New Jersey – Sales Leads Provided to Automobile Dealerships are Taxable

SALT Report 1192 – The New Jersey Division of Taxation has issued an advisory explaining that a website’s charges to automobile dealerships for sales leads are subject to New Jersey sales and use tax as information services. New Jersey law defines information services as the “furnishing of information of any kind, which has been collected, compiled, or analyzed by the seller, and provided through any means or method, other than personal or individual information which is not incorporated into reports furnished to other people.”

In the example provided, a motor vehicle dealership contracts with a website that agrees to list the dealer’s inventory and make it searchable by prospective car buyers. The website agrees to collect prospective buyer information and verify the accuracy of the information. The auto dealership is then provided with the sales lead information via e-mail or fax. The information collected by the website is nonexclusive and may be provided to any or all of the participating dealerships that have the same inventory or as designated by the search criteria. The website offers its service to be invoiced either per sales lead or as a flat fee for a monthly subscription.

According to the NJDT, the list of names, addresses, phone numbers, e-mail addresses, and vehicle descriptions are sales leads and meet the definition of an information service. Since this information is collected and may be provided to all participating dealerships that have the same make and model in their inventory, this information is not “personal or individual.”

Therefore, the website’s charge for sales leads is subject to tax as an information service. The division determined that the method of billing, either per sales lead or a flat fee for monthly subscriptions, does not affect the taxable outcome.

The NJDT will enforce these provisions as of November 5, 2011.

For Further Information:

New Jersey Division of Taxation Technical Advisory Memorandum TAM-21