BILL ANALYSIS
AB 469
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Date of Hearing: May 13, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 469 (Eng) - As Amended: April 2, 2009
Policy Committee: Revenue and
Taxation Vote: 6-2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill strengthens current provisions related to a taxpayers'
obligation to declare unpaid use tax obligations on their income
tax returns. Specifically, the bill:
1)States that taxpayers with unpaid use tax obligations from the
preceding year shall report and remit the amount owed on their
income tax return. Current law states that taxpayers may
report and pay such taxes owed.
2)For small and moderate sized purchases, allows individuals
making nonbusiness purchases to base their use tax liabilities
on a table that shows estimated use tax liabilities for
various levels of household income. Individual purchases of
more than $1,000 would have to be reported separately.
3)Applies to purchases made after January 1, 2010.
FISCAL EFFECT
1)The BOE indicates that the bill will increase annual use tax
collections by about $14 million beginning in 2010-11, of
which $9 million would accrue to the General Fund and $5
million would accrue to special and local funds.
2)FTB indicates that inclusion of the table in its instructional
booklet could be accomplished within existing resources.
COMMENTS
1)Rationale . This bill, sponsored by the BOE, is intended to
AB 469
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raise public awareness of the California use tax and increase
compliance among the growing number of California consumers
that use electronic commerce. The author asserts that, by
increasing compliance and capturing a portion of unreported
tax revenue, the state can avoid deeper cuts in core services.
2)Background . The use tax is levied at the same rate as the
sales tax on items purchased for use in California which are
not subject to the sales tax, either because they were not
purchased from a licensed retailer or they were purchased from
an out-of-state source with no nexus in California. With the
exception of vehicles, vessels, and aircraft (which are
subject to registration and thus can be identified by BOE) the
compliance rate for use tax payments is relatively low. BOE
estimates that total uncollected use taxes is over $1 billion,
of which about $400 million is attributed to households. A
major portion of the underreporting is believed to be related
to the growing amount of internet and purchases from
out-of-state retailers, which, under federal law, are not
required to collect use taxes and remit them to the state.
Legislation enacted in 2003 required the FTB to revise the
personal income tax and corporation tax returns to add a
separate line for use tax reporting. This requirement is
scheduled to sunset on December 31, 2009. Tax payments
reported and remitted under this program have risen from $2.8
million in 2004 to $9 million by 2007. However, the amount of
under reporting by households of use tax obligations remains
substantial.
3) Previous legislation . This bill is similar to AB 1957
(Eng), introduced in the 2008 legislative session. AB 1957
failed in the Senate Committee on Revenue and Taxation.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081