Revenue and Taxation Code section 6295
(a)
(1)Except as provided in subdivision (h), when a motor vehicle required to be registered under the Vehicle Code, except for a recreational vehicle that is either truck-mounted, permanently towable on the highways without a permit or a park trailer, as these terms are used in Section 18010 of the Health and Safety Code, is sold at retail by a dealer holding a license issued pursuant to Chapter 4 (commencing with Section 11700) of Division 5 of the Vehicle Code, the dealer shall pay the applicable sales tax and any applicable use tax due under the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251)) to the Department of Motor Vehicles acting for and on behalf of the California Department of Tax and Fee Administration pursuant to Section 4456 and 4750.6 of the Vehicle Code.(2)
The amendments to this subdivision made by Section 11 of Chapter 256 of the Statutes of 2021 do not constitute a change in, but are declaratory of, existing law.(b)
If the dealer makes an application to the Department of Motor Vehicles that is not timely, and is subject to penalty because of delinquency in effecting registration or transfer of registration of the vehicle, the dealer shall also be liable for penalty as specified in Section 6591, but no interest shall accrue.(c)
(1) Application to the Department of Motor Vehicles by the dealer shall be deemed a return filed with the California Department of Tax and Fee Administration pursuant to Article 1 (commencing with Section 6451) of Chapter 5 with respect to amounts reported to the Department of Motor Vehicles pursuant to subdivision (a).(A)
An application submitted to the Department of Motor Vehicles that is deemed a filed return pursuant to this subdivision shall be treated as filed on the date the application is submitted.(B)
An application submitted to the Department of Motor Vehicles that is deemed a filed return pursuant to this subdivision shall be subject to the requirements of this part.(2)
The amendments made to this subdivision by the act adding this paragraph shall apply to sales reported to the Department of Motor Vehicles for reporting periods beginning on and after January 1, 2021.(d)
(1)If the dealer fails to make an application to the Department of Motor Vehicles, fails to pay the amount of sales or use tax due, or fails to timely file a return with the California Department of Tax and Fee Administration under Section 6452, interest and penalties shall apply with respect to the unpaid amount as provided in Chapter 5 (commencing with Section 6451).(2)
The amendments to this section made by the act adding this subdivision do not constitute a change in, but are declaratory of, existing law.(e)
For purposes of this section, the following shall apply:(1)
“Dealer” shall not include a franchisee as defined in Section 331.1 of the Vehicle Code, a franchisee of a recreational vehicle franchise as defined in Section 331.3, a manufacturer or remanufacturer holding a license issued pursuant to Chapter 4 (commencing with Section 11700) of Division 5 of the Vehicle Code, an automobile dismantler holding a license and certificate issued pursuant to Chapter 3 (commencing with Section 11500) of Division 5 of the Vehicle Code, or a lessor-retailer holding a license issued pursuant to Chapter 3.5 (commencing with Section 11600) of Division 5 of the Vehicle Code, and subject to the provisions of Section 11615.5 of the Vehicle Code.(2)
“Newly licensed dealer” means a dealer who was originally licensed by the Department of Motor Vehicles on or after January 1, 2019.(f)
The Department of Motor Vehicles shall, through the adoption of regulations, establish any additional requirements for the implementation of this section.(g)
(1)Subject to paragraph (2), this section shall apply to sales of vehicles occurring on and after January 1, 2021.(2)
Based upon operational needs to effectively enforce the collection of taxes pursuant to this section, the Department of Motor Vehicles may establish the following compliance schedule for this section:(A)
Newly licensed dealers, dealers whose seller’s permit was reinstated within the last two years, and dealers with a previous finding of underreporting within the last two years shall comply beginning January 1, 2021.(B)
Except as provided in paragraph (3), all other dealers shall comply by January 1, 2023.(3)
Based upon operational needs to effectively enforce the collection of taxes pursuant to this section, the California Department of Tax and Fee Administration, in consultation with the Department of Motor Vehicles, may delay the compliance schedule set forth in subparagraph (B) of paragraph (2) to no later than January 1, 2026, for dealers that made more than 300 retail vehicle sales in the previous calendar year and are not subject to the compliance schedule set forth in subparagraph (A) of paragraph (2).(h)
(1)The California Department of Tax and Fee Administration, in consultation with the Department of Motor Vehicles, may exempt from the requirements of subdivision (a) any dealer, including any dealer that has paid the applicable sales tax and any applicable use tax due to the Department of Motor Vehicles pursuant to subdivision (a) prior to the operative date of the act adding this subdivision, if the dealer sold 1,000 or more vehicles at retail in the current or preceding calendar year and the dealer’s account is in good standing with the California Department of Tax and Fee Administration.(2)
The California Department of Tax and Fee Administration may revoke the exemption provided by this subdivision after 30 days following the date the department provides notice to the dealer that either of the following has occurred:(A)
The dealer is no longer in good standing.(B)
The dealer’s retail vehicle sales drop below 1,000 vehicles in any calendar year beginning on or after the operative date of the act adding this subdivision.(3)
For purposes of this subdivision, “good standing” means that the dealer has timely filed and remitted applicable payments, including applicable prepayments, for all required sales and use tax returns for the 12 quarterly reporting periods immediately preceding the issuance of the exemption.
Source:
Section 6295, https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC§ionNum=6295. (updated Jun. 27, 2025; accessed Jul. 14, 2025).
