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Motor Vehicle Casual Sales Notices
Questions and Answers

What does N.A.D.A. stand for?

National Automobile Dealers Association.   

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?

Failure to respond to the notice may cause an assessment of tax due followed by collection action.

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 Casual.Sales@treas.state.nj.us.

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.  Please make sure that this information is not included in any attachments you provide.

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 at 609-984-6206 or by email at Casual.Sales@treas.state.nj.us.

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.  Please make sure that this information is not included in any attachments you provide.

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 will be issued if necessary.

Do I have to complete the Buyer’s Certification at the bottom of the Questionnaire?

Yes. When completing the Questionnaire, it is required that the Buyer’s Certification be completed.

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

If the vehicle was free and clear of any lien, check the appropriate Verification of Exemption box on the Questionnaire and have the donor complete the Seller’s Affidavit

If the vehicle was transferred with a lien, were you a co-owner on the original loan agreement or Title?

If you were a co-owner on the original loan agreement or Title, there is no tax due. Check the appropriate Verification of Exemption box on the Questionnaire and submit a copy of the original loan agreement or Title.

If you were not a co-owner on the original loan agreement or Title, tax is due on the principal loan amount assumed.

Example :   You transferred the vehicle and assumed a $5,000 loan amount that was still remaining. You must pay 7% sales tax on the $5,000. Total sales tax due = $350. You must remit the sales tax due along with a copy of the Transfer of Equity paperwork to document the loan amount you assumed.

If you have questions pertaining to GIFT TAX, contact the IRS at 1-800-829-1040. This is a federal tax.

The vehicle was a gift however the donor is now deceased. What documentation should I submit?

You should check the appropriate Verification of Exemption box on the Questionnaire. The executor(trix) should complete the 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 Verification of Exemption box and enclose a copy of the will.

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 or you may have the seller complete the Affidavit in Section III of the Questionnaire.

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 Affidavit, 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 N.A.D.A. value listed on the notice. What should I do?

You should have the seller complete the 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. Your information will be reviewed and if acceptable, a Notice of Adjustment will be sent for the additional tax due.

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 correspondence. Your information will be reviewed. However, without proper proof of the vehicle purchase price, you may be assessed sales tax based on the N.A.D.A. value.

I cannot locate the seller to have them fill out the 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 N.A.D.A. value.

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 tax due on that transfer?

As a sole proprietor you would not have to pay any additional tax on that transfer. Complete the Questionnaire and attach 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 1991 Ford Escort. This is a taxable transfer. The tax is based on the Fair Market Value of the Ford Escort, which is the same value as the boat ($5,000 x 7% = $350 sales tax due).

Example #2: A person swaps a 1990 Ford Escort for a 1991 Ford Probe. In order to obtain the 1991 Ford Probe, the taxpayer gave $1,000 cash in addition to the 1990 Ford Escort. Tax is based on the Fair Market Value of the 1990 Ford Escort and the $1,000 cash.

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

Yes, unless the corporation was dissolved prior to 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.

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 1-888-486-3339 (within New Jersey) or 1-609-292-6500 (out of State).

Last Updated: Thursday, 09/26/13



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