• 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.

    When a Dealer sells a vehicle that will be registered in another state, the Dealer must:

    1. Complete a Report of Sale, REG 51 and mark it “For registration in another state”
    2. Complete a Statement of Facts, REG 256 explaining how the vehicle was moved
    3. Mail the DMV copy of the REG 51 and REG 256 to:

    Department of Motor Vehicles
    Incoming Mail MS A235
    PO Box 944292
    Sacramento, CA 94244-2920

    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

    Valuable Reference Links