BILL NUMBER: AB 1956 AMENDED BILL TEXT AMENDED IN ASSEMBLY MARCH 24, 2008 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 amended, 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,sales of digital property are subject to tax for purposes of the Sales and Use Tax Law, includes digital propertyLaw and the economicrevenue 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" includesincludes, but is not limited to, 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.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 Sectionsection , 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,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), includes digital property.2). (b) The economicrevenue impact of the proposed regulation. (c) Changes required to ensure compliance withadminister 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).