BILL NUMBER: SB 70 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 22, 2010
INTRODUCED BY Committee on Budget and Fiscal Review
JANUARY 20, 2009
An act relating to the Budget Act of 2009.
An act to amend Sections 6051.8, 6201.8, 6480.1, 7360, 7361.1,
7653.1, and 60050 of, and to add Section 6357.3 to, the
Revenue and Taxation Code, relating to taxation, to take effect
immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
SB 70, as amended, Committee on Budget and Fiscal Review.
Budget Act of 2009. Sales and use taxes: fuel taxes.
The Sales and Use Tax Law imposes a tax on retailers measured by
the gross receipts from the sale of tangible personal property sold
at retail in this state, or on the storage, use, or other consumption
in this state of tangible personal property purchased from a
retailer for storage, use, or other consumption in this state.
Assembly Bill 6 of the 2009-10 8th Extraordinary Session would, if
enacted, impose an additional 1.75% tax on the sale of, and the
storage, use, or other consumption in this state of, diesel fuel on
or after July 1, 2011.
This bill would exempt the sale of, and the storage, use, or other
consumption of, specified diesel fuel from that tax that would be
imposed by AB 6 of the 2009-10 8th Extraordinary Session.
Assembly Bill 6 of the 2009-10 Eighth Extraordinary Session would
both increase and decrease the rates of specified taxes and require
adjustments to the rates on an annual basis to achieve revenue
neutrality. Assembly Bill 6 would increase the rate of tax under the
Motor Vehicle Fuel Tax Law on the removal, entry, sale, delivering or
specified use of motor vehicle fuel, including aviation gasoline.
This bill would clarify that the rate changes to achieve revenue
neutrality would be effective for the next fiscal year. This bill
would exclude aviation gasoline from the increase in the rate of
motor vehicle fuel taxes.
The Sales and Use Tax Law requires a collection of prepayment of
retail sales tax at the time that motor vehicle fuel tax or diesel
fuel tax is imposed, and on each subsequent sale other than the
retail sale. This law requires the State Board of Equalization to
establish the prepayment rate based on 80% of the combined state and
local sales tax rate, as prescribed. This law authorizes the board to
readjust the rate if the price of fuel decreases or increases and
the established rate results in prepayments which consistently exceed
or are significantly lower than the retailers' sales tax liability.
This bill would also authorize the State Board of Equalization to
readjust the rate if an exemption from sales tax for sales of fuel,
as specified, is enacted and the established rate results in or could
result in prepayments which consistently exceed or are significantly
lower than the retailers' sales tax liability.
This bill would become operative only if both this bill and AB 6
of the 2009-10 8th Extraordinary Session are chaptered and this bill
is chaptered last.
This bill would take effect immediately as a tax levy.
This bill would express the intent of the Legislature to enact
statutory changes relating to the Budget Act of 2009.
Vote: majority. 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 6051.8 of the
Revenue and Taxation Code , as added by Assembly Bill 6 of
the 2009-10 Eighth Extraordinary Session, is amended to read:
6051.8. (a) In Except as provided by
Section 6357.3, in addition to the taxes imposed by this part,
for the privilege of selling tangible personal property at retail a
tax is hereby imposed upon all retailers at the rate of 1.75 percent
of the gross receipts of any retailer from the sale of all
diesel fuel, as defined in Section 60022, sold at retail in
this state on and after the operative date of this subdivision.
(b) Subdivision (a) shall become operative on July 1, 2011.
SEC. 2. Section 6201.8 of the Revenue
and Taxation Code , as added by Assembly Bill 6 of the
2009-10 Eighth Extraordinary Session, is amended to read:
6201.8. (a) In Except as provided by
Section 6357.3, in addition to the taxes imposed by this part,
an excise tax is hereby imposed on the storage, use, or other
consumption in the state of diesel fuel, as defined in Section 60022,
at the rate of 1.75 percent of the sales price of the diesel fuel on
and after the operative date of this subdivision.
(b) Subdivision (a) shall become operative on July 1, 2011.
SEC. 3. Section 6357.3 is added to the
Revenue and Taxation Code , to read:
6357.3. (a) On and after July 1, 2011, there are exempted from
the taxes imposed by Sections 6051.8 and 6201.8, the gross receipts
from the sale in this state of, and the storage, use, or other
consumption in this state of both of the following:
(1) Diesel fuel purchased for use or used in a manner that is
exempt from the tax imposed pursuant to Part 31 (commencing with
Section 60001) of Division 2 and not subject to the backup tax
imposed by Section 60058 or the payment requirement specified in
Section 60108.
