Vehicle sales tax rate based on buyer’s registration address, not location of sale
Roseville, Calif.- It is important for Californians to have complete confidence they are paying the correct amount of tax.
Getting the tax rate wrong on a vehicle purchase could easily force a buyer to pay hundreds of dollars of taxes they don’t owe.
Sales and use tax rates vary widely across California and change over time. In addition to the statewide sales and use tax rate, many cities and counties add voter-approved local taxes. The result is some cities have sales tax rates above 10 percent.
Unlike typical retail transactions, the tax rate for a vehicle sale is based on the buyer’s registration address, not where the sale took place. If you buy your car at a dealership, the burden is on the car dealer to collect the tax. But in the case of a private party sale, DMV collects the tax when the buyer registers the vehicle.
DMV’s previous errors have stemmed from its reliance on postal zip codes to determine tax rates. If even a small portion of a zip code’s territory has a higher tax rate, DMV typically charges everyone in that zip code the higher tax.
This is no small problem. About 20% of California’s zip codes have multiple tax rates. By relying on zip codes alone, DMV charged customers who live in these zip codes too much tax. Even taxpayers armed with their correct tax rate have been forced to pay an incorrect rate and then look for assistance obtaining refunds.
Determine Tax Rates
There is already a system in place that DMV could be using. To help combat sales tax rate confusion, at my urging the Board of Equalization developed an extremely accurate tool for determining tax rates at specific locations. The Board’s online tax rate lookup tool, available at https://maps.cdtfa.ca.gov/, enables anyone, even DMV, to find the correct sales tax rate for a specific address.
The Board of Equalization has the same expectation for DMV that we have for thousands of private sector businesses: charge the correct amount of tax. Government agencies are not above the law.
If you recently purchased a vehicle, please follow these steps to ensure you didn’t pay too much tax:
1. Visit https://maps.cdtfa.ca.gov/ to determine the correct tax rate for your address.
2. Compare this rate to the rate you were charged when you purchased or registered your vehicle.
3. If you were overcharged, visit https://www.cdtfa.ca.gov/formspubs/pub117/ instructions on how to request a refund