Nebraska Rules on Guaranteed Asset Protection Waiver Contracts

Thursday, March 10th, 2016

 
 
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The Nebraska Department of Revenue has ruled on the taxability of Guaranteed Asset Protection ("GAP") waiver contracts for motor vehicles.

A GAP waiver contract is an agreement in which a creditor agrees to cancel or waive all or part of a borrower's debt on a finance agreement for a motor vehicle if the vehicle is totaled or stolen.

A motor vehicle seller may sell GAP waiver contracts to buyers along with a motor vehicle. The contract is then part of the sales price of the motor vehicle and is subject to sales and use tax. The buyer of the motor vehicle is the borrower and the seller is the creditor in this scenario.

http://www.revenue.nebraska.gov/legal/rulings/rr011601_GAP_waiver.html


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