(2) Diesel fuel subject to the payment requirement specified in
Section 60502.2.
(b) No exemption from the tax imposed pursuant to Sections 6051.8
and 6201.8 shall be allowed under this section unless the purchaser
furnishes the seller with an exemption certificate, completed in
accordance with any instructions or regulations as the board may
prescribe.
(c) If a purchaser certifies in writing to the seller that the
diesel fuel purchased without payment of the tax imposed pursuant to
Section 6051.8 or 6201.8 will be used in a manner entitling the
seller to regard the gross receipts or sales price from the sale as
exempt from that tax, and uses the diesel fuel in a manner that
subjects the diesel fuel to the tax imposed pursuant to Section
60050, the purchaser shall be liable for payment of the sales tax
imposed pursuant to Section 6051.8, with applicable interest, as if
the purchaser were a retailer making a retail sale of the diesel fuel
at the time the fuel is so used, and the sales price of the diesel
fuel to the purchaser shall be deemed the gross receipts from that
retail sale.
SEC. 4. Section 6480.1 of the Revenue
and Taxation Code is amended to read:
6480.1. (a) At any time that motor vehicle fuel tax or diesel
fuel tax is imposed or would be imposed, but for the dyed diesel fuel
exemption in paragraph (1) of subdivision (a) of Section 60100, or
the train operator exemption in paragraph (7) of subdivision (a) of
Section 60100 or paragraph (11) of subdivision (a) of Section 7401,
or, pursuant to subdivision (f) of Section 6480, would be deemed to
be imposed, on any removal, entry, or sale in this state of motor
vehicle fuel, aircraft jet fuel, or diesel fuel, the supplier shall
collect prepayment of retail sales tax from the person to whom the
motor vehicle fuel, aircraft jet fuel, or diesel fuel is sold.
However, if no sale occurs at the time of imposition of motor vehicle
fuel tax or diesel fuel tax, the supplier shall prepay the retail
sales tax on that motor vehicle fuel, aircraft jet fuel, or diesel
fuel. The prepayment required to be collected by the supplier
constitutes a debt owed by the supplier to this state until paid to
the board, until satisfactory proof has been submitted to prove that
the retailer of the fuel has paid the retail sales tax to the board,
or until a supplier or wholesaler who has consumed the fuel has paid
the use tax to the board. Each supplier shall report and pay the
prepayment amounts to the board, in a form as prescribed by the
board, in the period in which the fuel is sold. On each subsequent
sale of that fuel, each seller, other than the retailer, shall
collect from his or her purchaser a prepayment computed using the
rate applicable at the time of sale. Each supplier shall provide his
or her purchaser with an invoice for, or other evidence of, the
collection of the prepayment amounts which shall be separately stated
thereon.
(b) (1) A wholesaler shall collect prepayment of the retail sales
tax from the person to whom the motor vehicle fuel, aircraft jet
fuel, or diesel fuel is sold. Each wholesaler shall provide his or
her purchaser with an invoice for or other evidence of the collection
of the prepayment amounts, which shall be separately stated thereon.
(2) Each wholesaler shall report to the board, in a form as
prescribed by the board and for the period in which the motor vehicle
fuel, aircraft jet fuel, or diesel fuel was sold, all of the
following:
(A) The number of gallons of fuel sold and the amount of sales tax
prepayments collected by the wholesaler.
(B) The number of tax-paid gallons purchased and the amount of
sales tax prepayments made by the wholesaler.
(C) In the event that the amount of sales tax prepayments
collected by the wholesaler is greater than the amount of sales tax
prepayments made by the wholesaler, then the excess constitutes a
debt owed by the wholesaler to the state until paid to the board, or
until satisfactory proof has been submitted that the retailer of the
fuel has paid the tax to the board.
(c) A supplier or wholesaler who pays the prepayment and issues a
resale certificate to the seller, but subsequently consumes the motor
vehicle fuel, aircraft jet fuel, or diesel fuel, shall be entitled
to a credit against his or her sales and use taxes due and payable
for the period in which the prepayment was made, provided that he or
she reports and pays the use tax to the board on the consumption of
that fuel.
