BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 805| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 CONTINUED SB 805 Page 2 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 CONTINUED SB 805 Page 3 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. CONTINUED SB 805 Page 4 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 **** END **** CONTINUED