Which low-emission vehicle and retrofit-device amounts qualified for the section 6356.5 exemption?

Plain-English summary

The incremental cost of a new Air Resources Board-certified low-emission vehicle was exempt if separately stated on the manufacturer's vehicle label, the manufacturer's invoice to the retailer, and the retailer's sales contract. Incremental cost meant the difference from the suggested retail price of a comparably equipped conventional-fuel vehicle.

A retrofit device was exempt when the required low-emission labeling and manufacturer-to-retailer and retailer-to-customer documentation were present. The exemption applied to a kit or a device installed on the customer's vehicle, and installation labor generally qualified as exempt installation or repair labor.

If a dealer bought a vehicle, installed the device, and sold that used vehicle, the transaction was neither a new low-emission vehicle sale nor a retrofit-device sale. The entire used-vehicle selling price was taxable under the annotation.

Citations and references

• California Revenue and Taxation Code section 6356.5(a) and (b) (as cited)

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/580-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/580-0230.pdf

Original ruling text

State of California

Board of Equalization
Legal Division

Memorandum

580.0230

To:

Mr. Don Fillman

November 13, 1992

From:

Gordon P. Adelman

Subject:

Annotation – Low Emission Motor Vehicles and Retrofit Devices Attached is the annotation for the above. You may wish to abbreviate it further. GPA:sr Attach.

Annotation
Low Emission Motor Vehicles and Retrofit Devices
Pursuant to Section 6356.5(a), Revenue and Taxation Code, incremental costs of the sale of and the storage, use, or other consumption in this state of low emission motor vehicles certified by the Air Resources Board are exempt from tax provided the incremental cost is separately stated on the manufacturer’s label affixed to the vehicle, the manufacturer’s invoice to the retailer, and the retailer’s contract of sale with the purchaser. Incremental cost is the difference between the actual price of a new low emission vehicle and the manufacturer’s suggested retail price for a comparably equipped conventional fuel vehicle. Pursuant to Section 6356.5(b), Revenue and Taxation Code, the sale of, and the storage, use or other consumption in this state of any retrofit device is exempt from tax provided low emission labeling appears on the device itself or its packaging, the documentation from the manufacturer to be retained by the retailer upon sale, and the retailer’s contract of sale with the customer. A retrofit device is exempt when sold as a kit or when installed on a customer’s vehicle. The labor to install will generally qualify as exempt installation or repair labor. If the dealer purchases a vehicle, installs the retrofit device and sells the vehicle with the device, the vehicle does not qualify as a new low emission vehicle, nor is it a sale of a retrofit device, and the entire selling price of the used vehicle is a taxable transaction not exempt pursuant to Section 6356.5(a) or (b).