(d) The amount of a prepayment paid by the retailer or a supplier
or wholesaler who has consumed the motor vehicle fuel, aircraft jet
fuel, or diesel fuel to the seller from whom he or she acquired the
fuel shall constitute a credit against his or her sales and use taxes
due and payable for the period in which the sale was made. Failure
of the supplier or wholesaler to report prepayments or the supplier's
or wholesaler's failure to comply with any other duty under this
article shall not constitute grounds for denial of the credit to the
retailer, supplier, or wholesaler, either on a temporary or permanent
basis or otherwise. To be entitled to the credit, the retailer,
supplier, or wholesaler shall retain for inspection by the board any
receipts, invoices, or other documents showing the amount of sales
tax prepaid to his or her supplier, together with the evidence of
payment.
(e) The rate of the prepayment required to be collected during the
period from July 1, 1986, through March 31, 1987, shall be four
cents ($0.04) per gallon of motor vehicle fuel distributed or
transferred.
(f) On April 1 of each succeeding year, the prepayment rate per
gallon for motor vehicle fuel, rounded to the nearest one-half of one
cent ($0.005), of the required prepayment shall be established by
the board based upon 80 percent of the combined state and local sales
tax rate established by Sections 6051, 6051.2, 6051.3, 6051.5, 7202,
and 7203.1, and Section 35 of Article XIII of the California
Constitution on the arithmetic average selling price (excluding sales
tax) as determined by the State Energy Resources Conservation and
Development Commission, in its latest publication of the "Quarterly
Oil Report," of all grades of gasoline sold through a self-service
gasoline station. In the event the "Quarterly Oil Report" is delayed
or discontinued, the board may base its determination on other
sources of the arithmetic average selling price of gasoline. The
board shall make its determination of the rate no later than November
1 of the year prior to the effective date of the new rate.
Immediately upon making its determination and setting of the rate,
the board shall each year, no later than January 1, notify by mail
every supplier, wholesaler, and retailer of motor vehicle fuel. In
the event the price of fuel decreases or increases or an
exemption from sales tax for sales of fuel is enacted , and the
established rate results in or could result in
prepayments which consistently exceed or are significantly lower than
the retailers' sales tax liability, the board may readjust the rate.
(g) On April 1 of each succeeding year, the prepayment rate per
gallon for aircraft jet fuel, rounded to the nearest one-half of one
cent ($0.005), shall be established by the board based upon 80
percent of the combined state and local sales tax rate established by
Sections 6051, 6051.2, 6051.3, 6051.5, 7202, and 7203.1, and Section
35 of Article XIII of the California Constitution on the arithmetic
average selling price (excluding sales and state excise tax) as
determined by the board. The board shall make its determination of
the rate no later than November 1 of the year prior to the effective
date of the new rate. The rate of the prepayment required to be
collected for aircraft jet fuel shall be equal to 80 percent of the
arithmetic average selling price of aircraft jet fuel as specified by
industry publications. Immediately upon making its determination and
setting of the rate, the board shall each year, no later than
January 1, notify by mail every supplier, wholesaler, and retailer of
aircraft jet fuel. In the event the price of aircraft jet fuel
decreases or increases, and the established rate results in
prepayments that consistently exceed or are significantly lower than
the retailers' sales tax liability, the board may readjust the rate.
(h) On April 1 of each succeeding year, the prepayment rate per
gallon for diesel fuel, rounded to the nearest one-half of one cent
($0.005), shall be established by the board based upon 80 percent of
the combined state and local sales tax rate established by Sections
6051, 6051.2, 6051.3, 6051.5, 7202, and 7203.1, and Section 35 of
Article XIII of the California Constitution on the arithmetic average
selling price (excluding sales and state excise tax) as determined
by the board. The board shall make its determination of the rate no
later than November 1 of the year prior to the effective date of the
new rate. The rate of the prepayment required to be collected for
diesel fuel shall be equal to 80 percent of the arithmetic average
selling price of diesel fuel as specified by industry publications.
Immediately upon making its determination and setting of the rate,
the board shall each year, no later than January 1, notify by mail
every supplier, wholesaler, and retailer of diesel fuel. In the event
the rate of sales tax imposed on sales of diesel fuel increases
or decreases or the price of diesel fuel decreases or
increases, and the established rate results in or could result
in prepayments that consistently exceed or are significantly
lower than the retailers' sales tax liability, the board may readjust
the rate.
