Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2017
Sales and Use Tax Annotations
295.0000 GROSS RECEIPTS
(f) COSTS AND EXPENSES
295.1430 Vehicle Biennial Smog Exemption. Effective July 1, 1994, purchasers of new vehicles or of commercial vehicles are allowed to defer their first smog certification renewal from the current two years after purchase to four years by checking a box so marked on the application for registration and by paying an additional $39 at the time of the initial purchase. Any change in ownership would nullify this exemption, other than the removal of a lessor's name from the registration of a leased vehicle.
The entire $39 is transferred to the state: seven dollars goes to the DMV's vehicle inspection fund, the same as the smog certificate fee in the regular program, even though no certificate is issued for this new extension; and the remaining $32 goes to a special fund created for this purpose and maintained by the Bureau of Automotive Repair.
If the purchaser elects to purchase the extension, the dealer must collect the $39, include these charges on the sales contract, and remit each portion of the fee to the appropriate agency. Revenue and Taxation Code section 6012 (c)(9) excludes from the measure of sales tax any motor vehicle fee or tax imposed by and paid to the State of California that has been added to, or is measured by a stated percentage of the sales or purchase price.
While electing to purchase the Smog Biennial Exemption is an option available to the new car buyer, once the election is made, the fee becomes mandatory. However, since the entire $39 of this new smog renewal extension is imposed by the state, as a fee added to the selling price of the new vehicle, it is excludable from the measure of sales tax, assuming it is separately stated on the sales contract and paid to the state by the dealer. 8/1/94.