BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   SB 805|
          |Office of Senate Floor Analyses   |                         |
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                                    CONSENT


          Bill No:  SB 805
          Author:   Senate Veterans Affairs Committee
          Amended:  As introduced
          Vote:     21

           
           SENATE GOVERNANCE & FINANCE COMMITTEE  :  9-0, 4/27/11
          AYES:  Wolk, Huff, DeSaulnier, Fuller, Hancock, Hernandez, 
            Kehoe, La Malfa, Liu

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8


           SUBJECT  :    Sales and use taxes:  consumers:  veterans: 
          itinerant vendors

           SOURCE  :     State Board of Equalization


           DIGEST  :    This bill deletes the January 1, 2012 sunset, so 
          that qualified itinerant veteran vendors would remain 
          consumers indefinitely with respect to tangible personal 
          property they sell for $100 or less under the specified 
          conditions.

           ANALYSIS  :    Current state law imposes the sales and use 
          tax on the gross receipts on tangible personal property 
          unless statutorily exempted.  The law does not contain a 
          general sale and use tax exemption for products sold by 
          veterans.

          Current law, with respect to certain veterans that sell 
          goods, provides that until January 1, 2012, a "qualified 
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          itinerant vendor" is a consumer of tangible personal 
          property owned and sold by the qualified itinerant vendor, 
          except alcoholic beverages and tangible personal property 
          sold for more than $100. 

          This provision specifies that a person is a "qualified 
          itinerant vendor" when all of the following apply:

          1. 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 from 
             service.

          2. The person is unable to obtain a livelihood by manual 
             labor due to a service-connected disability.

          3. For the purposes of selling tangible personal property, 
             the person is a sole proprietor with no employees.

          4. The person has no permanent place of business in this 
             state.   

          The law also 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, and excludes 
          from that term, any building or other permanently affixed 
          structure, including a residence, used for any of the 
          following:

          1. The storage of tangible personal property.

          2. The cleaning or the storage of equipment or other 
             property used in connection with the manufacture or sale 
             of tangible personal property.

          These provisions, however, do not apply to caterers or 
          vending machine operators.  

          This bill deletes the January 1, 2012 sunset, so that 
          qualified itinerant veteran vendors would remain 
          "consumers" indefinitely with respect to tangible personal 
          property they sell for $100 or less under the specified 

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          conditions. 

          This bill becomes effective immediately.

           Comments
           
          This bill is sponsored by the Board of Equalization in 
          order to enable qualifying veterans to retain their 
          consumer status with respect to their itinerant sales.  
          This provision represents one small step towards 
          recognizing our disabled veterans who have already made, or 
          are making the transition from military to civilian 
          employment, and it should not be allowed to sunset.  This 
          provision assists in this transition by simplifying 
          reporting requirements under the Sales and Use Tax Law for 
          those qualifying disabled veterans that are honorably 
          discharged or released from service that desire to engage 
          in the business of selling goods they own.  For qualifying 
          disabled veterans without employees or a permanent place of 
          business, this provision eliminates the need for them to 
          hold a seller's permit, file sales tax returns, and remit 
          sales tax on their sales.  

          Senate Bill 809 (Senate Veteran's Affairs), Chapter 621, 
          Statutes of 2009, added this exemption and became operative 
          on April 1, 2009.  The bill passed the Legislature 
          unanimously.  For several years prior to the enactment of 
          SB 809, veterans argued that they qualified for a sales and 
          use tax exemption under a Business and Professions Code 
          section which exempts honorably discharged veterans from 
          locally-imposed license taxes and fees.   Veterans groups 
          argued that they were specifically exempt from the 
          application of the sales and use tax on sales of food 
          products and carbonated beverages from a mobile food cart.  
          According to the courts and Legislative Counsel, that law 
          did not exempt qualified veterans from the sales and use 
          tax which prompted the need for additional legislation.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes   
          Local:  Yes

          According to the BOE, this bill will result in an annual 
          state and local revenue loss of about $22,000.


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           SUPPORT  :   (Verified  5/10/11)

          State Board of Equalization (source)

           ARGUMENTS IN SUPPORT  :    These provisions apply to a small 
          group of itinerant disabled veteran vendors, and if the 
          sunset date were not repealed, the BOE argues that it 
          creates an administrative burden on them because it has to 
          re-register these individuals, re-issue a seller's permit 
          to them, and ensures that they are in compliance with the 
          law.

          AGB:do  5/10/11   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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