BILL NUMBER: AB 2914 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 3, 2008
INTRODUCED BY Assembly Member Charles Calderon
FEBRUARY 22, 2008
An act to amend Section 6001 of the Revenue and Taxation
Code, relating to taxation. An act to amend Sections
6011 and 6012 of, and to add Part 14.5 (commencing with Section
33001) to Division 2 of, the Revenue and Taxation Code, relating to
taxation, to take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 2914, as amended, Charles Calderon. Sales and Use Tax
Law. Taxation: Adult Entertainment Venue Impact Fund.
The Sales and Use Tax Law imposes a tax on the sale of or the
storage, use, or other consumption of, tangible personal property in
this state at specified rates.
This bill would, in addition, impose a tax on gross receipts, as
defined, of an adult entertainment venue, as defined, in this state
at a rate of 8%. The tax would generally be collected, administered,
and enforced in the same manner as the taxes imposed under the Sales
and Use Tax Law. This bill would create the Adult Entertainment Venue
Impact Fund and express the intent of the Legislature that all
revenues, less refunds and the costs of the administration of the
tax, derived from the tax be transferred to the fund. This bill would
provide that moneys in the fund, upon appropriation by the
Legislature, be used to ameliorate the secondary effects of adult
entertainment venues, as provided. This bill makes findings and
declarations with regard to adult entertainment venues and the
imposition of this tax.
This bill would result in a change in state taxes for the purpose
of increasing state revenues within the meaning of Section 3 of
Article XIII A of the California Constitution, and thus would require
for passage the approval of 2/3 of the membership of each house of
the Legislature.
This bill would take effect immediately as a tax levy.
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.
This bill would make a technical, nonsubstantive change to that
law.
Vote: majority 2/3 . Appropriation:
no. Fiscal committee: no yes .
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 6011 of the Revenue
and Taxation Code is amended to read:
6011. (a) "Sales price" means the total amount for which tangible
personal property is sold or leased or rented, as the case may be,
valued in money, whether paid in money or otherwise, without any
deduction on account of any of the following:
(1) The cost of the property sold.
(2) The cost of materials used, labor or service cost, interest
charged, losses, or any other expenses.
(3) The cost of transportation of the property, except as excluded
by other provisions of this section.
(b) The total amount for which the property is sold or leased or
rented includes all of the following:
(1) Any services that are a part of the sale.
(2) Any amount for which credit is given to the purchaser by the
seller.
(3) The amount of any tax imposed by the United States upon
producers and importers of gasoline and the amount of any tax imposed
pursuant to Part 2 (commencing with Section 7301) of this division.
(c) "Sales price" does not include any of the following:
(1) Cash discounts allowed and taken on sales.
(2) The amount charged for property returned by customers when
that entire amount is refunded either in cash or credit, but this
exclusion shall not apply in any instance when the customer, in order
to obtain the refund, is required to purchase other property at a
price greater than the amount charged for the property that is
returned. For the purpose of this section, refund or credit of the
entire amount shall be deemed to be given when the purchase price
less rehandling and restocking costs are refunded or credited to the
customer. The amount withheld for rehandling and restocking costs may
be a percentage of the sales price determined by the average cost of
rehandling and restocking returned merchandise during the previous
accounting cycle.
(3) The amount charged for labor or services rendered in
installing or applying the property sold.
(4) (A) The amount of any tax (not including, however, any
manufacturers' or importers' excise tax, except as provided in
subparagraph (B)) imposed by the United States upon or with respect
to retail sales whether imposed upon the retailer or the consumer.
(B) The amount of manufacturers' or importers' excise tax imposed
pursuant to Section 4081 or 4091 of the Internal Revenue Code for
which the purchaser certifies that he or she is entitled to either a
direct refund or credit against his or her income tax for the federal
excise tax paid or for which the purchaser issues a certificate
pursuant to Section 6245.5.
(5) The amount of any tax imposed by any city, county, city and
county, or rapid transit district within the State of California upon
or with respect to retail sales of tangible personal property,
measured by a stated percentage of sales price or gross receipts,
whether imposed upon the retailer or the consumer.
(6) The amount of any tax imposed by any city, county, city and
county, or rapid transit district within the State of California with
respect to the storage, use or other consumption in that city,
county, city and county, or rapid transit district of tangible
personal property measured by a stated percentage of sales price or
purchase price, whether the tax is imposed upon the retailer or the
consumer.
(7) Separately stated charges for transportation from the retailer'
s place of business or other point from which shipment is made
directly to the purchaser, but the exclusion shall not exceed a
reasonable charge for transportation by facilities of the retailer or
the cost to the retailer of transportation by other than facilities
of the retailer. However, if the transportation is by facilities of
the retailer, or the property is sold for a delivered price, this
exclusion shall be applicable solely with respect to transportation
which occurs after the purchase of the property is made.
