Laws, Regulations and Annotations
Search
Business Taxes Law Guide—Revision 2024
Uniform Local Sales And Use Tax Law
Revenue and Taxation Code
Division 2. Other Taxes
Part 1.5. Uniform Local Sales and Use Taxes
Chapter 1. General Provisions
Section 7205.1
7205.1. Place of sale: leases of motor vehicles. (a) Notwithstanding any other provision of law, in connection with any use tax imposed pursuant to this part with respect to the lease (as described in Sections 371 and 372 of the Vehicle Code) of a new or used motor vehicle (as defined in subdivision (d) by a dealer or leasing company, the place of use for the reporting and transmittal of the use tax shall be determined as follows:
(1) If the lessor is a California new motor vehicle dealer (as defined in Section 426 of the Vehicle Code), or a leasing company, the place of use of the leased vehicle shall be deemed to be the city in which the lessor's place of business (as defined in Section 7205 and the regulations promulgated thereunder) is located.
(2) If a lessor, who is not a person described in paragraph (1), purchases the vehicle from a person as so described, the place of use of the leased vehicle shall be deemed to be the city in which the place of business (as defined in Section 7205 and the regulations promulgated thereunder) of the person from whom the lessor purchases the vehicle is located.
(3) The place of use as determined by this subdivision shall be the place of use for the duration of the lease contract, notwithstanding the fact that the lessor may sell the vehicle and assign the lease contract to a third party.
(b) Except as described in subdivision (a), this section shall not apply if the dealer or leasing company entering into the lease agreement is located outside of California.
(c) (1) The provisions of this section that are applicable to a California new motor vehicle dealer shall apply to lease transactions entered into on or after January 1, 1996.
(2) The provisions of this section, applicable to a leasing company, shall apply to lease transactions entered into on or after January 1, 1999.
(d) As used in this section, the following definitions shall apply:
(1) "City" means a city, city and county, or county.
(2) "Motor vehicle" means any self-propelled passenger vehicle (other than a house car) or pickup truck rated less than one ton.
(3) "Leasing company" means a motor vehicle dealer (as defined in Section 285 of the Vehicle Code), that complies with all of the following:
(A) The dealer originates lease contracts, described in subdivision (a), that are continuing sales and purchases.
(B) The dealer does not sell or assign those lease contracts that it originates in accordance with subparagraph (A).
(C) (i) The dealer has annual motor vehicle lease receipts of fifteen million dollars ($15,000,000) or more per location.
(ii) For purposes of this subparagraph, only those periodic payments required by the lease shall be considered in determining whether a lessor has annual receipts of fifteen million dollars ($15,000,000) or more. Amounts received by lessors attributable to capitalized cost reductions or amounts paid by a lessee upon his or her exercising an option shall not be considered in determining whether a lessor has annual lease receipts of fifteen million dollars ($15,000,000) or more.
(e) If the lessor is not a dealer described in paragraph (1) of subdivision (a), or a person who is described in paragraph (2) of subdivision (a) as purchasing from a dealer, the use tax shall be reported to and distributed through the countywide pool of the county in which the lessee resides.
History—Added by Stats. 1995, Ch. 676, in effect January 1, 1996. Stats. 1998, Ch. 140, in effect January 1, 1999, deleted comma after "415 of the Vehicle Code)", and added "by a dealer or leasing company" in subdivision (a); added "California" after "lessor is a", and added "or a leasing company" after "Code)" in paragraph (1) of subdivision (a); created new paragraph (2) with the former second sentence of paragraph (1) and substituted "paragraph (1) … so described," for this paragraph, purchases the vehicle from a dealer (as defined in Section 285 of the Vehicle Code)," after "described in", and substituted "person" for "dealer" after "thereunder) is" in subdivision (a); created new paragraph (3) with the former third sentence of paragraph (1) and substituted "subdivision" for "paragraph" after "by this" in subdivision (a); deleted former paragraph (2) of subdivision (a) which provided, "If the lessor is not a person described in paragraph (1) and purchases the vehicle leased from a source other than as described in paragraph (1), the use tax shall be reported to and distributed through the countywide pool of the county in which the lessee resides."; created new paragraph (1) in subdivision (d) beginning with "City" and substituted "following definitions shall apply:" for "word ‘city’ " after "section, the" therein; added subparagraph (2) to subdivision (d); and added subdivision (e). Stats. 2002, Ch. 775, (SB 2092), in effect January 1, 2003, substituted "as defined in subdivision (d)" for "(as defined in Section 415 of the Vehicle Code)" in subdivision (a); added new paragraph (2) to subdivision (d), and renumbered former paragraph (2) as (3) therein.