Section 14 of 20

DMV Dealer Continuing Education

Sales and Use Tax

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“Sellers Permit” and the California Department of Tax and Fee Administration

Effective July 1, 2018, the Board of Equalization (BOE) has become the California Department of Tax and Fee Administration (CDTFA)

All Dealers and Auto Brokers must obtain a “Seller’s Permit” from the Department of Tax and Fee Administration before you can collect use tax and file your State returns.

There is no fee to obtain the Permit and you can apply online or at a nearby CDTFA office.

Collection of Taxes

You must collect Sales or Use Tax whenever you sell a vehicle and remit this to the CDTFA.

How to compute tax

The Tax rate is based on the county and city where the vehicle will be primarily located and registered.

  • For most Buyers, this would be their home address
  • For commercial Buyers, this may the address of their business.

It is good practice to use the Buyer’s Registration address for tax rate calculations.


What is taxable and non-taxable?

Taxable portions of the Conditional Sales Contract include:

  • The selling price of the vehicle
  • Accessories installed, not included in vehicle price (parts and labor)
  • The labor portion of the Smog Fee
  • Document Preparation Service Fee

Non-taxable items of the Conditional Sales Contract include:

  • DMV fees (license & registration)
  • California State Smog Certificate fee

Tax Exempt Sales

Out-of-State Deliveries

Sales to Out-of-State Purchasers are generally exempt from DMV fees and Sales Tax provided there is proof the delivery did occur outside of California.

You must arrange the transportation and keep documentation (a shipping invoice, tow bill, bill of lading, etc.) to prove the vehicle left California.

Dealers should hire a commercial transporter and obtain a Bill of Lading that confirms the delivery to the out-of-state address. Otherwise, have an out-of-state Notary complete a BT-448 form during the delivery.

Other Tax-Exempt Sales

  • Sales of Mobile Homes or Commercial Coaches
  • Sales to other Licensed Dealers when they are purchasing for the purpose of resale

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