# California Sales Tax and Vehicle License Fee



## podge8 (Mar 18, 2002)

We have our ED on July 6, and leave for Munich on July 2, so we are currently scheduled to sign the loan papers at the dealer on June 28. Does California require that both sales tax and vehicle license fees be collected at that time? The reason I ask is that because of the current budget fiasco, there is still no budget from Sacramento. A 1% sales tax increase and an increase in the vehicle fees are scheduled to expire on July 1 (and it looks like there won't be the votes in the legislature to extend them after that date). I'd love to sign the papers on July 1 and save over $400+, but we leave the next day and $400 is worth it to us not to have our CA calling on our way to the airport that BMW FS rejected the loan for some reason and we have to go back and redo it. 

As for the VLF, the DMV isn't even sending out registration renewal notices for after July 1 because no one knows what the fees will be! I know that the dealer shouldn't send the registration papers to the DMV until I take redelivery here, but are they required to take payment now? Could we pay for it as a separate transaction when the registration papers are filed later? 

So is it possible to pay for the car, minus sales tax and VLF, and pay those when the car arrives sometime in September? Or if tax and VLF are required to be paid when the loan is signed, we are going on numbers that will probably be lower after July 1. Could we claim a refund from the dealer for the difference? What are our options here? Or do we just have to suck it up and pay the higher tax and fees? (Is this question better posted in the Ask-a-Dealer forum?)


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## jsciv (Oct 5, 2010)

I paid all of my fees here in SoCal at the time I finalized the financing in February for my March ED. There was nothing due when I picked up the car for redelivery, or for that matter any time after the Feb. date.


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## chrischeung (Sep 1, 2002)

Pay the fee now. Refund later if there is a difference.


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## pharding (Mar 14, 2004)

One pays the fees and taxes when you sign the finance agreement. I would sign the papers on July 1. The lease starts rolling when you sign it. The later the better for you. I signed my lease the day before we left for Europe.


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## interpolator (Jul 10, 2007)

My California experiences with ED have been different. In fact my car is scheduled for redelivery at the dealer on June 28 and my pickup will be deferred until after June 30. The application of the California sales tax in my case has been as follows. Lease- sales tax collected with the monthly payments. Cash purchase - sales tax collected upon redelivery of the car at the delaership. Financed purchase - sales tax collected on the day when you execute the contract and financing papers prior to ED. Cal DMV license fee - in all cases paid upon pick up of the car from the dealership upon redelivery. As a side bar; it appears as most California dealerships have no clue at this point on what they are to do on July 1 as they have received no directions from either the DMV or SBE regarding the handling of new car sales as no one knows what the law is going to be.


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## dkreidel (Aug 24, 2005)

On ED purchases in CA I always pay the sales tax and DMV registration fees upon re-delivery at the CA dealership. Why would I pay CA registration when the car is in Germany or on the water? Ditto on sales tax.

I haven't leased a car in CA so I don't know how that works.

dk


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## jsciv (Oct 5, 2010)

dkreidel said:


> On ED purchases in CA I always pay the sales tax and DMV registration fees upon re-delivery at the CA dealership. Why would I pay CA registration when the car is in Germany or on the water? Ditto on sales tax.


I don't buy cars often enough to know which I "should" do, but I guess I would look at that from the other side: why would I want to have to worry about paying more on redelivery when I can take care of everything at once? 

But I guess the answer to the OP's question is that it IS possible do do!


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## podge8 (Mar 18, 2002)

Thanks for the input everyone! I'm still a little confused as to what is required by law. The CA Board of Equalization website says that sales tax should be paid when the car is registered, which tells me that the dealer is not required to collect the taxes on an ED when the loan is signed (we are financing).

jsciv, as you said, it would be nice to take care of everything at the same time and roll the TTL into the loan. But it would be nice to save $800!

drkeidel, when you did this in the past, you paid for just the price of the car before you left for Germany, and then the dealer collected sales tax and registration upon redelivery? Was it a loan or did you pay cash?


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## pharding (Mar 14, 2004)

Your dealer should know. Ask them to register prior to the July 1 deadline.


