AB 2618, by Assembly Member Fiona Ma, would ensure that purchasers of cars at auction pay the appropriate amount of sales or use tax on those transactions.

All too frequently, unscrupulous Californians are avoiding paying taxes on cars purchased at auction, especially salvaged auto auctions, by telling the auctioneer that they will be reselling the vehicles later, then never doing so. Many of these vehicles are either never subsequently registered with DMV, or if they are they report a value lower than the actual sale price.

AB 2618 would curb this fraud by requiring those buyers claiming intent to resell to be licensed dealers, dismantlers, repair dealers, or scrap metal processors.

The sales and use tax supports not only the state’s General Fund, but also counties and cities. The sales and use tax is also an important funding component for 2011 realignment.

The Assembly Revenue and Taxation Committee will consider AB 2618 at its hearing next Monday, May 14.