(8) Charges for transporting landfill from an excavation site to a
site specified by the purchaser, either if the charge is separately
stated and does not exceed a reasonable charge or if the entire
consideration consists of payment for transportation.
(9) The amount of any motor vehicle, mobilehome, or commercial
coach fee or tax imposed by and paid the State of California that has
been added to or is measured by a stated percentage of the sales or
purchase price of a motor vehicle, mobilehome, or commercial coach.
(10) (A) The amount charged for intangible personal property
transferred with tangible personal property in any technology
transfer agreement, if the technology transfer agreement separately
states a reasonable price for the tangible personal property.
(B) If the technology transfer agreement does not separately state
a price for the tangible personal property, and the tangible
personal property or like tangible personal property has been
previously sold or leased, or offered for sale or lease, to third
parties at a separate price, the price at which the tangible personal
property was sold, leased, or offered to third parties shall be used
to establish the retail fair market value of the tangible personal
property subject to tax. The remaining amount charged under the
technology transfer agreement is for the intangible personal property
transferred.
(C) If the technology transfer agreement does not separately state
a price for the tangible personal property, and the tangible
personal property or like tangible personal property has not been
previously sold or leased, or offered for sale or lease, to third
parties at a separate price, the retail fair market value shall be
equal to 200 percent of the cost of materials and labor used to
produce the tangible personal property subject to tax. The remaining
amount charged under the technology transfer agreement is for the
intangible personal property transferred.
(D) For purposes of this paragraph, "technology transfer agreement"
means any agreement under which a person who holds a patent or
copyright interest assigns or licenses to another person the right to
make and sell a product or to use a process that is subject to the
patent or copyright interest.
(11) The amount of any tax imposed upon diesel fuel pursuant to
Part 31 (commencing with Section 60001).
(12) (A) The amount of tax imposed by any Indian tribe within the
State of California with respect to a retail sale of tangible
personal property measured by a stated percentage of the sales or
purchase price, whether the tax is imposed upon the retailer or the
consumer.
(B) The exclusion authorized by subparagraph (A) shall only apply
to those retailers who are in substantial compliance with this part.
(13) The amount of any tax imposed pursuant to Part 14.5
(commencing with Section 33001) of this division.
SEC. 2. Section 6012 of the Revenue and
Taxation Code is amended to read:
6012. (a) "Gross receipts" mean the total amount of the sale or
lease or rental price, as the case may be, of the retail sales of
retailers, valued in money, whether received in money or otherwise,
without any deduction on account of any of the following:
(1) The cost of the property sold. However, in accordance with any
rules and regulations as the board may prescribe, a deduction may be
taken if the retailer has purchased property for some other purpose
than resale, has reimbursed his or her vendor for tax which the
vendor is required to pay to the state or has paid the use tax with
respect to the property, and has resold the property prior to making
any use of the property other than retention, demonstration, or
display while holding it for sale in the regular course of business.
If that deduction is taken by the retailer, no refund or credit will
be allowed to his or her vendor with respect to the sale of the
property.
(2) The cost of the materials used, labor or service cost,
interest paid, losses, or any other expense.
(3) The cost of transportation of the property, except as excluded
by other provisions of this section.
(4) The amount of any tax imposed by the United States upon
producers and importers of gasoline and the amount of any tax imposed
pursuant to Part 2 (commencing with Section 7301) of this division.
(b) The total amount of the sale or lease or rental price includes
all of the following:
(1) Any services that are a part of the sale.
(2) All receipts, cash, credits and property of any kind.
(3) Any amount for which credit is allowed by the seller to the
purchaser.
(c) "Gross receipts" do not include any of the following:
(1) Cash discounts allowed and taken on sales.
(2) Sale price of property returned by customers when that entire
amount is refunded either in cash or credit, but this exclusion shall
not apply in any instance when the customer, in order to obtain the
refund, is required to purchase other property at a price greater
than the amount charged for the property that is returned. For the
purpose of this section, refund or credit of the entire amount shall
be deemed to be given when the purchase price less rehandling and
restocking costs are refunded or credited to the customer. The amount
withheld for rehandling and restocking costs may be a percentage of
the sales price determined by the average cost of rehandling and
restocking returned merchandise during the previous accounting cycle.
(3) The price received for labor or services used in installing or
applying the property sold.
(4) (A) The amount of any tax (not including, however, any
manufacturers' or importers' excise tax, except as provided in
subparagraph (B)) imposed by the United States upon or with respect
to retail sales whether imposed upon the retailer or the consumer.
