BILL NUMBER: AB 155	AMENDED
	BILL TEXT

	AMENDED IN SENATE  SEPTEMBER 9, 2011
	AMENDED IN SENATE  AUGUST 29, 2011
	AMENDED IN ASSEMBLY  MAY 2, 2011
	AMENDED IN ASSEMBLY  MARCH 3, 2011

INTRODUCED BY   Assembly Members Charles Calderon and Skinner
   (Principal coauthor: Senator Hancock)

                        JANUARY 18, 2011

   An act to repeal and add Section 6203 of the Revenue and Taxation
Code, relating to taxation, and declaring the urgency thereof, to
take effect immediately.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 155, as amended, Charles Calderon. State Board of Equalization:
administration: retailer engaged in business in this state.
   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. Existing law defines a
"retailer engaged in business in this state" to include  a
retailer that has substantial nexus with this state and a retailer
upon whom federal law permits the state to impose a use tax
collection duty;  a retailer entering into an agreement or
agreements under which a person or persons in this state, for a
commission or other consideration, directly or indirectly refer
potential purchasers of tangible personal property to the retailer,
whether by an Internet-based link or an Internet Web site, or
otherwise, provided that 2 specified conditions are met, including
the condition that the retailer, within the preceding 12 months, has
total cumulative sales of tangible personal property to purchasers in
this state in excess of $500,000  ; and a retailer that is a
member of a commonly controlled group, as defined under the
Corporation Tax Law, and a member of a combined reporting group, as
defined, 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
 .
   This bill would  ,   revise the definition of
a "retailer engaged in business in this state" to temporarily
eliminate the above-mentioned inclusions in that definition, and
would condition the commencement of the operation of these inclusions
upon the enactment of a certain federal law and the state's election
to implement that law. This bill,  for purposes of 
that definition   one of those inclusions  , 
would  revise  that   the cumulative sales
 condition to increase the amount of total cumulative sales of
tangible personal property to purchasers in this state to an amount
in excess of $1,000,000.
   This bill would provide that certain provisions of this bill are
severable.
   This bill would declare that it is to take effect immediately as
an urgency statute.
   Vote: 2/3. 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
repealed.
   SEC. 2.    Section 6203 is added to the  
Revenue and Taxation Code   , 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 includes 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) 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), and not specified in paragraph (1), (2), or (3), 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) 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 its 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) Any limitations created by this section upon the definition of
"retailer engaged in business in this state" shall apply only 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.   SEC. 3.   Section 6203 is
added to the Revenue and Taxation Code, 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 any retailer that has substantial
nexus with this state for purposes of the commerce clause of the
United States Constitution and any retailer upon whom 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) As respects a lease, any retailer deriving rentals from a
lease of tangible personal property situated in this state.
   (4) 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.
   (5) (A) Any retailer entering into an agreement or agreements
under which a person or persons in this state, for a commission or
other consideration, directly or indirectly refer potential
purchasers of tangible personal property to the retailer, whether by
an Internet-based link or an Internet Web site, or otherwise,
provided that both of the following conditions are met:
   (i) The total cumulative sales price from all of the retailer's
sales, within the preceding 12 months, of tangible personal property
to purchasers in this state that are referred pursuant to all of
those agreements with a person or persons in this state, is in excess
of ten thousand dollars ($10,000).
   (ii) The retailer, within the preceding 12 months, has total
cumulative sales of tangible personal property to purchasers in this
state in excess of one million dollars ($1,000,000).
   (B) An agreement under which a retailer purchases advertisements
from a person or persons in this state, to be delivered on
television, radio, in print, on the Internet, or by any other medium,
is not an agreement described in subparagraph (A), unless the
advertisement revenue paid to the person or persons in this state
consists of commissions or other consideration that is based upon
sales of tangible personal property.
   (C) Notwithstanding subparagraph (B), an agreement under which a
retailer engages a person in this state to place an advertisement on
an Internet Web site operated by that person, or operated by another
person in this state, is not an agreement described in subparagraph
(A), unless the person entering the agreement with the retailer also
directly or indirectly solicits potential customers in this state
through use of flyers, newsletters, telephone calls, electronic mail,
blogs, microblogs, social networking sites, or other means of direct
or indirect solicitation specifically targeted at potential
customers in this state.
   (D) For purposes of this paragraph, "retailer" includes an entity
affiliated with a retailer within the meaning of Section 1504 of the
Internal Revenue Code.
   (E) This paragraph shall not apply if the retailer can demonstrate
that the person in this state with whom the retailer has an
agreement did not engage in referrals in the state on behalf of the
retailer that would satisfy the requirements of the commerce clause
of the United States Constitution.
   (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.
   (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. 3.   SEC. 5.   The provisions
contained in Section  2   3  of this act
are severable. If any provision of Section  2  3
 of this act 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.
   SEC. 6.    (a) Sections 1 and 2 of this act shall
become operative on the effective date of this act.  
   (b) Section 3 of this act shall become operative on either of the
following dates:  
   (1) If federal law is enacted on or before July 31, 2012,
authorizing the states to require a seller to collect taxes on sales
of goods to in-state purchasers without regard to the location of the
seller, and the state does not, on or before September 14, 2012,
elect to implement that law, Section 3 of this act shall become
operative on January 1, 2013, and Section 2 of this act shall become
inoperative on that same date.  
   (2) If federal law is not enacted on or before July 31, 2012,
authorizing the states to require a seller to collect taxes on sales
of goods to in-state purchasers without regard to the location of the
seller, Section 3 of this act shall become operative on September
15, 2012, and Section 2 of this act shall become inoperative on that
same date.  
   (c) The Director of Finance shall, on or before August 15, 2012,
certify in writing to the Governor, the Senate Committee on Rules,
the Speaker of the Assembly, and the State Board of Equalization
whether or not federal law has been enacted on or before July 31,
2012, authorizing the states to require a seller to collect taxes on
sales of goods or services to in-state purchasers without regard to
the location of the seller.  
   (d) For the period between June 28, 2011, and the effective date
of this act, state law regarding the imposition and collection of use
taxes, including, but not limited to, any reporting requirement
imposed on a seller, shall be administered and applied in accordance
with state law as it read on June 27, 2011. 
   SEC. 4.  SEC. 7.   This act is an
urgency statute necessary for the immediate preservation of the
public peace, health, or safety within the meaning of Article IV of
the Constitution and shall go into immediate effect. The facts
constituting the necessity are: 
   In order to lessen the burden at the earliest possible time on
small businesses that are otherwise required to collect use tax, it
is necessary that this act take effect immediately.  
   In order to clarify and confirm at the earliest possible time the
obligations of certain retailers to collect use taxes from California
purchasers, it is necessary that this act take effect immediately.

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