(i) (1) Notwithstanding any other provision of this section, motor
vehicle fuel sold by a supplier or wholesaler to a qualified
purchaser who, pursuant to a contract with the State of California or
its instrumentalities, resells that fuel to the State of California
or its instrumentalities shall be exempt from the prepayment
requirements.
(2) A qualified purchaser who acquires motor vehicle fuel for
subsequent resale to the State of California or its instrumentalities
pursuant to this subdivision shall furnish to the supplier or
wholesaler from whom the fuel is acquired an exemption certificate,
completed in accordance with any instructions or regulations as the
board may prescribe. The supplier or wholesaler shall retain the
certificate in his or her records in support of the exemption. To
qualify for the prepayment exemption, both of the following
conditions shall apply:
(A) The qualified purchaser does not take possession of the fuel
at any time.
(B) The fuel is delivered into storage tanks owned or leased by
the State of California or its instrumentalities via facilities of
the supplier or wholesaler, or by common or contract carriers under
contract with the supplier or wholesaler.
(3) For purposes of this subdivision, "qualified purchaser" means
a wholesaler who does not have or maintain a storage facility or
facilities for the purpose of selling motor vehicle fuel.
SEC. 5. Section 7360 of the Revenue and
Taxation Code , as amended by Assembly Bill 6 of the
2009-10 Eighth Extraordinary Session, is amended to read:
7360. (a) (1) A tax of eighteen cents ($0.18) is hereby imposed
upon each gallon of fuel subject to the tax in Sections 7362, 7363,
and 7364.
(2) If the federal fuel tax is reduced below the rate of nine
cents ($0.09) per gallon and federal financial allocations to this
state for highway and exclusive public mass transit guideway purposes
are reduced or eliminated correspondingly, the tax rate imposed by
paragraph (1), on and after the date of the reduction, shall be
recalculated by an amount so that the combined state rate under
paragraph (1) and the federal tax rate per gallon equal twenty-seven
cents ($0.27).
(3) If any person or entity is exempt or partially exempt from the
federal fuel tax at the time of a reduction, the person or entity
shall continue to be so exempt under this section.
(b) (1) On and after July 1, 2010, in addition to the tax imposed
by subdivision (a), a tax is hereby imposed upon each gallon of
motor vehicle fuel , other than aviation gasoline,
subject to the tax in Sections 7362, 7363, and 7364 in an amount
equal to 173/10 cents ($0.173) per gallon.
(2) For the 2011-12 fiscal year and each fiscal year thereafter,
the board shall, on or before March 1 of the fiscal year immediately
preceding the applicable fiscal year, adjust the rate in paragraph
(1) in that manner as to generate an amount of revenue that will
equal the amount of revenue loss attributable to the exemption
provided by Section 6357.7, based on estimates made by the board
, and that rate shall be effective during the state's next fiscal
year .
(3) In order to maintain revenue neutrality for each year,
beginning with the rate adjustment on or before March 1, 2012, the
adjustment under paragraph (2) shall also take into account the
extent to which the actual amount of revenues derived pursuant to
this subdivision and, as applicable, Section 7361.1, the revenue loss
attributable to the exemption provided by Section 6357.7 resulted in
a net revenue gain or loss for the fiscal year ending prior to the
rate adjustment date on or before March 1.
(4) The intent of paragraphs (2) and (3) is to ensure that the act
adding this subdivision and Section 6357.7 does not produce a net
revenue gain in state taxes.
SEC. 6. Section 7361.1 of the Revenue
and Taxation Code , as added by Assembly Bill 6 of the
2009-10 Eighth Extraordinary Session, is amended to read:
7361.1. (a) For the privilege of storing, for the purpose of
sale, each supplier, wholesaler, and retailer owning 1,000 or more
gallons of tax-paid motor vehicle fuel , other than aviation
gasoline, on July 1, 2010, shall pay a storage tax of 173/10
cents ($0.173) per gallon of tax-paid motor vehicle fuel , other
than aviation gasoline, in storage according to the volumetric
measure thereof.
(b) For purposes of this section:
(1) "Owning" means having title to the motor vehicle fuel ,
other than aviation gasoline .
(2) "Retailer" means any person who sells motor vehicle fuel
, other than aviation gasoline, in this state to a person who
subsequently uses the motor vehicle fuel , other than aviation
gasoline .