(B) The amount of manufacturers' or importers' excise tax imposed
pursuant to Section 4081 or 4091 of the Internal Revenue Code for
which the purchaser certifies that he or she is entitled to either a
direct refund or credit against his or her income tax for the federal
excise tax paid or for which the purchaser issues a certificate
pursuant to Section 6245.5.
(5) The amount of any tax imposed by any city, county, city and
county, or rapid transit district within the State of California upon
or with respect to retail sales of tangible personal property
measured by a stated percentage of sales price or gross receipts
whether imposed upon the retailer or the consumer.
(6) The amount of any tax imposed by any city, county, city and
county, or rapid transit district within the State of California with
respect to the storage, use or other consumption in that city,
county, city and county, or rapid transit district of tangible
personal property measured by a stated percentage of sales price or
purchase price, whether the tax is imposed upon the retailer or the
consumer.
(7) Separately stated charges for transportation from the retailer'
s place of business or other point from which shipment is made
directly to the purchaser, but the exclusion shall not exceed a
reasonable charge for transportation by facilities of the retailer or
the cost to the retailer of transportation by other than facilities
of the retailer. However, if the transportation is by facilities of
the retailer, or the property is sold for a delivered price, this
exclusion shall be applicable solely with respect to transportation
which occurs after the sale of the property is made to the purchaser.
(8) Charges for transporting landfill from an excavation site to a
site specified by the purchaser, either if the charge is separately
stated and does not exceed a reasonable charge or if the entire
consideration consists of payment for transportation.
(9) The amount of any motor vehicle, mobilehome, or commercial
coach fee or tax imposed by and paid to the State of California that
has been added to or is measured by a stated percentage of the sales
or purchase price of a motor vehicle, mobilehome, or commercial
coach.
(10) (A) The amount charged for intangible personal property
transferred with tangible personal property in any technology
transfer agreement, if the technology transfer agreement separately
states a reasonable price for the tangible personal property.
(B) If the technology transfer agreement does not separately state
a price for the tangible personal property, and the tangible
personal property or like tangible personal property has been
previously sold or leased, or offered for sale or lease, to third
parties at a separate price, the price at which the tangible personal
property was sold, leased, or offered to third parties shall be used
to establish the retail fair market value of the tangible personal
property subject to tax. The remaining amount charged under the
technology transfer agreement is for the intangible personal property
transferred.
(C) If the technology transfer agreement does not separately state
a price for the tangible personal property, and the tangible
personal property or like tangible personal property has not been
previously sold or leased, or offered for sale or lease, to third
parties at a separate price, the retail fair market value shall be
equal to 200 percent of the cost of materials and labor used to
produce the tangible personal property subject to tax. The remaining
amount charged under the technology transfer agreement is for the
intangible personal property transferred.
(D) For purposes of this paragraph, "technology transfer agreement"
means any agreement under which a person who holds a patent or
copyright interest assigns or licenses to another person the right to
make and sell a product or to use a process that is subject to the
patent or copyright interest.
(11) The amount of any tax imposed upon diesel fuel pursuant to
Part 31 (commencing with Section 60001).
(12) (A) The amount of tax imposed by any Indian tribe within the
State of California with respect to a retail sale of tangible
personal property measured by a stated percentage of the sales or
purchase price, whether the tax is imposed upon the retailer or the
consumer.
(B) The exclusion authorized by subparagraph (A) shall only apply
to those retailers who are in substantial compliance with this part.
For purposes of the sales tax, if the retailers establish to the
satisfaction of the board that the sales tax has been added to the
total amount of the sale price and has not been absorbed by them, the
total amount of the sale price shall be deemed to be the amount
received exclusive of the tax imposed. Section 1656.1 of the Civil
Code shall apply in determining whether or not the retailers have
absorbed the sales tax.
(13) The amount of any tax imposed pursuant to Part 14.5
(commencing with Section 33001) of this division.
SEC. 3. Part 14.5 (commencing with Section 33001)
is added to Division 2 of the Revenue and Taxation Code
, to read:
PART 14.5. Adult Entertainment Venue Tax
33001. The Legislature finds and declares all of the following:
(a) Adult entertainment venues engender many types of criminal
activities.
(b) Adult entertainment venues frequently cause adverse effects on
local property values and on the public health, safety, and welfare
of citizens in their vicinity, and on the character of local
neighborhoods.
(c) The presence of adult entertainment venues often impacts the
character of neighborhoods, or curtails and prevents development of
properties in their general vicinity, or both.
(d) This part is not intended as a de facto prohibition of legally
protected forms of expression.
