BILL NUMBER: SB 1243	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Lowenthal
   (Coauthor: Assembly Member Bonnie Lowenthal)

                        FEBRUARY 23, 2012

   An act to amend and repeal Section 6385 of the Revenue and
Taxation Code, relating to taxation, to take effect immediately, tax
levy.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1243, as introduced, Lowenthal. Sales and use taxes:
exemptions: bunker fuel.
   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. That
law exempts, until January 1, 2014, the gross receipts from the sale
of fuel and petroleum products to a water common carrier for
immediate shipment outside this state for consumption in the conduct
of its business as a common carrier after the first out-of-state
destination, if specified conditions are met.
   This bill would extend that exemption to apply indefinitely.
   The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes
counties and cities to impose local sales and use taxes in conformity
with the Sales and Use Tax Law, and existing law authorizes
districts, as specified, to impose transactions and use taxes in
accordance with the Transactions and Use Tax Law, which conforms to
the Sales and Use Tax Law. Exemptions from state sales and use taxes
are incorporated into these laws. Section 2230 of the Revenue and
Taxation Code provides that the state will reimburse counties and
cities for revenue losses caused by the enactment of sales and use
tax exemptions.
   This bill would provide that, notwithstanding Section 2230 of the
Revenue and Taxation Code, no appropriation is made and the state
shall not reimburse counties and cities for sales and use tax
revenues lost by them pursuant to this bill.
   This bill would take effect immediately as a tax levy.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


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

  SECTION 1.  Section 6385 of the Revenue and Taxation Code, as added
by Section 3 of Chapter 712 of the Statutes of 2003, is amended to
read:
   6385.  (a) There are exempted from the computation of the amount
of the sales tax the gross receipts from the sale of tangible
personal property, other than fuel and petroleum products, to a
common carrier, shipped by the seller via the purchasing carrier's
facilities under a bill of lading whether the freight is paid in
advance, or the shipment is made freight charges collect, to a point
outside this state and the property is actually transported to the
out-of-state destination for use by the carrier in the conduct of its
business as a common carrier.
   (b) There are exempted from the computation of the amount of the
sales tax the gross receipts from the sale of tangible personal
property, other than aircraft fuel and petroleum products, purchased
by a foreign air carrier and transported by the foreign air carrier's
facilities to a foreign destination for use by the air carrier in
the conduct of its business as a common carrier by air of persons or
property. To qualify for this exemption, the foreign air carrier
shall furnish to the seller a certificate in writing that the
property shall be transported and used in the manner required in this
subdivision. The certificate shall be substantially in the form
prescribed by the board. A seller is not liable for the sales tax if
the seller accepts the certificate in good faith. If the seller does
not have the certificate at the time the board requests the seller to
submit the certificate to the board, the seller shall be given a
reasonable time to request the foreign air carrier to provide the
seller with the certificate. The foreign air carrier shall maintain
records in this state, such as a copy of a bill of lading, an air
waybill, or cargo manifest, documenting its transportation of the
tangible personal property to a foreign destination.
   (c) There are exempted from the computation of the amount of the
sales tax the gross receipts from the sale of fuel and petroleum
products to a water common carrier, for immediate shipment outside
this state for consumption in the conduct of its business as a common
carrier after the first out-of-state destination. To qualify for the
exemption the common carrier shall furnish to the seller an
exemption certificate in writing stating the quantity of fuel and
petroleum products claimed as exempt which is to be consumed after
reaching the first out-of-state destination. That certificate shall
bear the purchaser's valid seller's permit number or valid fuel
exemption registration number and shall be substantially in the form
prescribed by the board. Acceptance in good faith of that certificate
shall relieve the seller from liability for the sales tax.
   (d) "First out-of-state destination," as used in this section,
means the first point reached outside this state by a common carrier
in the conduct of its business as a common carrier at which cargo or
passengers are loaded or discharged, cargo containers are added or
removed, fuel is bunkered, or docking fees are charged. "First
out-of-state destination," as used in this section, also includes the
entry point of the Panama Canal when the carrier is only transiting
the canal in the conduct of its business as a common carrier.
   (e) "Common carrier," as used in this section, with respect to
water transportation, shall be deemed to include any vessel engaged,
for compensation, in transporting persons or property in interstate
or foreign commerce.
   (f) "Foreign air carrier," as used in this section, means a
foreign air carrier as defined in Section 40102 of Title 49 of the
United States Code.
   (g) "Immediate shipment," as used in this section, means that the
delivery of the fuel and petroleum products by the seller is directly
into a ship for transportation outside this state and not for
storage by the purchaser or any third party.
   (h) Any common carrier claiming exemption under subdivision (c)
who is not required to hold a valid seller's permit shall be required
to register with the board and obtain a fuel exemption registration
number and shall be required to file returns as the board may
prescribe if either the board notifies the carrier that returns must
be filed or the carrier is liable for taxes based upon consumption of
fuel erroneously claimed as exempt under this section. A common
carrier required to hold a fuel exemption registration number shall
be subject to all applicable provisions of this part, Part 1.5
(commencing with Section 7200), and Part 1.6 (commencing with Section
7251).
   (i) A common carrier claiming an exemption under subdivision (c),
upon request, shall make available to the board records, including,
but not limited to, a copy of a log abstract or a cargo manifest,
documenting its transportation of the fuel or petroleum product to an
out-of-state destination and the amount claimed as exempt. If the
carrier fails to provide these records upon request, the board may
revoke the carrier's fuel exemption registration number.
   (j) The board may require any carrier claiming an exemption under
this section and required to obtain a fuel exemption registration
number to place with it that security as the board may determine
pursuant to Section 6701.
   (k) Pursuant to subdivisions (a), (b), and (c), any use of the
property by the purchasing carrier, other than that incident to the
delivery of the property to the carrier and the transportation of the
property by the carrier to the first out-of-state destination and
subsequent use in the conduct of its business as a common carrier, or
a failure of the carrier to document its transporting the property
to the first out-of-state destination, shall subject the carrier to
liability for payment of sales tax as if it were a retailer making a
retail sale of the property at the time of that use or failure, and
the sales price of the property to it shall be deemed to be the gross
receipts from the retail sale. 
   (  l  ) On December 31, 2005, the Legislative
Analyst's Office (LAO) shall submit a report to the Governor and the
Legislature that evaluates the economic impact of the partial sales
tax exemption regarding bunker fuel. 
   (m) This section shall remain in effect only until January 1,
2014, and as of that date is repealed. 
  SEC. 2.  Section 6385 of the Revenue and Taxation Code, as added by
Section 4 of Chapter 712 of the Statutes of 2003, is repealed.

