BILL ANALYSIS �
AB 2618
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Date of Hearing: May 25, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2618 (Ma) - As Amended: April 18, 2012
Policy Committee: Revenue and
Taxation Vote: 8-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill provides that a person making a sale at a vehicle
auction, or a licensed dismantler making specified vehicle
sales, shall be presumed to be making sales at retail (not
resale) and therefore must collect sales tax under the sales and
use tax (SUT) law.
FISCAL EFFECT.
In its staff analysis of this bill, the BOE notes that it
conducted a six-month study of California auto auctioneers.
Based on a statistical sampling of vehicles sold to non-dealers,
BOE staff found that about 40% of the vehicles sold were never
registered with the DMV, and of those vehicles actually
registered, about 25% of the actual sales price was not reported
to DMV. These combined practices result in an estimated revenue
loss of $5.5 million, which this bill seeks to recover.
COMMENTS
1)Purpose. The author states that BOE audits and investigations
discovered retailers, who are not licensed dealers or even in
the automobile business, acquiring salvage certificate
vehicles by issuing a resale certificate and not reporting
subsequent vehicle sales.
2)Support. The BOE, the bill's sponsor, explains this bill
closes a tax gap that occurs within the auto auction and
dismantling industry when purchasers who are not properly
licensed to sell, repair, or dismantle vehicles, buy vehicles
without paying sales tax to the sellers or use tax to DMV.
AB 2618
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They are able to do this by issuing a resale certificate at
the time of purchase at a salvage auto auction. Some of the
purchasers remit use tax to DMV upon registration of the
vehicles, but report a much lower price than the actual
purchase price.
This bill requires auto auctions and dismantlers to collect
sales tax on the sale of any vehicle sold to a person other
than a licensed dealer, dismantler, automotive repair dealer
or scrap metal processor.
The bill enables auto auctioneers to also accept a resale
certificate from any person licensed in another state, country
or jurisdiction as a dealer, dismantler, automotive repair
dealer, or scrap metal processor.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081