2020Directory_FNL_FlippingBook

KEY REMINDERS ON SALES AND USE TAX ISSUES

2020 MEMBERSHIP DIRECTORY & SERVICES GUIDE HOT TOPICS

Mixed-Use Vehicles: Dealers may compute use tax due on “mixed use” vehicles (i.e., loaner cars, demos used by employees) on 1% of the cost per month if the vehicle is used: • For six months or less with no mileage restriction; or • For more than six months but no more than one year; and • For less than 15,000 miles. Dealers must also remember that: • If the mileage exceeds 15,000 miles or number of months used exceeds 12 months, FULL sales tax will be assessed on the cost of the vehicle. • Demo log should be maintained reflecting dates in and out of service. • Use tax will not be due if you state on the sales invoice or other written document provided to the customer that the sale includes the use of a loaner car. • Vehicles held in inventory exclusively for resale but used for demonstration to customers are not taxable if used solely for demonstration. Sales of Motor Vehicles to Non-Residents • If the vehicle is sold to a non-resident who will register it in New York, sales tax must be collected based on the rate in effect where the sale occurs. • When in-transit permits are used, the vehicle is not subject to New York state and local sales tax. To claim the non-resident exemption, a purchaser must: • Be a non-resident of New York State. • Have no permanent place of abode in New York. • Not be engaged in business, employment or trade in New York. • Give the dealer a completed non-resident affidavit (Form DTF-820). • Dealer must indicate EXEMPT: OUT-OF-STATE PURCHASE on the MV-50. • ANY TIME a buyer resides in a county that is different from where your dealership is located, the customer must complete a DTF-820.

Purchases Subject to Use Tax Use tax is due on the cost of the following: • If an item is taken out of inventory and used by the dealership.

• If items are purchased from out-of-state and no sales tax is charged (e.g., business cards, office supplies, etc.) • If “free oil changes”are provided to customers, use tax is due on the cost of the oil and filters unless it is shown to be included as part of the sale of the car. • Purchases of furniture, machinery and equipment where sales tax is not charged.

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Information provided courtesy of Richards, Witt & Charles, LLP: 516.741.0515