Qualified Automobile Demonstration Use Law and Legal Definition

Qualified automobile demonstration use means the use of an automobile that is currently in the inventory of the dealership and that is available for test drives by customers during normal business hours of an employer in which a salesperson has no personal possessions stored. Such automobile must be driven within the dealer’s sales area and it should not be used by individuals other than the full-time salesperson such as family members and for personal trips. Vehicles that are used by full-time salespersons for qualified automobile demonstration use will not be subjected to sales tax or use tax.

According to 26 USCS § 132 (j)(3)(B), the term "qualified automobile demonstration use" means any use of an automobile by a full-time automobile salesman in the sales area in which the automobile dealer's sales office is located if:

(i) such use is provided primarily to facilitate the salesman's performance of services for the employer; and

(ii) there are substantial restrictions on the personal use of such automobile by such salesman.