Motor vehicle dealers must pay limited sales and use tax when purchasing marketing and advertising materials and promotional items, and when paying for items or services used in the operation of their business. Motor vehicle dealers cannot issue a resale certificate when purchasing these items or services.
A motor vehicle dealer that holds a sales and use tax permit can issue a resale certificate (PDF) instead of paying sales or use tax when purchasing parts that will be resold as part of a motor vehicle.
Sales tax is due when a motor vehicle dealer purchases the following:
Sales tax is due on items that a motor vehicle dealer uses to promote their business, including
Sales tax must be paid at the time of purchase for the promotional items. A motor vehicle dealer that holds a sales and use tax permit cannot buy promotional items for resale.
When a motor vehicle dealer provides free maintenance or other services after they sell a vehicle, the motor vehicle dealer owes sales tax on the parts and materials they used to provide those services. For example, if a motor vehicle dealer gives away an oil-change service, the oil, filter, and lubricants are promotional items, and are not resold. The motor vehicle dealer owes sales tax on the parts and materials used for the promotion at the time of purchase.
A motor vehicle dealer that removes parts and materials from their tax-free inventory for use in a promotion must pay use tax on the parts and materials.
A motor vehicle dealer must pay sales tax when purchasing office supplies and equipment they use to operate their business, such as paper, printer toner, ink and labels.
Other taxable business expenses include certain taxable services, such as the following