Assembly Bill 575 (Chapter No. 59, Statutes of 2005) established a voluntary framework by which a vendor can elect to bill and collect the recycling fee and remit directly to the state if specific preconditions listed below have been met. This legislation does not change the lessor's obligation to pay the recycling fee or the amount that must be paid. Lessors taking advantage of this option must ensure that their vendor collects the proper fee rates or risk being held accountable for the miscollected fees. For information on the full range of issues related to the California Electronic Recycling Fee go to [insert link to Information on Collecting the California Electronic Recycling Fee]
A leasing company electing to be billed for the recycling fee by a vendor will assume the expense of the fee and may not bill it to the lessee; the expense can only be passed through as part of the cost. Lessors must provide a written statement to a lessee that they absorbed the fee expense on behalf of the lessee. Rather than determining the amount of fee to bill, the lessor can defer to the vendor's invoice to determine the amount of fee to include in the financed amount.
This option is limited to vendors participating with lessors who voluntarily elect to take advantage of its provisions in the context of a purchase transaction for purposes of a lease. The state requires four specific preconditions that a lessor must comply with to avail itself of this option. Failure of a lessor to adhere to these conditions can void collections rendered by a vendor on behalf of the lessor.
- The vendor must be registered to collect and remit the recycling fee.
- The vendor must have a California seller's permit to collect sales and use tax.
- The lessor must pay the fee by referencing the invoice between the lessor and the vendor, which separately states the fee.
- The lessor must notify the lessee in writing that the fee has been paid on their behalf.
This legislation does not change the lessor's obligation to pay the recycling fee or the amount that must be paid. Lessors choosing to take advantage of this legislation must make certain that both they and the vendor are in full compliance or run the risk of having all payments declared invalid. Simply telling the vendor to collect the fee is not enough. Responsibility for ensuring that the vendor is registered and collecting the correct amount of fee voluntarily according to state mandated criteria ultimately falls upon the lessor. Lessors should make sure to get the vendor's agreement and promise of compliance in writing.
To verify that a vendor is registered contact the California Department of Tax and Fee Administration at 800-400-7115. Lessors can also verify this information online using the BoE Electronic Verification system.