California Auto Sales Tax Law

New car owners mustr pay a use tax.

California law requires that automobile purchasers pay a use tax. The buyer must pay the use tax to the California Department of Motor Vehicles. However, California exempts several types of transactions from the auto sales tax.

Use Tax

The use tax is assessed at the sales tax rate in effect in the county in which the seller had registered the automobile. In other words, if the seller had registered in Orange County, the applicable use tax rate is equal to the Orange County sales tax rate.

Rates

As of 2010, California sales tax varies by county from around 8.25 percent minimum to 10.25 percent maximum. Some cities sales tax varies within their respective county as well. For instance, Camarillo residents pay a sales tax rate of 8.25 percent while Oxnard residents pay a sales tax rate of 8.75 despite the fact both cities are in Ventura County.

Reporting

Automobile sellers must report the sale to the California Department of Motor Vehicles within five days of the transaction. Automobile buyers must notify the California Department of vehicles of the change of ownership within 10 days of the transaction.

TIme Limit

The automobile buyer then has 30 days to pay the applicable fees and the automobile use tax. If the buyer fails to pay the applicable fees within the 30-day period, then the California Department of Motor Vehicles may assess additional automobile use tax penalties.

Exemptions

Four types of transactions are exempt from the automobile use tax. First, if a parent, child, grandparent, grandchild, domestic partner or sibling, transfers a vehicle between one another, then the transaction is exempt. Second, if the vehicle transfer is a gift with no party giving consideration for the other in exchange for the vehicle, then the transaction is exempt. Third, if a court orders the vehicle transfer, no use tax is required. Finally, if the vehicle is transferred as part of an inheritance, then no use tax is required. These exemptions do not apply when the transferee is a commercial automobile seller.

Warning

To determine how the facts of your situation apply to California law, consult a qualified attorney licensed to practice law in the State of California.

References

• California Department of Motor Vehicles: Vehicle Registration and Title Information
• California State Board of Equalization: City and County Sales and Use Tax Rates

Resources

• State of Califirnia DMV: Statement of Use Tax Exemption Form