BILL NUMBER: AB 155	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Charles Calderon

                        JANUARY 18, 2011

   An act to amend Sections 6203 and 7055 of, and to add Section 6208
to, the Revenue and Taxation Code, relating to taxation.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 155, as introduced, Charles Calderon. Use tax: notification to
purchasers: retailer engaged in business.
   Existing law imposes a sales tax on retailers measured by the
gross receipts from the sale of tangible personal property sold at
retail in this state, and a use tax 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,
measured by sales price. That law requires every retailer engaged in
business in this state, as defined, and making sales of tangible
personal property for storage, use, or other consumption in this
state to collect the tax from the purchaser. The commerce clause of
the United States Constitution allows a state to compel a retailer to
collect use tax if the retailer has a substantial nexus with the
state.
   This bill would revise the definition of "retailer engaged in
business in this state" to mean any retailer that has a substantial
nexus with this state for purposes of the commerce clause of the
United States Constitution and any retailer upon which federal law
permits this state to impose a use tax collection duty. The bill
would also include specified retailers as retailers engaged in
business in this state and would eliminate an exclusion.
   This bill would also require each retailer that is not required to
collect use tax to provide notification on its retail Internet Web
site and any catalog that tax is imposed on the storage, use, or
other consumption in this state of the tangible personal property
purchased from the retailer and is required to be paid by the
purchaser, as provided.
   The Sales and Use Tax Law also authorizes, in administration of
the use tax, the State Board of Equalization to require the filing of
reports by any person or class of persons possessing or having
custody of information relating to sales of tangible personal
property the storage, use, or other consumption of which is subject
to the use tax.
   This bill would require every person not required to register with
the board that sells tangible personal property the storage, use, or
other consumption of which is subject to use tax to file a report
with the board regarding those sales, as specified. The bill would
also require those persons to annually send a notice to each
purchaser showing the total amount of purchases made by that
purchaser in the prior calendar year and informing the purchaser of
the obligation to file the appropriate use tax returns, as
prescribed. The bill would impose specified monetary penalties for
failure to comply, while excluding from these requirements persons
whose receipts from those sales do not exceed a specified amount.
   This bill would provide that its provisions are severable.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 6203 of the Revenue and Taxation Code is
amended to read:
   6203.  (a) Except as provided by Sections 6292 and 6293, every
retailer engaged in business in this state and making sales of
tangible personal property for storage, use, or other consumption in
this state, not exempted under Chapter 3.5 (commencing with Section
6271) or Chapter 4 (commencing with Section 6351), shall, at the time
of making the sales or, if the storage, use, or other consumption of
the tangible personal property is not then taxable hereunder, at the
time the storage, use, or other consumption becomes taxable, collect
the tax from the purchaser and give to the purchaser a receipt
therefor in the manner and form prescribed by the board.
   (b) As respects leases constituting sales of tangible personal
property, the tax shall be collected from the lessee at the time
amounts are paid by the lessee under the lease.
   (c) "Retailer engaged in business in this state" as used in this
section and Section 6202 means  and   any
retailer that has a substantial nexus with this state for purposes of
the commerce clause of the United States Constitution and any
retailer upon which federal law permits this state to impose a use
tax collection duty. "Retailer engaged in business in this state"
specifically  includes  , but is not limited to,  any
of the following:
   (1) Any retailer maintaining, occupying, or using, permanently or
temporarily, directly or indirectly, or through a subsidiary, or
agent, by whatever name called, an office, place of distribution,
sales or sample room or place, warehouse or storage place, or other
place of business.
   (2) Any retailer having any representative, agent, salesperson,
canvasser, independent contractor, or solicitor operating in this
state under the authority of the retailer or its subsidiary for the
purpose of selling, delivering, installing, assembling, or the taking
of orders for any tangible personal property. 
   (3) Any retailer that is a member of a commonly controlled group,
as defined in Section 25105, and is a member of a combined reporting
group, as defined in paragraph (3) of subdivision (b) of Section
25106.5 of Title 18 of the California Code of Regulations, that
includes another member of the retailer's commonly controlled group
that, pursuant to an agreement with or in cooperation with the
retailer, performs services in this state in connection with tangible
personal property to be sold by the retailer, including, but not
limited to, design and development of tangible personal property sold
by the retailer, or the solicitation of sales of tangible personal
property on behalf of the retailer.  
   (3) 
    (4)  As respects a lease, any retailer deriving rentals
from a lease of tangible personal property situated in this state.

   (4) (A) Any retailer soliciting orders for tangible personal
property by mail if the solicitations are substantial and recurring
and if the retailer benefits from any banking, financing, debt
collection, telecommunication, or marketing activities occurring in
this state or benefits from the location in this state of authorized
installation, servicing, or repair facilities.  
   (B) This paragraph shall become operative upon the enactment of
any congressional act that authorizes states to compel the collection
of state sales and use taxes by out-of-state retailers. 