   6385.  (a) There are exempted from the computation of the amount
of the sales tax the gross receipts from the sale of tangible
personal property, other than fuel and petroleum products, to a
common carrier, shipped by the seller via the purchasing carrier's
facilities under a bill of lading whether the freight is paid in
advance, or the shipment is made freight charges collect, to a point
outside this state and the property is actually transported to the
out-of-state destination for use by the carrier in the conduct of its
business as a common carrier.
   (b) There are exempted from the computation of the amount of the
sales tax the gross receipts from the sale of tangible personal
property, other than aircraft fuel and petroleum products, purchased
by a foreign air carrier and transported by the foreign air carrier's
facilities to a foreign destination for use by the air carrier in
the conduct of its business as a common carrier by air of persons or
property. To qualify for this exemption, the foreign air carrier
shall furnish to the seller a certificate in writing that the
property shall be transported and used in the manner required in this
subdivision. The certificate shall be substantially in the form
prescribed by the board. A seller is not liable for the sales tax if
the seller accepts the certificate in good faith. If the seller does
not have the certificate at the time the board requests the seller to
submit the certificate to the board, the seller shall be given a
reasonable time to request the foreign air carrier to provide the
seller with the certificate. The foreign air carrier shall maintain
records in this state, such as a copy of a bill of lading, an air
waybill, or cargo manifest, documenting its transportation of the
tangible personal property to a foreign destination.
   (c) "Common carrier," as used in this section, with respect to
water transportation, shall be deemed to include any vessel engaged,
for compensation, in transporting persons or property in interstate
or foreign commerce.
   (d) "Foreign air carrier," as used in this section, means a
foreign air carrier as defined in Section 40102 of Title 49 of the
United States Code.
   (e) Pursuant to subdivisions (a) and (b), any use of the property
by the purchasing carrier, other than that incident to the delivery
of the property to the carrier and the transportation of the property
by the carrier to an out-of-state destination and subsequent use in
the conduct of its business as a common carrier, or a failure of the
carrier to document its transporting the property to an out-of-state
destination, shall subject the carrier to liability for payment of
sales tax as if it were a retailer making a retail sale of the
property at the time of that use or failure, and the sales price of
the property to it shall be deemed to be the gross receipts from the
retail sale.
   (f) This section shall become operative on January 1, 2014.

  SEC. 3.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.