Laws, Regulations and Annotations
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Business Taxes Law Guide—Revision 2024
California Tire Fee Annotations
- Demonstrator Vehicle Tires
- Retail Purchaser - Lift Crane Services and Rental
- Sale/Service Contract
- Short-Term Rental of Motor Vehicles and Equipment
When a motor car dealer puts a vehicle in its resale inventory to taxable use as a demonstrator vehicle, the dealer must self-report the tire fee on the new tires mounted on the vehicle and remit the fee to the Board if the dealer cannot establish that the fee on these tires has already been paid. Likewise, if the dealer mounts the spare tire on the vehicle while it is still in use as a demonstrator vehicle, the dealer must also self-report and remit to the Board the fee on the spare tire at the time it is mounted on the vehicle. However, if the spare tire is still new, i.e., it has never been mounted on a vehicle, at the time the dealer sells the demonstrator vehicle to the end user, the dealer shall collect the tire fee on the spare tire from the end user at the time of sale and remit it to the Board. In addition, if the dealer mounts new tires on a demonstrator vehicle when the dealer sells the vehicle to the end user, the dealer must collect the fee on the new tires from the end user and remit the fee to the Board. 8/22/07.
Retail Purchaser - Lift Crane Services and Rental
A general engineering company that provides lift crane services and rentals to California customers must self-report and pay the California Tire Fee to the Board on "new tires," as defined (Pub. Resources Code, §42885, subd. (g)), that are mounted on a support fleet vehicle or lift fleet crane the company purchases from an out-of-state vendor for use in California. Unless the company can show that it paid the tire fee to the vendor at the time of purchase, the provisions of Sales and Use Tax Regulation 1620, subdivision (b)(3)–(5), regarding vehicles and other property purchased for use in this state, will be applied, by analogy, to determine whether the support fleet vehicle or lift fleet crane on which the new tires were mounted was purchased for use in this state and, accordingly, whether the tire fee is due. 3/27/08; 7/3/08; 8/25/08.
Dealer A agrees to provide new tires and service to various trucking companies and customers of Dealer B. Dealer A bills Dealer B for the tires and services, and Dealer B bills his customers, including all applicable taxes. Dealer B would be considered the retail seller who is subject to the fee. 3/16/98. (M99–1).
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.