   (5) Notwithstanding Section 7262, a retailer specified in
paragraph (4) above, and not specified in paragraph (1), (2), or (3)
above, is a "retailer engaged in business in this state" for the
purposes of this part and Part 1.5 (commencing with Section 7200)
only.  
   (d) (1) For purposes of this section, "engaged in business in this
state" does not include the taking of orders from customers in this
state through a computer telecommunications network located in this
state which is not directly or indirectly owned by the retailer when
the orders result from the electronic display of products on that
same network. The exclusion provided by this subdivision shall apply
only to a computer telecommunications network that consists
substantially of online communications services other than the
displaying and taking of orders for products. 
   (2) This subdivision shall become inoperative upon the operative
date of provisions of a congressional act that authorize states to
compel the collection of state sales and use taxes by out-of-state
retailers.  
   (e) 
    (d)  Except as provided in this subdivision, a retailer
is not a "retailer engaged in business in this state" under paragraph
(2) of subdivision (c) if that retailer's sole physical presence in
this state is to engage in convention and trade show activities as
described in Section 513(d)(3)(A) of the Internal Revenue Code, and
if the retailer, including any of his or her representatives, agents,
salespersons, canvassers, independent contractors, or solicitors,
does not engage in those convention and trade show activities for
more than 15 days, in whole or in part, in this state during any
12-month period and did not derive more than one hundred thousand
dollars ($100,000) of net income from those activities in this state
during the prior calendar year. Notwithstanding the preceding
sentence, a retailer engaging in convention and trade show
activities, as described in Section 513(d)(3)(A) of the Internal
Revenue Code, is a "retailer engaged in business in this state," and
is liable for collection of the applicable use tax, with respect to
any sale of tangible personal property occurring at the convention
and trade show activities and with respect to any sale of tangible
personal property made pursuant to an order taken at or during those
convention and trade show activities. 
   (f) 
    (e)  Any limitations created by this section upon the
definition of "retailer engaged in business in this state" shall only
apply for purposes of tax liability under this code. Nothing in this
section is intended to affect or limit, in any way, civil liability
or jurisdiction under Section 410.10 of the Code of Civil Procedure.
  SEC. 2.  Section 6208 is added to the Revenue and Taxation Code, to
read:
   6208.  Each retailer making sales of tangible personal property,
the storage, use, or other consumption of which is subject to tax,
that is not required to collect use tax, shall provide notice on its
retail Internet Web site and any retail catalog that tax is imposed
by this part on the storage, use, or other consumption in this state
of the tangible personal property purchased from the retailer, the
storage, use, or other consumption of which is not exempt from tax,
and that tax is required to be paid by the purchaser. The
notification shall be readily visible.
  SEC. 3.  Section 7055 of the Revenue and Taxation Code is amended
to read:
   7055.   (a)    In administration of the use tax
 ,  the board may require the filing of reports by any
person or class of persons  having  in  his
or their possession or custody  of  information
relating to sales of tangible personal property  ,  the
storage, use, or other consumption of which is subject to the tax.
The reports shall be filed when the board requires and shall set
forth the names and addresses of purchasers of the tangible personal
property, the sales price of the property, the date of sale, and such
other information as the board may require. 
   (b) (1) Every person that sells tangible personal property, the
storage, use, or other consumption of which is subject to use tax,
that is not registered with the board, shall annually file with the
board a report that sets forth the names and addresses of purchasers
of the tangible personal property, the sales price of the property,
the date of sale, and other relevant information as may be required
by the board.  
   (2) Paragraph (1) shall not apply to a person whose receipts from
sales described in paragraph (1) are less than five hundred thousand
dollars ($500,000) in the prior calendar year, and are reasonably
expected to be less than five hundred thousand dollars ($500,000) in
the current calendar year.  
   (3) Each person required to comply with paragraph (1) shall be
subject to a penalty of ten dollars ($10) per violation for each name
of a purchaser that was not included in the report for each annual
period. If the board finds that a person's failure to comply with
paragraph (1) is due to reasonable cause and circumstances beyond the
person's control, and occurred notwithstanding the exercise of
ordinary care and the absence of willful neglect, the person shall be
relieved of the penalties provided in this paragraph.  
   (c) (1) Each person required to comply with paragraph (1) of
subdivision (b) shall annually send a notice to each purchaser
showing the total amount of purchases made by that purchaser in the
prior calendar year. The notice shall inform the purchaser of the
obligation to file the appropriate sales and use tax returns. The
notice shall be sent separately to each purchaser, by first-class
mail, with the following notice contained on the exterior of the
envelope: "Important Tax Document Enclosed."  
   (2) Each person required to comply with paragraph (1) shall be
subject to a penalty of ten dollars ($10) per violation for each
purchaser to whom notice is not sent. If the board finds that a
person's failure to comply with paragraph (1) of this subdivision is
due to reasonable cause and circumstances beyond the person's
control, and occurred notwithstanding the exercise of ordinary care
and the absence of willful neglect, the person shall be relieved of
the penalties provided in this paragraph. 
  SEC. 4.  The provisions of this bill are severable. If any
provision of this bill or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application.