BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: SB 680 Hearing Date: 4/21/2015
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|Author: |Wieckowski |
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|Version: |2/27/2015 |
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|Urgency: |Yes |Fiscal: |Yes |
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|Consultant|Randy Chinn |
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SUBJECT: Sales taxes: exemption: motor vehicles (Tax Levy)
DIGEST: This bill exempts from sales taxes any new car bought
in California which is permanently used and moved outside of
California.
ANALYSIS:
Existing law subjects a vehicle purchase in California to
California sales tax at the location at which the transaction
takes place, regardless of whether the purchaser moves the
vehicle outside the state.
This urgency bill exempts the purchase of a new vehicle
purchased in California by a non-resident if the purchaser moves
the vehicle out of state within 30 days, receives a one-trip
permit from the Department of Motor Vehicles (DMV), and receives
an exemption certificate from the Board of Equalization.
COMMENTS:
1.Purpose. According to the author, this bill is necessary to
eliminate a disincentive for purchasing a car in California.
Under current law, a non-resident who purchases a vehicle in
California has to pay California sales tax on the purchase
even though the car is being used and registered in the state
where the purchaser resides. The purchaser would also owe
sales tax to the state where the new car was registered.
While this would be offset by the California sales tax, there
SB 680 (Wieckowski) Page 2 of ?
is some risk that the offset wouldn't be sufficient to cover
the California tax, according to the author.
It may be hard to imagine when someone would purchase a car in
California to take back to another state, but Tesla is hoping
to create just such a circumstance. That's because several
states, such as Texas, have prohibited Tesla from selling its
cars directly to customers. Tesla customers then have to buy
their cars out of state and drive or ship them in. Some of
those customers may come to tour the Tesla factory in Fremont
to complete their purchase, just as customers of some high-end
European vehicles do.
2.California incentive eligibility for non-California uses.
California has a number of programs to encourage the purchase
of low- and zero-emission vehicles. It seems reasonable that
these incentives should be inapplicable if these vehicles are
purchased in California and taken out of state. The Clean
Vehicle Rebate Program (CVRP) is the most significant of those
incentives. While the California Air Resources Board
regulations provide that only new vehicles are eligible for
the CVRP there are some loopholes that could allow other
vehicles to obtain the CVRP rebate. California's green/white
HOV sticker program does not require that the car be purchased
in California. The author and committee may wish to consider
prohibiting the owners of vehicles obtained under the
provisions of this bill from applying for these programs.
3.Mechanical flaw. The DMV does not have a formal position on
this bill. When contacted by the committee, the DMV suggested
the current language may create an inadvertent loophole in the
bill whereby a purchaser could buy the car, take it out of
state for a month, and then bring the car back into California
without paying the sales tax. This is because the DMV would
have no way to track the movement of the vehicle. The author
and committee may wish to work with the DMV to develop a
mechanism to close this loophole.
4.Double referral. This bill has been double-referred to the
Government and Finance Committee. Because of the fiscal bill
deadlines, any amendments agreed to in this committee will be
incorporated into the bill in that committee.
Related Legislation:
SB 680 (Wieckowski) Page 3 of ?
None.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes
Local: No
POSITIONS: (Communicated to the committee before noon on
Wednesday,
April 15, 2015.)
SUPPORT:
Tesla
OPPOSITION:
None received.
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