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## chrischeung (Sep 1, 2002)

I'm not sure the dealer can legally do that without the MSO.


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## pharding (Mar 14, 2004)

chrischeung said:


> I'm not sure the dealer can legally do that without the MSO.


What is an MSO?


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## dkreidel (Aug 24, 2005)

podge8 said:


> dkreidel, when you did this in the past, you paid for just the price of the car before you left for Germany, and then the dealer collected sales tax and registration upon redelivery? Was it a loan or did you pay cash?


I've done it both ways: loan and cash. In both cases I paid the sales tax and CA registration in cash when the car was re-delivered to me at the dealer. If you want to pack the reg and sales tax in the loan then you will need to arrange this at the contract signing pre-Welt delivery.

A month driving in Europe plus at least 2 months enroute means you are paying the registration, tax and any interest on those items for 3 months with no tangible benefit.

MSO: Manufacturers Statement of Origin


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## beewang (Dec 18, 2001)

pharding said:


> What is an MSO?


Its your car's "Birth Certificate" Without it, you CANNOT register a car in US as you can't proof the ownership of the said vehicle.

http://en.wikipedia.org/wiki/Manufacturer’s_Certificate_of_Origin


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## beewang (Dec 18, 2001)

jsciv said:


> I don't buy cars often enough to know which I "should" do, but I guess I would look at that from the other side: why would I want to have to worry about paying more on redelivery when I can take care of everything at once?


Because:

1) You lose the use (or float) of the taxes (appx. 10% in CA) paid. For the 2~3 months before your car is re-delivered in CA.

2) You lose the 2~3 months in Paid "tag" fee and that is appx. $213( $850/12 months X3 mos)

A better question is why WOULD YOU WANT TO PAY the state fees 2~3 months ahead of when you really need to.:dunno:


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## jsciv (Oct 5, 2010)

beewang said:


> Because:
> 
> 1) You lose the use (or float) of the taxes (appx. 10% in CA) paid. For the 2~3 months before your car is re-delivered in CA.
> 
> 2) You lose the 2~3 months in Paid "tag" fee and that is appx. $213( $850/12 months X3 mos)


Well, on #1 I guess I did, but since the total amount of interest I'm paying on the car for the entire life of the loan is $937 thanks to that 0.9% deal, I won't cry too much about it: I'll just keep it in mind for next time.

As far as #2, I don't believe that is correct. The car was redelivered in May and the license expiry on my tags is also May (not February when I finalized or March when I did the ED), so I don't believe that you're correct there. It looks like the dealer just held the fee until redelivery but I didn't lose any time.


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## SD ///M4 (Jan 24, 2011)

podge8 said:


> Thanks for the input everyone! I'm still a little confused as to what is required by law. The CA Board of Equalization website says that sales tax should be paid when the car is registered, which tells me that the dealer is not required to collect the taxes on an ED when the loan is signed (we are financing).
> 
> jsciv, as you said, it would be nice to take care of everything at the same time and roll the TTL into the loan. But it would be nice to save $800!
> 
> drkeidel, when you did this in the past, you paid for just the price of the car before you left for Germany, and then the dealer collected sales tax and registration upon redelivery? Was it a loan or did you pay cash?


I posted this in the Ask A Dealer forum where you also posed the question, but I contacted the Finance person at my dealership today. She said that the car has not yet been recorded as being sold and won't be until it arrives there sometime next month. I asked if it would be possible to refund the tax and registration fee to us and we would repay it when we take redelivery. She understood where I was coming from and didn't seem put off. Our CA isn't in today, but she is going to talk to our CA and the Sales Manager tomorrow and let me know. I would save $520.55 on the tax and if the registration drops by 40% that would be an additional $277 for a total of $798!

The way I'm going to suggest it is they cut us a check for the amount we already paid and we hold the check until redelivery. If things actually change on July 1 up to and including our redelivery date, we cash the check and then pay them the new tax and registration fee. If things don't change, we just give them back the check and they just void the check.


