From sales tax exemptions for disabled veterans and trade-in credits for electric vehicles to vehicle refinancing, temporary tags, dealer plates, and abandoned vehicles, New Jersey dealerships handle many complex issues in their day-to day operations. The following frequently asked questions and their answers provide a practical reference for dealers to better understand the rules and requirements governing these vehicle transactions.

Is there a sales tax exemption for disabled veterans?

Yes. If a disabled veteran receives funds from the U.S. Department of Veterans Affairs (VA) or the New Jersey Department of Military and Veterans Affairs (NJDVA) to purchase a vehicle, those funds are exempt from New Jersey sales tax.

Note that:

• If the VA/NJDVA funds (or VA/NJDVA loan) cover the entire purchase price, the vehicle is fully exempt from sales tax.
• If the funds cover only part of the purchase price, sales tax is due only on the remaining balance.

Is an electric vehicle eligible for a sales tax trade-in credit?

Yes. An electric vehicle is eligible for a sales tax trade-in credit regardless of the amount of sales tax, if any, that was paid when the electric vehicle was purchased.

How does the sales tax trade-in credit work when a customer orders a vehicle?

The customer can receive a sales tax trade-in credit if the vehicle order and trade are contemporaneously completed. The customer must trade in the vehicle when the ROF is completed for the new vehicle.

Can I use a trade-in credit on two deals?

Yes. The trade can split between as many vehicles as the customer wants to purchase. Ensure that you document the deal jackets and list the traded vehicles on both Buyer’s Orders.

Can a customer trade in a vehicle that belongs to another person?

Yes. A customer may trade in a vehicle owned by someone else. However, the dealership should obtain documentation confirming that the vehicle owner has authorized the customer to trade in the vehicle.

Is there a sales tax on vehicle refinance?

No. Refinancing a vehicle is not subject to sales tax. However, we do not recommend that dealers refinance vehicles.

Does a member of the military need to pay New Jersey sales tax if they purchase a vehicle in New Jersey?

Yes. A member of the military is considered a resident of New Jersey and will need to pay sales tax regardless of their home state of record.

How many temp tags can I issue?

A second temp tag can be issued under the following circumstances: 

1. If the original title is lost;
2. If the original title is held by a lienholder and subject to delay;
3. During the process of complex title corrections, replacement titles and/or duplicate titles; or
4. At the discretion of the Chief Administrator.

A second temp must be issued prior to the expiration of the first temp tag.

What is the process for shipping a vehicle out of the country and utilizing the sales tax exemption?

In order to utilize the sales tax exemption for exporting a vehicle out of the country, the following conditions must be satisfied:

1. Customer cannot take possession of the vehicle;
2. Dealer cannot issue a temp tag;
3. ROF must note that the vehicle is being shipped out of the country and include the destination city as well as the country;
4. Dealer should obtain a copy of the port/dock receipt identifying the vehicle, container number, and name of shop, as well as the destination; and
5. Vehicle must be transported to the port with the same proof that needs to be documented and collected by the dealer.

MVC paperwork should be title only. The customer is responsible for arranging the export, ensuring compliance with any applicable regulations. The dealer is not and should not be responsible for exporting the vehicle. All documentation should be kept in the deal jacket.

Is there a limit on what we can charge for shop supplies?

There is no limit on the amount that can be charged for shop supplies. However, the costs must be reasonable and disclosed in the estimate.

Can we use dealer plates on loaner vehicles?

No. Once a vehicle is removed from inventory, it needs to be plated.

If a vehicle is abandoned at the dealership, can the dealership tow an abandoned vehicle back to the owner’s property?

No. The dealership cannot tow the vehicle back to the owner’s property. The dealership must follow the procedures set forth by N.J.S.A. 39:4-56.6. NJMVC has an abandoned vehicle instruction packet with detailed information on this topic.

How can I make sure the correct address is on the paperwork?

Use the address on the customer’s driver’s license whenever possible. Make sure to include the apartment/unit number along with the correct street suffix (St., Rd., Ave., etc.). New Jersey licenses may have a residential and mailing address. It is okay if the paperwork and registration show different mailing addresses as long as the addresses are current. Different town names are also okay if the street address and ZIP code match.

If a business is purchasing a vehicle, the business’ EIN (corpcode) is tied to a specific address that must be used on all documentation.