BILL ANALYSIS
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|SENATE RULES COMMITTEE | SJR 1|
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|327-4478 | |
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UNFINISHED BUSINESS
Bill No: SJR 1
Author: Ducheny (D)
Amended: 7/15/09
Vote: 21
SENATE REVENUE & TAXATION COMMITTEE : 5-3, 4/22/09
AYES: Wolk, Alquist, Florez, Padilla, Wiggins
NOES: Walters, Ashburn, Runner
SENATE FLOOR : 22-16, 6/3/09
AYES: Alquist, Calderon, Cedillo, Corbett, DeSaulnier,
Ducheny, Florez, Hancock, Kehoe, Leno, Liu, Lowenthal,
Negrete McLeod, Padilla, Pavley, Romero, Simitian,
Steinberg, Wiggins, Wolk, Wright, Yee
NOES: Aanestad, Ashburn, Benoit, Cogdill, Correa, Cox,
Denham, Dutton, Harman, Hollingsworth, Huff, Maldonado,
Runner, Strickland, Walters, Wyland
NO VOTE RECORDED: Oropeza, Vacancy
ASSEMBLY FLOOR : 44-31, 8/24/09 - See last page for vote
SUBJECT : Sales Tax Fairness and Simplification Act
SOURCE : Author
DIGEST : This resolution urges members of the California
congressional delegation to join in support of legislative
action by the Congress of the United States to allow states
to collect use taxes on remote sales and to exempt form the
use tax collection requirement small businesses that sell
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products over the Internet, and for the President to sign
that legislation.
Assembly Amendments made clarifying changes.
ANALYSIS :
Existing Federal law is generally governed by the United
States Supreme Court decision Quill Corp. v. North Dakota
(1002) 119 L.Ed.2d 91 (Quill) that states that the commerce
clause of the United States Constitution (cl. 3, Sec. 8,
Art. I) Precludes a state from requiring an out-of-state
seller to collect and remit the use tax of that state
unless both of the following apply: (1) the tax is applied
to an activity with a substantial nexus with the taxing
state, and (2) the tax is fairly related to the services
provided by the state.
Existing state law imposes the sales and use tax two
separate and distinct taxes. The sales tax is imposed on
retailers for the privilege of selling tangible personal
property at retail stores in this state and is measured by
the gross receipts of retailers derived from those sales.
The use tax is imposed for the privilege of utilizing
tangible personal property in this state. Specifically,
the use tax is imposed on the storage, use, or other
consumption in this state of tangible personal property
purchased from any retailer. The use tax is imposed on the
purchaser, and unless that purchaser pays the use tax to a
retailer registered to collect the California use tax, the
purchaser is liable for the tax, unless the use of that
property is specifically exempted or excluded from tax.
The sales and use taxes are the same rate (eight and
one-forth percent state wide plus any additional
transactions and use taxes) and are required to be remitted
to the Board of Equalization (BOE) on or before the last
day of the month following the quarterly period in which
the purchase was made. Both the sales and use tax require
that the "retailer be engaged in business in this state,"
and provides that sales to Californian's through telephone,
Internet and Mail Order from out-of-state retailers with no
nexus in the state are not subject to sales or use tax
collection by the retailer. If a retailer has sufficient
"business presence," as defined, that retailer is required
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to register with the BOE and collect the applicable use tax
on all sales to California consumers.
The Streamlined Sales Tax Project . The Streamlined Sales
Tax Project was created by state governments, with input
from local governments and the private sector, in an effort
to simplify and modernize sales and use tax collection and
administration. The goal of the project is to develop
measures to design, test and implement sales and use tax
system that radically simplifies sales and use taxes. The
Project was organized in March 2000 and conducts its work
through a steering committee made up of co-chairs, four
work groups, and a number of sub-groups. The participants
are mainly state revenue departments, but also include
state legislators, local governments and businesses.
Between 2001 and 2001, 40 states enacted legislation
expressing the intent to simplify the states' sales and use
tax collection systems, and to participate in discussions
to allow for the collection of states' sales and use taxes.
By January 1, 2008, 22 states: Arkansas, Indiana, Iowa,
Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada,
New Jersey, North Carolina, North Dakota, Ohio, Oklahoma,
South Dakota, Tennessee, Texas, Utah, Vermont, Washington,
West Virginia, and Wyoming, representing over 35 percent of
the Total population of the United States, have enacted
legislation to provide a state statutory basis to require
remote sellers to collect the states' use tax.
This resolution:
1. Calls upon the members of the California Congressional
delegation to join in support of legislative action by
the U.S. Congress to allow states to collect use tax on
remote sales and to exempt small businesses that sell
products over the Internet.
2. Urges the President to sign into law legislation
allowing for the collection of use taxes on remote sales
and to provide an exception from that collection
obligation for small businesses.
3. Requires the Secretary of the Senate to transmit copies
of this resolution to the President and Vice President
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of the U.S., to the President pro Tempore of the U.S.
Senate, to the Speaker of the House of Representatives,
to each Senator and Representative from California in
the U.S. Congress, and to the author's office for
appropriate distribution.
The author's office states that, "Generally, state sales
tax systems have not been updated to keep pace with changes
in the modern economy. Designed in the 1930s, sales tax
bases were limited to personal property. Today, economies
are increasingly dominated by untaxed services which are in
many cases not subject to sales tax. The growth of remote
commerce (via catalog, telephone and the Internet) has
created numerous opportunities to avoid paying or
collecting tax. With the purpose of modernizing sales tax
systems and in response to a U.S. Supreme Court decision
that bars individual states from requiring remote retailers
to collect state sales taxes, we hope to encourage Congress
to allow states to simplify and improve sales tax
administration."
FISCAL EFFECT : Fiscal Com.: No
SUPPORT : (Verified 8/24/09)
California Communities United Institute
California Federation of Teachers
California Tax Reform Association
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Beall, Blumenfield, Brownley,
Buchanan, Caballero, Charles Calderon, Carter, Chesbro,
Coto, Davis, De La Torre, De Leon, Eng, Evans, Feuer,
Fong, Fuentes, Furutani, Hayashi, Hernandez, Hill,
Huffman, Jones, Lieu, Bonnie Lowenthal, Ma, Mendoza,
Monning, Nava, John A. Perez, V. Manuel Perez,
Portantino, Ruskin, Salas, Skinner, Solorio, Swanson,
Torlakson, Torres, Torrico, Yamada, Bass
NOES: Adams, Anderson, Bill Berryhill, Tom Berryhill,
Blakeslee, Conway, Cook, DeVore, Duvall, Emmerson,
Fletcher, Fuller, Gaines, Galgiani, Garrick, Gilmore,
Hagman, Harkey, Huber, Jeffries, Knight, Logue, Miller,
Nestande, Niello, Nielsen, Silva, Smyth, Audra
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Strickland, Tran, Villines
NO VOTE RECORDED: Block, Hall, Krekorian, Saldana, Vacancy
DLW:do 8/25/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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