I was coming up on the end of my 2018 Clarity PHEV lease in early December 2020, so I started shopping around and leased the Clarity Fuel Cell, all is well. In what I thought was separate, independent transaction, I asked the sales person about buying out the lease and selling the vehicle immediately to a private person. I was going to start with craigslist. The sales person gave me a completely incorrect scenario with respect to California sales in a pass through transaction. If I immediately sold the car, I am exempt from sales tax for that transaction. The sales person told the sales tax would be collect from both me and also from the buyer. This is incorrect!
I found the definitive answer in a document from the California Department of Tax and Fee Administration (CDTFA) in a publication entitled "Motor Vehicle Dealers", September 2019. (https://www.cdtfa.ca.gov/formspubs/pub34.pdf). This document clearly states there is 10 day window after receiving the title (Honda Financial Services in this case) to sell the car with no sales tax collected from me. I followed up with a phone call to the California Tax office. The 10 day window is the easiest way to execute the transaction with the DMV. Remember, automobile sales tax is collected by the DMV on behalf the tax authorities in California. If the transaction takes longer than ten days, the seller documents the odometer reading at the beginning of the process, the odometer at the actual sale with an explanation of the extra miles, typically test drives for prospective buyers. The agent made it clear the automobile in this transition state cannot be used for any other purpose.
I went back to the dealer with a printout and highlighted the key passage. Both the sales person and his boss became belligerint when I pointed out their mistake. All around yet another miserable dealership experience.
I found the definitive answer in a document from the California Department of Tax and Fee Administration (CDTFA) in a publication entitled "Motor Vehicle Dealers", September 2019. (https://www.cdtfa.ca.gov/formspubs/pub34.pdf). This document clearly states there is 10 day window after receiving the title (Honda Financial Services in this case) to sell the car with no sales tax collected from me. I followed up with a phone call to the California Tax office. The 10 day window is the easiest way to execute the transaction with the DMV. Remember, automobile sales tax is collected by the DMV on behalf the tax authorities in California. If the transaction takes longer than ten days, the seller documents the odometer reading at the beginning of the process, the odometer at the actual sale with an explanation of the extra miles, typically test drives for prospective buyers. The agent made it clear the automobile in this transition state cannot be used for any other purpose.
I went back to the dealer with a printout and highlighted the key passage. Both the sales person and his boss became belligerint when I pointed out their mistake. All around yet another miserable dealership experience.
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