repair bills;
- Estimates for repairs;
- Accident reports; or
- Photographs.
Complete the Questionnaire and Purchaser’s Affidavit. You also may have the seller complete the Seller’s Affidavit confirming the purchase price.
I did not report the correct purchase price when I registered a vehicle; but, 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 a 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, the Casual Sales Unit will mail you a Notice of Adjustment.
I paid cash for a vehicle and do not have a receipt. How can I prove the purchase price?
You may attach a copy of your bank statement that shows the cash withdrawal. You may also have the seller complete the Seller’s Affidavit and return it with the completed Questionnaire and Purchaser’s Certification. 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 him or her fill out the Seller's Affidavit. What should I do?
You should enclose a copy of the cash receipt, canceled check, or money order. You should provide a detailed letter regarding the transaction, provide the seller’s 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.).
I am a sole proprietor, and I transferred a 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.
A 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 that indicates the buyout figure and the amount of tax paid by the lessee.
I transferred a vehicle from my corporation to myself. Is this taxable?
Yes, if there was any payment, barter, exchange, or service for a 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?
You can find this information 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-22) with the New Jersey 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-22 by calling (609) 292-6500, or you can print a copy of the form.
