BILL ANALYSIS                                                                                                                                                                                                    


          |SENATE RULES COMMITTEE            |                  AB 1265|
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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  

           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  


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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  

             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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             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. 


          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  

           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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