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## podge8 (Mar 18, 2002)

We got back from the dealer and signed all the loan papers. We did have to pay the higher rates, because they said that BMW FS requires that TTL be collected at the time of purchase. Since California does not require sales tax to be paid until the car is registered, we will receive a refund from the dealer on the overpaid amounts when the car is redelivered to us. There is still no budget signed, so no official word on the lower rates, but we do expect to get refunded both on the tax and VLF. I hope. We could have signed on Friday, July 1, but we leave the next day, and the peace of mind is worth it to us not having to worry about mistakes and the loan coming back for some problem. It was very confusing for all involved since the rates for TTL rarely change, and being and ED threw another wrench into it, but it's all done, and we'll worry about it when we take redelivery. Thanks for all your advice, everyone!

Tom, any word from your CA on what they are going to do for you?


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## speedjunkie (Aug 26, 2004)

I'm kind of in the same boat as the OP. ED pick-up on 7/9 and I was planning on signing the purchase docs tomorrow, 6/30, until I found out about the vehicle license fee drop. I'm leasing, so the sales tax issue is not really a big deal, but I definitely don't mind saving a few hundred bucks on the VLF (vehicle license fee).

The only thing is that I locked the lease rates on my car (E93 M3) a while back and I think my rate lock expires the end of this month. Not sure if it expires exactly at the end of this month or on the 2nd or 3rd (thereabouts) of the following month when the new lease rates are published. My CA is double checking this, but anybody here know???

I did find this link on the CA DMV website: http://dmv.ca.gov/FeeCalculatorWeb/index.jsp

Funny thing is that the Vehicle License fee is the same whether I input 6/30 or 7/1 as the purchase date and that the current registration fee actually INCREASED by $6. :dunno:


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## SD ///M4 (Jan 24, 2011)

podge8 said:


> We got back from the dealer and signed all the loan papers. We did have to pay the higher rates, because they said that BMW FS requires that TTL be collected at the time of purchase. Since California does not require sales tax to be paid until the car is registered, we will receive a refund from the dealer on the overpaid amounts when the car is redelivered to us. There is still no budget signed, so no official word on the lower rates, but we do expect to get refunded both on the tax and VLF. I hope. We could have signed on Friday, July 1, but we leave the next day, and the peace of mind is worth it to us not having to worry about mistakes and the loan coming back for some problem. It was very confusing for all involved since the rates for TTL rarely change, and being and ED threw another wrench into it, but it's all done, and we'll worry about it when we take redelivery. Thanks for all your advice, everyone!
> 
> Tom, any word from your CA on what they are going to do for you?


No, I haven't heard anything yet. They didn't call yesterday like they said that they would. I think they may be waiting to see what happens on Friday in case it turns out to be a moot point. Since podge8 indicates that BMW FS requires the TTL be paid at the time of purchase they're probably not going to give me back the money before the redelivery.

If the increase isn't extended I fully expect to get a refund on the tax already paid and any difference in the license/registration fees if they change. I can't possibly imagine that they would expect to just keep the difference if things do change. They confirmed that the car hasn't yet been recorded as a sale yet, so they've just been holding the money since 5/2.

The good news is that the Faust docked at Port Hueneme this morning! It should be just a matter of weeks now!


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## SD ///M4 (Jan 24, 2011)

The finance person at my dealer never called me back regarding the sales tax difference. I've had a couple of e-mail exchanges with my CA recently regarding the re-delivery logistics, as our car is just days away at the VDC in Port Hueneme (although it was closed yesterday because of a leak in their fire sprinkler system ). He conveniently has avoided direct questions regarding a refund of the $520.55 in difference between the 8.75% and 7.75% tax which I have told him that we are expecting to receive when we take re-delivery.

My wife is the Controller at a real-estate investment company and a CPA, so she gets tax-related notices and information from the State. She received this notice today from the California State Board of Equalization, the state entity that collects sales tax, and I've included the relevant portions and bolded the specific portions that apply:

California Statewide Sales and Use Tax Rate is 7.25 Percent
_Rate Reduced By 1 Percent July 1, 2011_​
On July 1, 2011, the statewide sales and use tax rate decreased from 8.25 percent to 7.25 percent. In areas where there are voter-approved district taxes, the total tax rate related to sales and purchases is the statewide base tax rate of 7.25 percent plus any applicable district tax.

