Specialty Repairs or Services for Auto Repair Garages Español

Smog Checks and Certification

The smog check fee and the smog certificate fee are both nontaxable charges. The certificate fee amount is regulated by the Department of Consumer Affairs. Certificate fees must be separately stated on your invoices.

You cannot perform smog checks unless all of the following are met:

• You are a licensed smog check station
• You or one of your employees is a licensed smog inspector, and
• You have a licensed smog mechanic on your premises, unless you are a "test only" facility.

Note for DMV licensed vehicle dealers: If you perform a smog check on a vehicle you plan to sell, the charge is taxable.

Licenses are issued by the Bureau of Automotive Repair. For more information, contact the Bureau of Automotive Repair

Insurance Work

The taxable amount of an insurance bid will be equal to the estimated parts cost of the bid. You should keep all bids with your records to support the cost of the parts.

If the actual price is less than the bid, you owe the full tax on the amount on the bid price. If the actual price is more than the bid, you owe full tax on the actual cost. The tax liability is based upon the bid estimate unless both of the following apply:

• You inform the insurance company or customer by providing an amended invoice or other written notification.
• The estimated sales price on the bid is less than your cost for the parts.

Auto Painting and Body Work

Parts and materials that remain on the vehicle are taxable to the customer while supplies and tools are taxable to you.

Parts and materials that remain on the vehicle being repaired are considered items for resale. Materials remaining on the vehicle include such things as putty, primer, paint, sealer, acrylic lacquer, and fisheye eliminator. You may purchase these items with a resale certificate and your charges to your customer will be taxable.

Supplies and tools that do not remain on the vehicle being repaired are taxable when you purchase them for use. This includes sandpaper, steel wool, masking tape, paint thinner, bodywork tools, etc. You may not use a resale certificate to purchase these items. For information on charging for supplies see the Invoicing Your Customer section on the Industry Topics section.

Labor charges for painting new parts prior to installation are considered fabrication labor and are taxable. Labor charges for painting used parts or a new part after installing it on a used vehicle are considered repair labor and these charges are not taxable. If however, you charge a separate charge for the paint for the used or installed part, the paint charge by itself would be taxable.

Auto Glass Replacement

When installing auto glass, the charge for the glass is taxable. The installation labor is not taxable unless you are installing custom glass on a new vehicle.

Work to cut and grind glass to size, charges for measuring, cutting, and grinding are fabrication labor and are taxable.

Lead-Acid Battery Fees and Refundable Deposits

California Battery Fee

Retail sales of "new" replacement lead-acid batteries are subject to the California battery fee. A replacement lead-acid battery is a new lead-acid battery sold at retail in California which replaces the original battery that came with the vehicle, watercraft, aircraft, or equipment. Replacement lead-acid batteries do not include spent, discarded, refurbished, reconditioned, rebuilt, or reused lead-acid batteries. As the retailer, you must collect the $1.00 California battery fee from your customer at the time of purchase. You must also register for a California battery fee account, file, and pay the fees collected to us, even if you have a seller's permit or certificate of registration – use tax account. The California battery fee is imposed on the consumer and is not subject to sales or use tax.

You may retain 1.5 percent of the fee collected as reimbursement for any costs associated with the collection of the fee. The remainder of the fee shall be paid to CDTFA when the fee is due.

Please refer to our Tax and Fee Rates page for current rates.

Manufacturer Battery Fee

California manufacturers or importers of lead-acid batteries must pay a $1.00 manufacturer battery fee on the sale of the battery. A retailer who purchases and imports lead-acid batteries from a manufacturer who is not subject to the jurisdiction of California, is considered an importer and must pay the manufacturer battery fee. If you are making the first sale of lead-acid batteries inside California, you are responsible for both the California battery fee and manufacturer battery fee. You must register, file, and pay both fees to CDTFA. Effective January 1, 2020, importers who are responsible for the manufacturer battery fee may agree, in writing that the manufacturer not subject to California jurisdiction will pay the manufacturer battery fee on behalf of the importer.

Please refer to our Tax and Fee Rates page for current rates.

