N.J.A.C. 18:24-32.5 - Treatment of Leases When Property Is Relocated to or From New Jersey Before Expiration of the Lease

(a) If property purchased outside of New Jersey for a lease or rental that originated outside this State is subsequently brought into New Jersey for use in this State, tax is due on each of the subsequent lease payments attributable to the period of the agreement remaining after the first use in this State. Lessee's tax liability is reduced by credit for sales tax paid to the state where the lease began, if the tax on the full lease was due and paid to that state at the inception of the lease, with no right to a refund of that state's sales tax under that state's law.

(b) If property originally leased in New Jersey is permanently relocated to another state before the expiration of the lease, the lessee is entitled to a partial refund of the amount of sales tax paid allocable to the portion of the lease or rental that remains in effect after the property is removed from New Jersey, if the following conditions are met:

1. The state to which the property has been relocated does not provide a credit against its own sales or use tax for the tax paid on a lease that began in this State; and

2. If the state to which the property is relocated taxes leases or rentals on a lump-sum basis, it allows a corresponding partial refund when property originally leased there is subsequently relocated to New Jersey before the lease expires.