What if I collected tax at the incorrect rate? 
We are aware that some retailers may not have reprogrammed their cash registers in time for the tax rate change. *If you charged sales tax reimbursement or collected use tax at the higher rate on or after July 1, 2011, you must return any excess tax collected to your customers or pay it to the State.*

*What is the date of sale? 
A sale occurs when a customer takes title to or possession of an item. (Not when payment is received.) Consequently, sales are generally subject to the applicable tax rate in effect when the merchandise is delivered to the customer, unless a contract specifically identifies and passes title to the customer at a different time. *​
This doesn't address the specific question of what happens if a retailer collects at the higher rate before July 1 but the actual sale (customer takes title) occurs after July 1.

It's also a little fuzzy in it's definition of a sale, saying that it "occurs when a customer takes title to or possession of an item". Since a California BMW ED customer takes possession of their car at BMW Welt but the vehicle doesn't get titled until re-delivery, it would seem to go either way. However, the finance person told me that the sales doesn't get recorded until re-delivery when the car gets titled, so the money collected prior to ED isn't paid to the State until re-delivery.

There's also the part of the last sentence that mentions "unless a contract specifically identifies and passes title to the customer at a different time". I don't know specifically what title is involved while in Europe, however, a California title doesn't pass to the customer until re-delivery.

Bottom line, a dealer doesn't pay sales tax to the State until the car is titled, regardless of when it is collected from a customer. This would seem to make the case that if a California European Delivery Customer paid sales tax on their purchase prior to July 1 but didn't take delivery from their dealer until after July 1, they should have the sales tax refunded to them because tax was collected at the higher rate than was in effect at the actual date of sale.

Any CA tax attorneys out there that can confirm (or refute) this?


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## chrischeung (Sep 1, 2002)

I think you have a reasonable case. I'd try and work with the dealership. Barring that, wouldn't you be able to claim that as a credit on your CA income tax as tax overpaid?


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## SD ///M4 (Jan 24, 2011)

When we go to the dealer next week for re-delivery my wife is going to bring a copy of this document. I can't see how the dealer can not refund the difference to us, especially because they haven't even paid the tax yet. I would certainly like to hear their excuse if they won't. I don't think that they will jeopardize what up until now has been a very good experience.

I'm confident that this will be resolved with no problem. If not, we could probably declare it on our taxes next year, but I'd rather have the money now rather than in May next year. I suppose that that there's also a call to BMW NA, the Board of Equalization, or small claims court.


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## SANguru (Jun 14, 2009)

I just did my paperwork for my Z4 35is today and asked about it. Since they do not submit it to DMV and issue tags until the car gets back to you, you will get a refund from the dealer themselves.


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## SD ///M4 (Jan 24, 2011)

SANguru said:


> I just did my paperwork for my Z4 35is today and asked about it. Since they do not submit DMV and get tags until the car gets back to you, you will get a refund from the dealer themselves.


Right, this is what I'm expecting. I just don't understand why my dealer is acting as if the issue doesn't exist. I've sent him more than one e-mail and asked point blank about a refund but he answers everything else in the e-mail except this which is what concerns me. If he would just confirm that we will be getting a refund then I wouldn't be concerned. Maybe he just figures that this isn't his area and that finance will take care of it. I'm probably being paranoid. Time will tell.


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## SANguru (Jun 14, 2009)

SD 335is said:


> Right, this is what I'm expecting. I just don't understand why my dealer is acting as if the issue doesn't exist. I've sent him more than one e-mail and asked point blank about a refund but he answers everything else in the e-mail except this which is what concerns me. If he would just confirm that we will be getting a refund then I wouldn't be concerned. Maybe he just figures that this isn't his area and that finance will take care of it. I'm probably being paranoid. Time will tell.


a great litmus test on whether you will be doing business with this CA in the future.


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## interpolator (Jul 10, 2007)

Anything new on this matter about refund of the California Sales Tax for ED delivered after July 1 but paid for pre July 1?


