Which agency audits dealers to ensure proper collection of use tax?

The correct choice is the California Department of Tax and Fee Administration (CDTFA) because this agency is specifically responsible for administering and collecting various taxes, including the use tax associated with vehicle sales in California. The CDTFA conducts audits of car dealerships to ensure compliance with tax laws and that proper taxes are collected and remitted. This is crucial for maintaining the integrity of the tax system and ensuring that businesses are fulfilling their tax obligations correctly.

The IRS primarily oversees federal income tax and does not engage directly with state tax compliance or audits related to vehicle sales. The Department of Motor Vehicles (DMV) focuses on vehicle registration and licensing rather than tax collection and enforcement. The State Department of Revenue, while it may handle some tax-related matters, typically operates at a broader level and does not focus specifically on use tax collection within California's vehicle sales. Therefore, CDTFA is the most relevant agency for auditing dealerships to ensure proper use tax collection.