California Code of Regulations › Title 18 - Public Revenues › Division 2 - California Department of Tax and Fee Administration- Business Taxes (State Board of Equalization- Business Taxes, See Ch. 6 and 9.9) › Chapter 4 - Sales and Use Tax › Article 16 - Resale Certificates; Demonstration; Gifts and Promotions › Section 1669.5 - Demonstration, Display, and Use of Property Held for Resale-Vehicles

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Vehicle
				  Dealers, Lessors, Manufacturers, and Distributors--In General.
(1) "Vehicle." Except as used in (a)(4), the
				  term "vehicle" as used herein means passenger motor vehicles, as defined in
				  section
				  465 of the
				  Vehicle Code, pickup trucks, and small vans.
(2) "Lessor." The term "lessor," as used
				  herein, means only a lessor whose leases are continuing sales.
(3) Demonstration or Display. A purchaser of
				  a vehicle under a resale certificate, who uses the vehicle solely for
				  demonstration or display while holding it for sale in the regular course of
				  business, is not required to pay tax on account of such use.
(4) Loans to Schools, Colleges, and Veterans'
				  Institutions for Educational or Training Programs.
(A) The loan by any retailer of any tangible
				  personal property to any school district for an educational program conducted
				  by the district is exempt from the use tax.
(B) The loan by any retailer of any motor
				  vehicle to the California State Universities or the University of California
				  for exclusive use in an approved driver education teacher preparation
				  certification program conducted by the state college or university is exempt
				  from the use tax.
(C) The loan by
				  any retailer of a motor vehicle to be used exclusively for driver training in
				  an accredited private or parochial secondary school in a driver education and
				  training program approved by the State Department of Education as a regularly
				  conducted course of study is exempt from the use tax.
(D) The loan by any retailer of any motor
				  vehicle to a veterans' hospital or such other nonprofit facility or institution
				  to provide instruction in the operation of specially equipped motor vehicles to
				  disabled veterans is exempt from the use tax.
(5) Donations of Vehicles. Operative January
				  1, 1989, vehicles withdrawn from resale inventory for donation to a qualified
				  organization located in this state as described in paragraph (e) of Regulation
				  1669, (18
				  CCR 1669), are exempt from the use tax. For
				  the period January 1, 1989 through October 1, 1989, this exemption is available
				  only to retailers. Effective October 2, 1989, this exemption is available to
				  all sellers.
(6) Personal or
				  Business Use. Vehicles withdrawn from resale inventory for personal or business
				  use are subject to use tax except as provided in paragraph (a)(5). If the
				  vehicle is not frequently demonstrated or displayed while holding it for resale
				  in conjunction with such business or personal use, the tax is measured by the
				  purchase price of the vehicle.
(7)
				  Vehicles Capitalized as Fixed Assets. Except for vehicles held for the purpose
				  of leasing, vehicles which are capitalized in a fixed asset account and
				  depreciated for income tax purposes are not held for sale in the regular course
				  of business. Tax must be paid measured by the purchase price of such
				  vehicles.
(8) Registration. If a
				  vehicle manufacturer, distributor, dealer, or lessor registers a vehicle
				  purchased for resale in a name other than that of the manufacturer,
				  distributor, dealer, or lessor, while retaining title to the vehicle, the
				  vehicle is not held for sale in the regular course of business, and the
				  manufacturer, distributor, dealer, or lessor must pay use tax measured by his
				  purchase price of the vehicle.
(9)
				  Vehicles Used Both For Demonstration and Other Purposes. If vehicles purchased
				  under a resale certificate are frequently demonstrated or displayed while being
				  held for sale in the regular course of business, and are also used partly for
				  other purposes, tax must be paid measured by the fair rental value of the
				  vehicles for the periods of other use. Such interspersed demonstration or
				  display and other use may occur when a dealer or lessor purchases vehicles
				  without tax paid on the purchase price and uses them personally, or allows
				  vehicle salespersons, vehicle sales managers, partners, corporate officers, or
				  other persons to use them for purposes in addition to demonstration or
				  display.
(10) Rental to
				  Salespersons For Demonstration. A dealer who rents vehicles which are not
				  mobile transportation equipment to salespersons is regarded as making
				  continuing sales of the vehicles and must collect and pay tax on the rental
				  receipts, unless tax has been paid measured by the purchase price of the
				  vehicles. However, if the rental receipts are less than 1/60th of the dealer's
				  purchase price of the vehicle for each month of the rental, the transaction
				  will not be considered a bona fide rental, and tax will be measured by 1/60th
				  of the purchase price for each month of such use. For the application of tax to
				  rentals of pickup trucks and other mobile transportation equipment, see
				  Regulation 1661.
(11) Subsequent
				  Retail Sales. The taxability of retail sales of vehicles is not affected by the
				  fact that tax has been paid previously on the purchase price, rental receipts,
				  or fair rental value because of the use or rental of the vehicles.
(12) Sales to Salespersons for Demonstration.
				  Tax applies to sales by dealers to their salespersons of vehicles to be used
				  for demonstration and personal use.
(13) Presumptions. Any presumption
				  established by this regulation may be rebutted only by clear and convincing
				  evidence to the contrary. However, declarations after the fact are of little
				  value as evidence because of their self-serving nature, and will be given
				  little weight.