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## SD ///M4 (Jan 24, 2011)

When we picked up our car on Wednesday afternoon we printed and brought the notice from the Board of Equalization that my wife got in an e-mail at work. We also highlighted the relevant paragraphs. We asked our CA and he just kind of threw his hands up in the air saying he doesn't have anything to do with finances. He did take a copy of the notice and a spreadsheet that my wife had done showing the tax difference of $520.55 that we feel is due back to us. After he read the two paragraphs that we had highlighted he agreed that it seemed pretty clear that we should get a refund.

He did mention that we will be getting back money on the registration, but I guess neither of us were really paying attention to that part and my wife didn't write it down (she always has pen and paper in these situation).

We'll see what happens in the few few days/weeks.


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## jsciv (Oct 5, 2010)

Oh, glad you finally got your car back after Customs' extended holiday examination!!


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## SD ///M4 (Jan 24, 2011)

Update: 

Today we received a check for $248 from our BMW local center. The stub indicated that it was a refund of the DMV fee. Auto registration fees dropped from 1.15% to 0.65% on July 1. (My calculation puts the refund at $260 though.)

A call to the finance person at our dealer to find out what has happened to the $520.55 in excess tax that we paid prior to July 1 and should be refunded based on the state tax also dropping 1% on July 1 was not returned today. My wife will be calling daily until this is resolved.


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## speedjunkie (Aug 26, 2004)

Glad to hear you got a refund of the Registration fees. Keep us updated on your progress with the dealer. Best of luck!


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## SD ///M4 (Jan 24, 2011)

Update:

My wife called the finance person and left messages three more times, four in total since my last post. She also called a couple more times but didn't leave a message. None of her calls were returned. I called the finance person last Friday and left a message telling her that by not returning our phone calls she was being completely unprofessional, her inaction reflected poorly on both her and the dealership, this was unacceptable customer service, and that if she didn't return my call my next call would be to the General Manager. 

My call makes six calls to her with only the first one being successful in actually talking to her. This was in June before the sales tax reduction and my initial call was to advise them about the possible tax reduction and ask how it would be handled.

On Monday night we got an e-mail from our CA asking us to call him but the dealership was closed by the time we saw the e-mail and he was off on Tuesday. I sent him an e-mail explaining the situation with the finance person and telling him that we either wanted the excess tax returned to us or a letter explaining why they feel that they shouldn't return the excess tax paid. I also apologized to him that he had to get involved and that we had no issue with him, only the finance person.

I had a service appointment today (cruise control issue) and I stopped by to see my CA after finishing with the service department. Apparently the finance person came to him on Monday and said that she got a voice mail from me indicating that there were unreturned phone calls and that I was upset. She told him that she was having problems with her phone and never got the voice mails. (Really? My wife leaves four messages in 10 days and she doesn't get any of them, but she gets mine a day later? She didn't find it strange that she had no voice mails during that time? Right!)

My CA went directly to to the finance person's boss, the Finance Director, who was not aware of the issue. I met her and she told me that she had sent it to their accounting department to look at it and would have an answer in a day or two. So the finance person apparently completely ignored the situation and never followed up on it.

Hopefully we will have a resolution this week that includes the return of $520.55 in excess tax paid.


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## jsleemd (Jun 17, 2011)

Any updates? I am going through the same thing. I took ED on 6/20, and should be taking redelivery in a couple weeks. I just emailed my CA at Southbay BMW. Hoping for a painless resolution. I am financing with BMWFS by the way. My understanding is 1% less taxes and 0.5%less in registration fees. Should add up to a good chunk of change.


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## SD ///M4 (Jan 24, 2011)

jsleemd said:


> Any updates? I am going through the same thing. I took ED on 6/20, and should be taking redelivery in a couple weeks. I just emailed my CA at Southbay BMW. Hoping for a painless resolution. I am financing with BMWFS by the way. My understanding is 1% less taxes and 0.5%less in registration fees. Should add up to a good chunk of change.


No calls from anyone except the service department. Apparently they are going to keep our car over the weekend. If the car had been ready today I would have gone in to see the Finance Director and find out the status. We'll see next week.


