SALT Report 1833 – The New Jersey Division of Taxation issued guidance regarding a Taxpayer’s purchases of brake cleaning kits, fuel injection kits, throttle body kits, and power steering kits. The kits include various fluids that are used to clean or flush vehicles. The Taxpayer notes that when the fluids are used in the shop and charged to a customer they are separately listed and taxed on the invoice that the Taxpayer provides to its consumers. The Taxpayer wanted to know if purchases of these items qualified as a sale for resale.
New Jersey law, N.J.S.A. 54:32B-1 provides that purchases of supplies for use by a dealership or repair shop that will not become a part of the vehicle are subject to sales tax. Further, there are no provisions in the regulation that allow a repair shop to use a resale certificate to purchase supplies to be used or consumed during the provision of a service.
Therefore, kits used to clean or flush various areas of a vehicle are considered supplies consumed and used by the dealership or repair shop. Consequently, this type of kit does not qualify for the resale exemption and are taxable when purchased by the dealership or repair shop. Further, the fact that these supplies are separately stated on the invoice provided to the customer does not make them non-taxable when purchased by the dealership or repair shop.
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