No. Parts, fluids, and materials are taxable. Labor to repair or maintain used vehicles is exempt—but fabrication, work on new vehicles, and some specialty repairs are taxed.

Yes. Failing to separate labor & parts, misusing lump-sum billing, or missing documentation puts you at risk for audited back taxes and penalties.

Always clearly itemize and subtotal parts, labor, supplies, and state fees on invoices. Properly use resale certificates. Retain all sales records for at least four years.

If you sell tires, batteries, or make lump-sum repair charges, or if your records are incomplete, you face a higher risk. Free audit risk review helps you identify problems before CDTFA does.