Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2014
Sales and Use Tax Annotations
295.0000 GROSS RECEIPTS
(e) TAXES AND FEES (GOVERNMENTAL)
295.1302.500 Tire Disposal Fee. The California Tire Recycling Act, as amended, imposes a $0.25 per tire disposal fee on every person who purchases a new tire from a retail seller of new tires. The seller is required to collect the fee and remit it to the state, but may retain 10% of the fee as reimbursement for any cost associated with the collection of the fee. (Pub. Resources Code § 42885 (a).)
Prior to January 1, 1997, the California Tire Recycling Act imposed the $0.25 per tire disposal fee on every person that left a tire for disposal with the seller of new or used tires. Where a tire dealer sold a new tire and charged $2.00 for tire disposal as a condition of that sale, the entire $2.00 charge was subject to tax except for that portion of the fee actually imposed on the customer for tire disposal. That is, the entire $2.00 was taxable if a customer did not leave a tire for disposal. If a customer left a tire for disposal, $1.75 of the disposal fee was subject to tax and the remaining $0.25 amount was a nontaxable fee imposed by the state directly on the customer.
The amended provisions of the Act impose the $0.25 fee directly on the purchaser of a new tire whether or not an old tire is left for disposal. Thus, whether or not an old tire is left for disposal, the retailer of a new tire collects the $0.25 fee from its customer as a fee imposed on that customer by the state. That $0.25 is not taxable. Any amount charged in excess of the $0.25 as a condition of the sale of a new tire is subject to tax ($1.75 in the above example).
None of the tire disposal fee charged by a tire dealer who simply disposes of a tire for a customer without selling a new tire is subject to tax because under such circumstances the charge relates entirely to the disposal of the old tire. Furthermore, the customers have the option of leaving the old tire for disposal and incurring an optional disposal fee, or of taking the tire with them and not incurring the fee, the optional disposal fee is not subject to sales or use tax. 3/21/2000. (Am. 2000-3).