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Business Taxes Law Guide—Revision 2024
Sales And Use Tax Law
Revenue and Taxation Code
Division 2. Other Taxes
Part 1. Sales and Use Taxes
Chapter 3.5. Vehicles, Vessels, and Aircraft *
Article 3. Auxiliary Collection Provisions
Section 6295
6295. Used motor vehicle dealers; Department of Motor Vehicles. (a) (1) When a motor vehicle required to be registered under the Vehicle Code, except for a recreational vehicle that is either truck-mounted, permanently towable on the highways without a permit or a park trailer, as these terms are used in Section 18010 of the Health and Safety Code, is sold at retail by a dealer holding a license issued pursuant to Chapter 4 (commencing with Section 11700) of Division 5 of the Vehicle Code, the dealer shall pay the applicable sales tax and any applicable use tax due under the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2) to the Department of Motor Vehicles acting for and on behalf of the California Department of Tax and Fee Administration pursuant to Sections 4456 and 4750.6 of the Vehicle Code.
(2) The amendments to this subdivision made by the act adding this paragraph do not constitute a change in, but are declaratory of, existing law.
(b) If the dealer makes an application to the Department of Motor Vehicles that is not timely, and is subject to penalty because of delinquency in effecting registration or transfer of registration of the vehicle, the dealer shall also be liable for penalty as specified in Section 6591, but no interest shall accrue.
(c) Application to the Department of Motor Vehicles by the dealer shall not relieve the dealer of the obligation to file a return with the California Department of Tax and Fee Administration under Section 6452. The dealer shall file a return as specified in Section 6453.
(d) (1) If the dealer fails to make an application to the Department of Motor Vehicles, fails to pay the amount of sales or use tax due, or fails to timely file a return with the California Department of Tax and Fee Administration under Section 6452, interest and penalties shall apply with respect to the unpaid amount as provided in Chapter 5 (commencing with Section 6451).
(2) The amendments to this section made by the act adding this subdivision do not constitute a change in, but are declaratory of, existing law.
(e) For purposes of this section, the following shall apply:
(1) "Dealer" shall not include a franchisee as defined in Section 331.1 of the Vehicle Code, a franchisee of a recreational vehicle franchise as defined in Section 331.3, a manufacturer or remanufacturer holding a license issued pursuant to Chapter 4 (commencing with Section 11700) of Division 5 of the Vehicle Code, an automobile dismantler holding a license and certificate issued pursuant to Chapter 3 (commencing with Section 11500) of Division 5 of the Vehicle Code, or a lessor-retailer holding a license issued pursuant to Chapter 3.5 (commencing with Section 11600) of Division 5 of the Vehicle Code, and subject to the provisions of Section 11615.5 of the Vehicle Code.
(2) "Newly licensed dealer" means a dealer who was originally licensed by the Department of Motor Vehicles on or after January 1, 2019.
(f) The Department of Motor Vehicles shall, through the adoption of regulations, establish any additional requirements for the implementation of this section.
(g) (1) Subject to paragraph (2), this section shall apply to sales of vehicles occurring on and after January 1, 2021.
(2) Based upon operational needs to effectively enforce the collection of taxes pursuant to this section, the Department of Motor Vehicles may establish the following compliance schedule for this section:
(A) Newly licensed dealers, dealers whose seller’s permit was reinstated within the last two years, and dealers with a previous finding of underreporting within the last two years shall comply beginning January 1, 2021.
(B) Except as provided in paragraph (3), all other dealers shall comply by January 1, 2023.
(3) Based upon operational needs to effectively enforce the collection of taxes pursuant to this section, the California Department of Tax and Fee Administration, in consultation with the Department of Motor Vehicles, may delay the compliance schedule set forth in subparagraph (B) of paragraph (2) to no later than January 1, 2026, for dealers that made more than 300 retail vehicle sales in the previous calendar year and are not subject to the compliance schedule set forth in subparagraph (A) of paragraph (2).
History—Added by Stats. 2020, Ch. 8 (AB 85), in effect June 29, 2020, but operative January 1, 2021. Amended by stats. 2020, Ch. 14 (AB 82), in effect June 29, 2020, redesigned subdivision (f) with (g) and added "The Department of Motor Vehicles shall, through the adoption of regulations, establish any additional requirements for the implementation of this section" to new subdivision (f). Amended by stats. 2021, Ch. 256, Sec. 11. (AB 176) in effect September 23, 2021, relettered former subdivisions letters (a), (d), (e), and (g) to (a)(1), (d)(1), (e)(1), and (g)(1) respectively. Added paragraphs (a)(2), (d)(2), (e)(2), (g)(2)(A) and (g)(2)(B). Added "motor" before "vehicle" and excludes a recreational vehicle as defined in Section of the 18010 of the Health and Safety Code; replaced "any" with "a" and added a dealer shall pay "any applicable use tax due under the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2)" in subdivision (a). Added "or use" after "sales" in subdivision (d). In subdivision (e), replaced "dealer" with "the following shall apply," "new motor vehicle dealer" with "franchisee," "by" with "in," and Section "426" with "331.1 of the Vehicle Code, a franchisee of a recreational vehicle franchise as defined in Section 331.3" and "of the Vehicle Code" was added after each division and section referenced with the paragraph. Replaced "this" with "(1) Subject to paragraph (2), this" in the first sentence of subdivision (g). Amended by stats. 2022, Ch. 474 (SB 1496), in effect January 1, 2022, added "Except as provided in paragraph (3)," before "all other dealers" in paragraph (2)(B) of subdivision (g); and added paragraph (g)(2)(B)(3).