(3) "Storing" includes the ownership or possession of tax-paid
motor vehicle fuel , other than aviation gasoline, outside
of the bulk transfer/terminal system, including the holding of
tax-paid motor vehicle fuel , other than aviation gasoline,
for sale at wholesale or retail locations stored in a container
of any kind, including railroad tank cars and trucks or trailer
cargo tanks. "Storing" also includes tax-paid motor vehicle fuel
, other than aviation gasoline, purchased from and invoiced by
the seller, and tax-paid motor vehicle fuel , other than
aviation gasoline removed from a terminal or entered into by a
supplier, prior to the date specified in subdivision (a) and in
transit on that date.
(4) "Wholesaler" means any person who sells motor vehicle fuel
, other than aviation gasoline, in this state
for resale to a retailer or to a person who is not a retailer and
subsequently uses the motor vehicle fuel , other than aviation
gasoline .
SEC. 7. Section 7653.1 of the Revenue
and Taxation Code , as added by Assembly Bill 6 of the
2009-10 Eighth Extraordinary Session, is amended to read:
7653.1. On or before August 31, 2010, each person subject to the
storage tax imposed under Section 7361.1 shall prepare and file with
the board, in a form prescribed by the board, a return showing the
total number of gallons of tax-paid motor vehicle fuel , other
than aviation gasoline, owned by the person on July 1, 2010,
the amount of the storage tax, and any other information that the
board deems necessary for the proper administration of this part. The
return shall be accompanied by a remittance payable to the
Controller in the amount of tax due.
SEC. 8. Section 60050 of the Revenue
and Taxation Code , as amended by Assembly Bill 6 of the
2009-10 Eighth Extraordinary Session, is amended to read:
60050. (a) (1) A tax of eighteen cents ($0.18) is hereby imposed
upon each gallon of diesel fuel subject to the tax in Sections 60051,
60052, and 60058.
(2) If the federal fuel tax is reduced below the rate of fifteen
cents ($0.15) per gallon and federal financial allocations to this
state for highway and exclusive public mass transit guideway purposes
are reduced or eliminated correspondingly, the tax rate imposed by
paragraph (1), including any reduction or adjustment pursuant to
subdivision (b), on and after the date of the reduction, shall be
increased by an amount so that the combined state rate under
paragraph (1) and the federal tax rate per gallon equal what it would
have been in the absence of the federal reduction.
(3) If any person or entity is exempt or partially exempt from the
federal fuel tax at the time of a reduction, the person or entity
shall continue to be exempt under this section.
(b) (1) On July 1, 2011, the tax rate specified in paragraph (1)
of subdivision (a) shall be reduced to 13.6 cents ($0.136) and every
July 1 thereafter shall be adjusted pursuant to paragraphs (2) and
(3).
(2) For the 2012-13 fiscal year and each fiscal year thereafter,
the board shall, on or before March 1 of the fiscal year immediately
preceding the applicable fiscal year, adjust the rate reduction in
paragraph (1) in that manner as to result in a revenue loss
attributable to paragraph (1) that will equal the amount of revenue
gain attributable to Sections 6051.8 and 6201.8, based on estimates
made by the board , and that rate shall be effective during the
state's next fiscal year .
(3) In order to maintain revenue neutrality for each year,
beginning with the rate adjustment on or before March 1, 2013, the
adjustment under paragraph (2) shall take into account the extent to
which the actual amount of revenues derived pursuant to Sections
6051.8 and 6201.8 and the revenue loss attributable to this
subdivision resulted in a net revenue gain or loss for the fiscal
year ending prior to the rate adjustment date on or before March 1.
(4) The intent of paragraphs (2) and (3) is to ensure that the act
adding this subdivision and Sections 6051.8 and 6201.8 does not
produce a net revenue gain in state taxes.
SEC. 9. This act shall become operative only if
Assembly Bill 6 of the 2009-10 Eight Extraordinary Session adds
Sections 6051.8 and 6201.8 to the Revenue and Taxation Code, both
this bill and Assembly Bill 6 of the 2009-10 Eighth Extraordinary
Session are chaptered, and this bill is chaptered last.
SEC. 10. This act provides for a tax levy within
the meaning of Article IV of the Constitution and shall go into
immediate effect.
SECTION 1. It is the intent of the Legislature
to enact statutory changes relating to the Budget Act of 2009.