According to new guidance from the California Department of Tax and Fee Administration (CDTFA), dealerships in California must register with the CDTFA and collect additional fees if they are selling retail parts that are considered to be “covered battery-embedded products” (CBEP). CBEP are products that have batteries that cannot be easily replaced using common household tools. An example that the CDTFA, as well as CalRecycle, uses is a tire pressure monitoring system (TPMS).
Does This Apply to Dealers?
Yes, but it is limited to only the dealership’s parts counter. Our friends over at the California New Car Dealers Association worked to obtain written guidance from CDTFA indicating that under 14 CCR § 18660.5, vehicles are exempt from the definition of CBEP. Further, CDTFA interprets this exemption to apply to any replacement vehicle part or component installed onto the vehicle by the dealer (i.e., parts installed in the service drive). However, qualifying CBEP products sold at retail over the parts counter trigger obligations under the law.
Staying with the TPMS example, if a TPMS was sold at the parts counter, then the dealer must collect the associated CBEP fee from the customer and remit it to the CDTFA. However, if the TPMS was sold and installed along with a tire repair service, then the product is exempt from this fee.
CalRecycle’s website has a list of products and guidance that contain embedded batteries for reference. Download this list of products from notices sent to CalRecycle by manufacturers. It is important to note that the list of products is subject to change, and its presence on this list is not dispositive. CalRecycle does not enforce the accuracy of the list or confirm that these products are CBEPs.
How Much is the CBEP Waste Recycling Fee?
The fee, which is paid by the customer and remitted by the dealer to the CDTFA, is 1.5 percent of the retail sales price for each CBEP sold and cannot exceed $15 per product. CalRecycle resets the CBEP waste recycling fee by October 1 annually, and it becomes effective January 1 of the following calendar year.
How Does the Dealer Collect the CBEP Waste Recycling Fee?
Generally, there are three ways the dealer can remit the CBEP waste recycling fee to the CDTFA.
1. Collect the CBEP Fee From Customer
As noted earlier, the dealer can collect 1.5% of the retail sales price for each CBEP, not to exceed $15 per item. The fee must be clearly identified and itemized on the part’s receipt or invoice. If the dealer elects to go this route, the CBEP waste recycling fee becomes a debt owed by the retailer to the CDTFA.
2. Cover the CBEP Fee for the Customer
If the dealer elects to pay the CBEP waste recycling fee to the CDTFA on behalf of the customer, the dealer must provide an express statement to that effect on the receipt at the time of sale. If the dealer elects to go this route, the CBEP waste recycling fee becomes a debt owed by the retailer to the CDTFA, and the customer is not liable for the fee.
3. Pay the CBEP Fee to the Vendor
The dealer can also remit the CBEP waste recycling fee to the CBEP vendor, as opposed to the CDTFA, only if the following conditions are met:
- The vendor is registered with the CDTFA to collect and remit the CBEP waste recycling fee;
- The vendor holds a valid seller’s permit;
- The dealer pays the CBEP waste recycling fee to the vendor, which is separately stated on the vendor’s invoice to the dealer; and
- The dealer provides an express statement on the customer’s invoice that the CBEP waste recycling fee has been paid on behalf of the customer.
If the dealer elects to go this route, the CBEP waste recycling fee becomes a debt owed by the vendor to the CDTFA, and the retailer is not liable for the fee.
Can the Dealer be Reimbursed?
Yes. The law allows dealers to retain up to 3 percent of the CBEP waste recycling fee as reimbursement for all costs associated with collecting the fee from the customer. The remainder must be transmitted to the CDTFA. Note: the dealer cannot retain the 3 percent if they elect to pay the vendor the CBEP recycling fee.
How Does the Dealer Register and Remit Payment to the CDTFA?
Dealerships can register online directly at the CDFTA website and are required to file their return electronically through CDTFA’s online services.
Starting January 1, 2026, dealers were required to collect the CBEP recycling fee from retail customers. The CDTFA assigns a filing frequency when dealers register. For example, if the reporting period is for the first quarter (January 1 through March 31), the return and fee payment are due on or before April 30, 2026.