BILL NUMBER: ABX3 22	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Charles Calderon

                        JUNE 25, 2008

   An act to add Section 7061 to the Revenue and Taxation Code,
relating to taxation.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 22, as introduced, Charles Calderon. State Board of
Equalization: sales and use taxes: tangible personal property:
digital property report.
   The Sales and Use Tax Law imposes a tax on the gross receipts from
the sale in this state of, or the storage, use, or other consumption
in this state of, tangible personal property. The State Board of
Equalization is authorized to enforce that law, as provided.
   This bill would require the State Board of Equalization, within 60
days of the effective date of this act, to submit a report to the
Legislature on transactions involving digital property within this
state, that includes, but is not limited to, a proposed regulation
that would provide that sales of digital property are subject to tax
for purposes of the Sales and Use Tax Law and the revenue impact of
that regulation. This bill also makes findings and declarations
regarding the taxation of electronic transmissions of information.
   The California Constitution authorizes the Governor to declare a
fiscal emergency and to call the Legislature into special session for
that purpose. The Governor issued a proclamation declaring a fiscal
emergency, and calling a special session for this purpose, on January
10, 2008.
   This bill would state that it addresses the fiscal emergency
declared by the Governor by proclamation issued on January 10, 2008,
pursuant to the California Constitution.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature hereby finds and declares all of the
following:
   (a) The Sales and Use Tax Law, administered by the State Board of
Equalization, imposes a tax on the gross receipts from the sale in
this state of, or the storage, use, or other consumption in this
state of, tangible personal property.
   (b) The State Board of Equalization is authorized to prescribe,
adopt, and enforce rules and regulations relating to the
administration and enforcement of the Sales and Use Tax Law. These
regulations are issued by the State Board of Equalization to
implement, interpret, or make specific provisions of the Sales and
Use Tax Law and to aid in the administration and enforcement of that
law.
   (c) Under the existing regulations, policies, and practices of the
State Board of Equalization, the electronic transmission of
information that does not involve the transfer of tangible personal
property is not taxable under the Sales and Use Tax Law.
   (d) Currently, therefore, if a subscriber receives a monthly
report via the Internet and the only hard copy of that report is
generated by the subscriber using his or her own computer, the
company's charge for the subscription to the report is not subject to
tax.
   (e) The increased use and sophistication of the Internet and
electronic equipment like personal computers, cellular telephones,
and devices that store, organize, and play audio and visual files
has, in turn, increased the amount of transactions in this state
involving the electronic transmission of information and "digital
property" that is received by a consumer through remote
telecommunications from a seller.
   (f) "Digital property" includes, but is not limited to, music,
movies, and books, which, if delivered in a tangible storage media,
would be subject to sales and use tax in this state under the Sales
and Use Tax Law.
   (g) Given these developments in the types of transactions between
consumers and sellers, it is imperative that California's sales and
use taxes reflect those developments.
  SEC. 2.  Section 7061 is added to the Revenue and Taxation Code, to
read:
   7061.  On or before 60 days after the effective date of the act
adding this section, the board shall submit to the Legislature a
report on transactions involving digital property within this state
that includes, but is not limited to, the following:
   (a) A draft of a proposed regulation that would provide that sales
of digital property are subject to tax for purposes of the Sales and
Use Tax Law (Part 1 (commencing with Section 6001) of Division 2).
   (b) The revenue impact of the proposed regulation.
   (c) The changes required to administer the proposed regulation.
   (d) The board may adopt regulations to implement this section. The
adoption, amendment, or repeal of a regulation authorized by this
section is hereby exempted from the rulemaking provisions of the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code).
  SEC. 3.  This act addresses the fiscal emergency declared by the
Governor by proclamation on January 10, 2008, pursuant to subdivision
(f) of Section 10 of Article IV of the California Constitution.