For more information regarding collecting and reporting the lead-acid battery fees, please see the Dealers/Retailers section on the Lead-Acid Battery Fees Guide.

Lead-Acid Battery Refundable Deposit

You must charge a refundable deposit (amount not specified) each time a consumer purchases a new lead-acid battery, regardless if the consumer gives you a used lead-acid battery at the same time. You must refund the deposit if a used lead-acid battery of the same type and size is returned within 45 days from the date of the sale of the new lead-acid battery (HSC section 25215.2). The fee and deposit must be separately stated on the customer's invoice. The refundable deposit is only charged on "new" lead-acid batteries and does not apply to refurbished or reconditioned batteries.

This refundable deposit is subject to sales tax, and the sales tax is not refunded when the deposit is refunded. The deposit is viewed as a trade-in allowance and is considered part of the payment for the sale.

Tire Sales and Recapping

Sales of new and used tires, including recapped or retreaded tires, are taxable. Tax is due on the selling price less any discounts allowed before you deduct any trade-in allowances.

Sellers of new tires must register for and pay the California Tire Fee. See the Getting Started section to register for this account, a license is required.

The fee of $1.75 per tire is not taxable. If a higher amount is charged, you owe tax on the excess charge.

When recapping tires, if you return the original tire to the customer, 75% of the charge is taxable. If you return a similar tire, not the original, the entire charge is taxable.

For more information about recapping, please see Regulation 1548, Retreading and Recapping Tires.

Spray-on Bed Liners

Charges to install a spray-on bedliner are taxable depending on whether the vehicle is new or used and how you charge for the materials.

If you are installing a spray-on bedliner on a new pickup truck, then the entire charge to perform the service is taxable. This charge includes the labor charge as well as the material charge. You may issue a resale certificate to your suppliers for the purchase of the materials you apply to the beds of new pickup trucks. You must also pay tax to your suppliers for purchases of tools used to install the spray-on bedliner.

If you are installing a spray-on bedliner on the bed of a used pickup truck, the labor you charge to install the spray-on the bedliner is nontaxable repair labor. If the retail value of the materials is 10 percent or less of the total charge, you are regarded as the consumer of the materials and the charge to the customer is not taxable. In this case, you must pay sales or use tax to your suppliers or report use tax on the purchase of materials you used to install spray-on bedliners to the beds of used pickup trucks. However, if you make a separate charge for materials you apply to the bed of a used pickup truck when you install a spray-on bedliner, there is a sale of the materials and the charge to the customer is taxable. In this case, you may issue a resale certificate to your suppliers for the purchase of the materials you apply to the beds of used pickup trucks.

Wrapping Vehicles

Charges to install vehicle wrapping are taxable depending on whether the vehicle is new or used and how you charge for the materials.

If you are installing vehicle wrapping on a new vehicle, then the entire charge to perform the service is taxable. This charge includes the labor charge as well as the material charge. You may issue a resale certificate to your suppliers for the purchase of the vehicle wrapping you apply to new vehicles.

If you are installing vehicle wrapping on a used vehicle, the labor you charge to install the vehicle wrapping is nontaxable repair labor. If the retail value of the materials is 10 percent or less of the total charge, you are regarded as the consumer of the materials and the charge to the customer is not taxable. In this case, you must pay sales or use tax to your suppliers or report use tax on the purchase of materials you used to install vehicle wrapping to used vehicles. However, if you make a separate charge for materials you apply to the used vehicle when you install vehicle wrapping, there is a sale of the materials and the charge to the customer is taxable. In this case, you may issue a resale certificate to your suppliers for the purchase of the materials you apply to used vehicles.

Warranty Work

Whether tax applies to parts for warranties depends on whether the warranty is mandatory or optional at the time the vehicle is purchased and whether the customer pays a deductible. The tables below demonstrate when tax applies to warranty repair charges.

¹ None of the warranty types described in this table include a provision requiring the customer to pay an amount for tax on the portion of the deductible related to the sale of parts. For more information and calculation examples, see publication 25, Auto Repair Garages and Service Stations.

To calculate the taxable portion of the deductible, use this formula:

(Charges for parts ÷ total charges) × deductible = taxable portion of deductible