![]() ![]() However, used car dealers will still file a sales and use tax return with CDTFA using schedule CDTFA-531-MV – also note that California imposed a monthly filing frequency for all used vehicle dealers as of January 1, 2021. ![]() Effective January 1, 2023, all used car dealers will pay their sales tax to the DMV. California’s New Sales Tax Reporting for Used Car Dealers and AuctioneersĬalifornia is currently in the process of transitioning its sales tax reporting and payment process for used vehicles from the CDTFA to the Department of Motor Vehicles (DMV). Car dealers should be mindful of the requirements for reimbursement of sales tax when passing the cost of sales tax to the customer (e.g., itemizing the sales tax portion on the bill or other proof of sale). For example, the following vehicle sales are taxable:Īs part of this obligation, you will likely need a seller’s permit from the California Department of Tax and Fee Administration (CDTFA) to report and pay the sales tax. The Different Tax Treatments for Your Dealership’s Vehicle SalesĬar dealerships generally must collect and pay sales tax (i.e., applicable state and district rates) when selling a vehicle to a customer for their personal or business use. Our guide addresses the sales tax consequence for common car dealership transactions in addition to some of the sales tax exemptions that may improve the bottom line of your next sales tax return. Your motor vehicle dealership can benefit from a detailed review of California’s sales tax rules and best practices to lower the future risk of audit, minimize sales tax exposure, and avoid penalties or even criminal liability. Administrative Appeal of Your Sales Tax AssessmentĬar dealerships can be a frequent target for California sales tax audits because of their large transaction values and complex rules that affect the business’s sales and use tax liability. ![]()
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