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## m3m3m3 (Feb 23, 2006)

I also signed our lease in June, with ED in early July. Our car is supposed to arrive back in CA in the next 2 weeks. 

On my BMW lease statement, I was charged the old sales tax rate on my first 2 payments while my third payment was charged the new sales tax rate. However, interestingly enough BMWFS paid my 2nd payment with the new tax rate, so they short paid like $6 or so. When I called to ask about the sales tax issue, they stated they start the payment when they "sold" the car, which is when I signed the lease. Even with out a title transferred, that is their policy. So I told them fine, you short paid my 2nd payment so pay up. 

Fortunately in my case, I only paid $6 or extra in tax. Still have to see if some of my DMV fees will be refunded when I pick up..


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## jsleemd (Jun 17, 2011)

This is the email reply I got from my CA. You will receive a DMV refund,however not a sales tax 
refund because they go by the date you signed the contract on.

Should I contest this. I've had good relations with this CA and have gotten great prices on the cars I bought from her.


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## jsciv (Oct 5, 2010)

jsleemd said:


> This is the email reply I got from my CA. You will receive a DMV refund,however not a sales tax
> refund because they go by the date you signed the contract on.
> 
> Should I contest this. I've had good relations with this CA and have gotten great prices on the cars I bought from her.


Find the original source of SD 335is's quote from the first page (the one about tax being due upon possession, not payment). It can't hurt to bring this up with the CA.


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## podge8 (Mar 18, 2002)

jsciv said:


> Find the original source of SD 335is's quote from the first page (the one about tax being due upon possession, not payment). It can't hurt to bring this up with the CA.


I was going to say that, too! Thanks, Tom, for bringing that to our attention! Also, I found the law about sales tax on vehicles on the Board of Equalization website, which says that sales tax on a car is due when the car is registered with the DMV.

(c) PAYMENT OF TAX BY PURCHASER.

(1) VEHICLES. Purchasers of vehicles, including off-highway vehicles subject to identification under Division 16.5 of the Vehicle Code, the sales of which are exempt from sales tax under (b)(1), above, shall pay tax to the Department of Motor Vehicles, acting for and on behalf of the Board, at the time of making application for registration or identification

Website is here: http://www.boe.ca.gov/lawguides/business/current/btlg/vol1/sutr/1610.html

I have also attached a copy of the PDF document that Tom originally quoted from. It's the BOE bulletin that notified retailers of the sales tax reduction.

I have yet to show this all to my CA and finance guy, but will need to soon as the car should be redelivered to us early next month. When we signed the papers, our CA told us we would get any money refunded to us that we overpaid, and said that we would get the DMV fees back, but he doubted we could get sales tax back. But the law pretty clearly states otherwise, and we will insist on a refund of both VLF and sales tax. I'll keep you guys updated as well!


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## jsleemd (Jun 17, 2011)

Wow you guys are awesome, I am cutting and pasting all this and sending it to my CA's email as we speak.

Thanks


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## SD ///M4 (Jan 24, 2011)

This just reminded me. My wife went and picked up our car from the service department today and we didn't even think to have her look for the Finance Director and get a status from her. She told me a week ago when we took the car in for service that she would have a resolution "in a few days". Guess I have to make a phone call tomorrow.


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## SD ///M4 (Jan 24, 2011)

podge8 said:


> I was going to say that, too! Thanks, Tom, for bringing that to our attention! Also, I found the law about sales tax on vehicles on the Board of Equalization website, which says that sales tax on a car is due when the car is registered with the DMV.
> 
> (c) PAYMENT OF TAX BY PURCHASER.
> 
> ...


Yes, that is what the BOE e-mailed to my wife. She's a CPA and gets these notices on a regular basis. I never thought she'd get one that applied to us.

BTW, someone mentioned somewhere along the way that if the dealer refuses to refund the excess tax paid that it can be deduced on your 2011 CA tax refund. Anybody with tax background know if this is true? (My wife will gladly tell you "Yes, I'm a CPA, but no, I don't do taxes!)


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