BILL NUMBER: AB 1956	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Charles Calderon

                        FEBRUARY 13, 2008

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


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1956, 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 tangible personal property, for purposes of
the Sales and Use Tax Law, includes digital property and the economic
impact of that regulation. This bill also makes findings and
declarations regarding the taxation of electronic transmissions of
information.
   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 products like 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, and, as such, is the digital equivalent of tangible personal
property.
   (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
tangible personal property, for purposes of the Sales and Use Tax Law
(Part 1 (commencing with Section 6001) of Division 2), includes
digital property.
   (b) The economic impact of the proposed regulation.
   (c) Changes required to ensure compliance with the proposed
regulation.