Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014
 

Sales and Use Tax Annotations


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R

490.0000 RETURNS, DEFECTS AND REPLACEMENTS—Regulation 1655

Annotation 490.0517

(c) WARRANTIES

(1) In General

490.0517 Replacement of Motorhome—"Lemon Law." When a manufacturer replaces a motorhome pursuant to Civil Code section 1793.2, more commonly known as the "lemon law," the replacement motorhome is considered a "replacement under warranty." The tax liability is measured by any amount that customer pays in excess of the credit received. If the value of the replacement property is less than the credit received for the original property, the customer must be refunded the difference, including applicable sales tax reimbursement.

Replacement pursuant to litigation qualifies for this treatment only if it satisfies all the requirements of Civil Code section 1793.2. Thus, the manufacturer would be required to pay, or to reimburse the buyer, for the amount of any license, registration or other official fees which the buyer is obligated to pay in connection with the replacement of the motor vehicle portion of the motorhome. Otherwise the replacement of the motorhome does not come within the provisions of Civil Code section 1793.2, and the transfer of the replacement would be considered a taxable sale. 5/14/90.