BILL ANALYSIS
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THIRD READING
Bill No: AB 1265
Author: Ma (D)
Amended: 6/1/09 in Assembly
Vote: 21
SENATE REVENUE & TAXATION COMMITTEE : 8-0, 7/8/09
AYES: Wolk, Walters, Alquist, Ashburn, Florez, Padilla,
Runner, Wiggins
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 75-1, 6/2/09 - See last page for vote
SUBJECT : Sales and use taxes: consumers: itinerant
vendors
SOURCE : Author
DIGEST : This bill provides that, until January 1, 2012,
a qualified itinerant vendor is a consumer, and not a
retailer, of tangible personal property that the qualified
itinerant vendor owns and sells for less than $100, except
alcoholic beverages.
ANALYSIS :
Existing law:
1. Imposes a sales tax on retailers for the privilege of
selling tangible personal property, absent a specific
CONTINUED
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exemption. The tax is based upon the gross receipts
from sales of tangible personal property in this state.
2. Imposes a use tax on the storage, use, or other
consumption in this state of tangible personal property
purchased from any retailer for storage, use, or other
consumption in this state, absent a specific exemption.
3. Designates the following entities as consumers, and not
retailers, of specified tangible personal property they
use or furnish in the performance of their professional
services:
A. Licensed optometrists, physicians, pharmacists,
and registered dispensing opticians.
B. Licensed veterinarians.
C. Licensed chiropractors.
D. Specified garment cleaning establishments that
received no more than 20 percent of their total gross
receipts from the alteration of garments during the
preceding calendar year.
E. Licensed hearing aid dispensers.
F. Producers of X-ray films or photographs used to
diagnose human medical or dental conditions.
This bill:
1. Provides that a person is a qualified itinerant vendor
when all of the following apply:
A. The person was a member of the United States Armed
Forces, who received an honorable discharge or a
release from active duty under honorable conditions.
B. The person is unable to obtain a livelihood by
manual labor due to a service-connected disability.
C. For the purposes of selling tangible personal
property, the person is a sole proprietor with no
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employees.
D. The person has no "permanent place of business" in
this state.
2. Defines "permanent place of business" as "any building
or other permanently affixed structure, including a
residence, that is used in whole or in part for the
purpose of making sales of, or taking orders and
arranging for shipment of, [tangible personal
property]." Provides that a permanent place of business
does not include any building or other permanently
affixed structure, including a residence, used for any
of the following:
A. The storage of tangible personal property.
B. The cleaning or storage of equipment or other
property used in connection with the manufacture or
sale of tangible personal property.
3. Provides that the preferential classification shall not
apply to a person:
A. Engaged in the business of serving meals, food, or
drinks to a customer at a location owned, rented, or
otherwise supplied by the customer (i.e., a caterer).
B. Or, operating a vending machine.
4. Applies to retail sales of tangible personal property
worth less than $100.
5. Takes immediate effect as a tax levy, but becomes
operative on the first day of the first calendar quarter
beginning more than 90 days after its effective date.
6. Specifies that the state will not reimburse any local
agency for any sales or use tax revenues lost by the
agency under this bill.
Comments
The author states: "AB 1265 represents one small step
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towards recognizing our disabled veterans who have already
made, or are making the transition from military to
civilian employment. Enactment of this bill would assist
in this transition in two ways: (1) by making the law
specific with regard to sales tax obligations of qualifying
disabled veterans, and (2) by simplifying reporting
requirements that can be unduly burdensome for these small
businesses. ? By placing qualifying itinerant veterans in
the 'consumer' status for sales and use tax purposes, the
veterans would not be required to obtain a seller's permit,
file sales tax returns, or remit sales tax on [their] sales
? Instead, the veterans would simply pay tax up front on
their purchases of the goods they intend to sell."
Related legislation . Several bills have been introduced
this year which provide "consumer status" to specified
entities. These include AB 659 (Hayashi), which provides
consumer status to certain dry cleaners, AB 1486
(Furutani), which extends consumer status to certain
nonprofit membership organizations, and AB 676 (Jeffries)
which extends the status to destination management
companies.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/19/09)
American Legion
Board of Equalization
California Taxpayers' Association
Department of Foreign Wars of the United States, Department
of California
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Tom
Berryhill, Blakeslee, Blumenfield, Brownley, Buchanan,
Caballero, Charles Calderon, Carter, Chesbro, Conway,
Cook, Coto, Davis, De La Torre, De Leon, DeVore, Duvall,
Emmerson, Eng, Evans, Feuer, Fletcher, Fong, Fuentes,
Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore,
Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber,
Huffman, Jeffries, Jones, Knight, Krekorian, Lieu, Logue,
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Bonnie Lowenthal, Ma, Mendoza, Miller, Nava, Nestande,
Niello, John A. Perez, V. Manuel Perez, Portantino,
Ruskin, Salas, Saldana, Silva, Skinner, Smyth, Solorio,
Audra Strickland, Swanson, Torlakson, Torres, Torrico,
Tran, Villines, Yamada, Bass
NOES: Nielsen
NO VOTE RECORDED: Bill Berryhill, Block, Monning, Price
DLW:mw 8/19/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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