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Important Notice: Alternate Highway Use Tax on a Lease or Rental Contract Sold to Another Retailer

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The information contained in this document is applicable to the alternate highway use tax due on the lease or rental of a motor vehicle subject to tax pursuant to N.C. Gen. Stat. § 105-187.5(a), where a retailer elects not to pay the highway use tax when applying for a certificate of title for a motor vehicle purchased by the retailer for lease or rental. This document serves as notice that effective January 1, 2017, N.C. Gen. Stat. § 105-187.5(a) is amended to provide “[w]hen a lease or rental contract [for a motor vehicle] is sold to another retailer, the seller of the lease or rental contract should provide to the purchaser [another retailer] of the lease or rental contract the documentation showing that the service contract and applicable sales taxes were separately stated at the time the lease or rental went into effect and the new retailer must retain the information to support an allocation for tax computed on the gross receipts subject to [the alternate] highway use tax.” The amendment to N.C. Gen. Stat. § 105-187.5(a) effective January 1, 2017, further provides “[t]he portion of a lease or rental billing or payment . . . applicable to the sales price of a service contract as defined in [N.C. Gen. Stat. §] 105-164.3 . . . must be separately stated on documentation given to the purchaser at the time the lease or rental agreement goes into effect, or on the monthly billing statement or other documentation given to the purchaser.”

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