Opinion ID: 1155601
Heading Depth: 1
Heading Rank: 3

Heading: Vehicle License Fees

Text: An annual license fee is imposed for the privilege of operating [a vehicle] upon the public highways in this state.... (Rev. & Tax. Code, § 10751.) [6] The amount of this fee shall be a sum equal to 2 percent of the market value of the vehicle as determined by the [DMV]. (§ 10752.) As originally enacted in 1941, section 10753 directed the DMV annually to compile and publish a list showing the market values... of each class of vehicle subject to the license fee.... (Stats. 1941, ch. 40, § 1, pp. 605-606.) Upon registration, the DMV would use the information in this rate book to assign to the vehicle a classification code from which its market value would be determined for the year of the sale and all subsequent years, regardless of any change in ownership. The DMV did not differentiate between vehicles originally sold within California and those originally sold outside the state. In 1948, section 10753 was amended to require the DMV to determine the market value of vehicles upon the basis of the California delivered prices as established by the manufacturers or distributors in their selling agreements with authorized dealers as of the time the particular make and year model is first offered for sale in California.... (Stats. 1948, ch. 26, § 2, p. 129.) Manufacturers informed the DMV of the delivered price on each model, and the DMV entered this information in its rate book. Using a method described in section 10753.2 (enacted in 1948), the market value of each vehicle was determined from this delivered price according to a depreciation schedule set forth in the statute. [7] As before, the same classification code was assigned to the vehicle and the same tax was imposed, whether the vehicle was purchased in California or elsewhere. The DMV, however, urged the Legislature to alter the method for determining the vehicle license fee, because manufacturers objected to supplying information regarding prices, thereby causing delays at the beginning of each model year in updating the rate book. In 1967, the Legislature amended section 10753 to require the DMV to determine the market value of vehicles by reference to the California suggested base price (§ 10753, subd. (a)), which was defined as the retail price of the vehicle suggested by the manufacturer ... as reflected on the price listing affixed to the vehicle pursuant to the Federal Automobile Information Disclosure Act of 1958.... (§ 10753, subd. (g), as amended by Stats. 1967, ch. 435, § 1, pp. 1647-1648.) The price listing is commonly referred to as the sticker price of the vehicle. [8] Section 10753 defined the California suggested base price to include destination charge[s] and the cost of statutorily required emission control devices, but not the cost of factory-installed accessor[ies] or optional equipment. [9] (§ 10753, subd. (g).) The statute further provided: In the event the [DMV] is unable to ascertain the California suggested base price as herein defined ..., the [DMV] shall determine the market value upon the basis of the cost price to the purchaser of the vehicle as evidenced by a certificate of cost.... (§ 10753, subd. (c).) Consistently, the Legislature also amended section 10753.2, which, as described above, sets forth the depreciation schedule used in determining a vehicle's market value, to reflect that this process was based on the California suggested base price, as defined above, of a vehicle or its cost price to the purchaser.... (Stats. 1967, ch. 435, § 2, p. 1649.) Based upon these amendments, the DMV ceased producing a rate book and began requiring dealers to provide, for each new vehicle sold in California, a report of sale listing the manufacturer's suggested retail price, destination charge, and the cost of emission-control devices as reflected by the sticker on the vehicle. As before, the DMV would use the information supplied by the dealer to assign to the vehicle a classification code from which its market value would be determined for the year of the sale and all subsequent years. If a vehicle originally was sold in another state, however, the DMV would not receive a report of sale from the dealer and thus could not assign a classification code. When the owner of such a vehicle attempted to register it in California, the DMV took the position that the California suggested base price could not be ascertained, and the DMV instead determined the market value of the vehicle based upon the cost price to the purchaser, requiring the owner to produce a certificate of cost. The DMV required a certificate of cost in such circumstances even if, as to pre-1968 models, the vehicle was listed in the DMV rate-book or the original sticker price was available. This practice resulted in the imposition of significantly higher license fees for vehicles purchased outside the state than for those first sold in California, in part because the cost of factory-installed accessories and optional equipment was excluded from the suggested base price for vehicles originally purchased in California, but not from the actual cost of vehicles first purchased in other states. The DMV's adoption of methods for determining the market value of vehicles originally purchased in California which differed from the methods applied to vehicles first sold elsewhere led the DMV also to adopt different methods of applying the depreciation schedule in section 10753.2. For vehicles originally purchased in California, the DMV used the vehicle's sticker price to determine its market value and applied the depreciation schedule, as directed by section 10753.2, subdivision (c), starting with the year [the vehicle was] first sold to a consumer as a new vehicle, ... (Stats. 1948, ch. 26, § 3, p. 130.) For vehicles originally purchased outside the state, however, the market value of the vehicle was based upon its actual cost to the person registering the vehicle rather than upon its sticker price. Presumably because the person registering the vehicle might have purchased it new or, instead, in a subsequent year as a used vehicle, the DMV interpreted the first year of the depreciation schedule to be the year the vehicle was sold to the first person to register the vehicle in California. [10] Apparently, the DMV adopted this approach because the actual cost of a used vehicle already would reflect the depreciated value of the vehicle. The DMV's application of the depreciation schedule to vehicles purchased outside the state, however, directly conflicted with the clear command of the then-governing language of section 10753.2, subdivision (c), that the first year of the depreciation schedule be the year [the vehicle was] first sold to a consumer as a new vehicle. (Stats. 1948, ch. 26, § 3, p. 130.) In 1977, the Legislature amended section 10753.2, subdivision (c), to provide that the depreciation schedule could be applied starting with either the year the vehicle was first sold to a consumer as a new vehicle or the year the vehicle was first purchased or assembled by the person applying for original registration in this state. (Stats. 1977, ch. 821, § 1, p. 2491.) This amendment provided statutory authorization for the DMV's already well-established practice of treating as the first year of the depreciation schedule the year a vehicle was purchased outside the state by the person applying for registration. In 1983, while the present litigation was pending, section 10753, subdivision (a), was amended to require the DMV to base the market value of all vehicles on the basis of the cost price to the purchaser as evidenced by a certificate of cost.... (Stats. 1983, ch. 323, § 79.1, p. 1017.) Effective June 30, 1991, the statute again was amended to require the DMV to redetermine the market value of a vehicle, based on its actual cost, upon its sale as a used vehicle. (§ 10753, subd. (a).) For vehicles first registered in 1983 or later, therefore, the market value is based upon the actual cost of the vehicle, whether or not it was purchased in California. For a vehicle first registered before 1983 and not sold as a used vehicle after June 30, 1991, however, the method used by the DMV to determine the market value of the vehicle depends upon where the vehicle originally was purchased. The reference to the California suggested base price also was deleted from section 10753.2, subdivision (a), by the 1983 legislation. Because of the 1977 amendment discussed above, however, section 10753.2, subdivision (c), continued to permit the DMV to treat the first year of the depreciation schedule either as the year the vehicle was first sold to a consumer as a new vehicle or the year the vehicle was first purchased or assembled by the person applying for original registration in this state.... (Stats. 1977, ch. 821, § 1, p. 2491.) [11]