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Business Taxes Law Guide—Revision 2024
California Tire Fee Annotations
Short-Term Rental of Motor Vehicles and Equipment
On and after October 1, 2009, a rental car company is not a "retail seller," for purposes of the California Tire Fee and Public Resources Code section 42885, subdivisions (b)(2) and (3), with respect to the rental of motor vehicles (as opposed to the sale of used motor vehicles when they are removed from the rental fleet), when the motor vehicle is rented or leased for a period of four months or less. A lease for a period of time exceeding four months constitutes a "sale." Therefore, the lessor of "new tires" mounted on a motor vehicle, construction equipment, or farm equipment (or motorized equipment that is determined to be a motor vehicle or construction or farm equipment) that is leased for more than four months is a "retail seller" who must register with the Board as a "retail seller" and collect the California Tire Fee from the lessee as part of the lease cost and remit it to the Board. 5/28/09.
On or after October 1, 2009, short-term rental car companies that rent motor vehicles for periods of four months or less, including motor vehicle dealers that rent vehicles to customers for periods of four months or less, are, for purposes of section 42885 of the California tire fee law, "purchasers" of the "new tires" that are mounted on, or included as a spare with, the motor vehicles they purchase. As "purchasers," short-term rental car companies are liable for the California Tire Fee on those tires, as set forth in PRC section 42885, subdivision (b)(1). If the short-term rental car company does not pay the tire fee to the seller from whom it purchases the vehicles and tires, then the short-term rental car company must, as a purchaser of "new tires," self-report and pay the applicable tire fee to the Board. 5/28/09.
On or after October 1, 2009, construction and farm equipment dealers (and dealers of motorized equipment that is determined to be a motor vehicle or construction or farm equipment) who rent or lease their equipment for periods of four months or less, are, for purposes of section 42885 of the California tire fee law, "purchasers" of the "new tires" that are mounted on the equipment they purchase or remove from inventory for rental (and any spares that come with the equipment). As "purchasers," such equipment dealers are liable for the tire fee on those tires, as set forth in PRC section 42885, subdivision (b)(1). If the equipment dealer does not pay the tire fee to the seller from whom it purchases the equipment, then the equipment dealer must, as a purchaser of "new tires," self-report and pay the applicable tire fee to the Board. 5/28/09.
A vendor of motor vehicles or equipment (e.g., a manufacturer or dealer) may not know, at the time it sells to a motor vehicle or equipment dealer or a short-term rental car company, where the motor vehicle or equipment will end up (e.g., in the dealer's inventory for retail sale, in a lease of more than four months, in the dealer's short-term rental fleet, in the short-term rental car company's short-term rental fleet, or assigned to a company employee). Therefore, if, on and after October 1, 2009, a vendor timely takes a valid sales tax resale certificate in good faith from the motor vehicle or equipment dealer or short-term rental car company, the vendor is relieved from liability for collecting and remitting the tire fee on those tires to the Board. A dealer or short-term rental car company that does not pay the tire fee to its vendor when purchasing equipment or a vehicle that it subsequently uses itself (e.g., for short-term rental) must self-report and pay the tire fee to the Board. 5/28/09.