(e) This part is intended to represent a balancing of competing
interests: the need to address criminal activity, protect and develop
neighborhoods, or both, through the taxation of adult entertainment
venues balanced against the legally protected rights of adult
entertainment establishments and their patrons.
(f) This article is not intended to allow or license any business,
establishment, or activity that would otherwise be unlawful under
the laws of this state or of the United States.
(g) This article is not intended to affect, or in any way limit,
the ability of local governments to address the negative secondary
effects of adult entertainment venues.
33002. Except where the context otherwise requires, the
definitions set forth in Part 1 (commencing with Section 6001) govern
the construction of this part.
33003. For purposes of this part, the following definitions
apply:
(a) (1) "Adult entertainment venue" means a retail establishment
located in California with a substantial purpose that is the sale or
rental of adult material, the premises of any facility located in
California that provides a public or private viewing of adult
material, or the public premises of any facility located in
California that offers live sexually explicit conduct that is
prohibited to audiences under 18 years of age or 21 years of age,
depending on the sale of alcoholic beverages on the premises.
(2) "Adult entertainment venue" shall not mean:
(A) A retail establishment that is open to the general public and
that segregates adult material by restricted access to persons 18
years of age or older, so long as the gross receipts from
transactions involving adult material do not exceed 5 percent of all
gross receipts of the retail establishment.
(B) A business whose primary purpose is the provision of live
performances that may include the display of complete nudity, so long
as the live performance is a legitimate play, opera, ballet, or
concert at a concert house, playhouse or theater, museum, or
educational institution or facility on whose premises alcoholic
beverages may be sold but which derives less than 20 percent of its
gross receipts from the sale of alcoholic beverages.
(b) "Adult material" includes all of the following:
(1) Harmful matter, as defined in Section 313 of the Penal Code.
(2) Live sexually explicit conduct provided at a business
establishment.
(3) Any item that includes sexually explicit conduct or is subject
to the requirements of Section 2257 of Title 18 of the United States
Code.
(c) "Gross receipts" includes receipts, from whatever source,
received by the adult entertainment venue, excepting any sales taxes
imposed on the transaction.
(d) "Sexually explicit conduct" means any of the following actual,
but not simulated, conduct:
(1) Sexual intercourse, including genital-genital, oral-genital,
anal-genital, or oral-anal, whether between persons of the same or
opposite sex.
(2) Masturbation.
(3) Sadistic or masochistic abuse.
(4) Lascivious exhibition of the genitals or pubic area of any
person.
33004. In addition to any tax imposed under Chapter 2 (commencing
with Section 6051) of Part 1, for the privilege of selling tangible
personal property at retail, a tax is hereby imposed upon all adult
entertainment venues at the rate of 8 percent of the gross receipts
received in this state on or after May 1, 2008.
33005. To the extent feasible or practicable, Section 1556.1 of
the Civil Code, the provisions of Chapter 5 (commencing with Section
6451), Chapter 6 (commencing with Section 6701), Chapter 7
(commencing with Section 6901), and Chapter 8 (commencing with
Section 7051) of Part 1, shall govern determinations, collections of
tax, overpayments and refunds, and administration under this part.
33006. The board shall enforce the provisions of this part and
may prescribe, adopt, and enforce rules and regulations relating to
the administration and enforcement of this part. The board may
prescribe the extent to which any ruling or regulation shall be
applied without retroactive effect.
33007. (a) All amounts required to be paid to the state under
this part shall be paid to the board in the form of remittances
payable to the State Board of Equalization. It is the intent of the
Legislature that the board shall transmit the payments, less refunds
and the board's costs of administration, to the Treasurer to be
deposited in the State Treasury to the credit of the Adult
Entertainment Impact Fund, which is hereby created.
(b) Moneys in the Adult Entertainment Impact Fund shall, upon
appropriation by the Legislature, be used to ameliorate the secondary
effects of adult entertainment venues. Amelioration of secondary
effects includes, but is not limited to:
(1) Increased funding to state and local law enforcement to combat
any increased criminal activity in the vicinity of adult
entertainment venues including, but not limited to, criminal activity
like the illegal sale of controlled substances, prostitution, and
crimes against women.
(2) Programs to address the negative secondary effects of adult
entertainment venues on property values.
(3) Provision of funding to address related health issues,
including the transmission of diseases and mental health treatment.
SEC. 4. The provisions of this act are severable.
If any provision of this act or its application is held invalid, that
invalidity shall not affect other provisions or applications that
can be given effect without the invalid provision or application.
SEC. 5. This act provides for a tax levy within
the meaning of Article IV of the Constitution and shall go into
immediate effect.
SECTION 1. Section 6001 of the Revenue and
Taxation Code is amended to read:
6001. This part is known and shall be cited as the "Sales and Use
Tax Law."