BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 143|
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CONSENT
Bill No: AB 143
Author: Holden (D), et al.
Amended: 4/8/13 in Assembly
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 7-0, 8/14/13
AYES: Wolk, Knight, Beall, DeSaulnier, Emmerson, Hernandez, Liu
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 77-0, 5/29/13 (Consent) - See last page for
vote
SUBJECT : Use taxes: exemption: Armed Forces: National
Guard: transfer
orders
SOURCE : Author
DIGEST : This bill, until January 1, 2019, exempts from the
use tax property purchased by a qualified active duty or reserve
member of the armed forces or National Guard, or his or her
spouse or registered domestic partner, outside the state and
prior to the report date on official orders transferring the
qualified service member to the state. This bill does not
affect state law guiding use taxes on vehicles.
ANALYSIS : State law imposes the sales tax on every retailer
"engaged in business in this state" that sells tangible personal
property to collect the appropriate tax from the purchase and
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AB 143
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remit the amount to the Board of Equalization. Unless the
person pays the sales tax to the retailer, he or she is liable
for the use tax, which is imposed on any person consuming
tangible personal property in the state. The use tax is the
same rate as the sales tax, and must be remitted on or before
the last day of the month following the quarterly period in
which the person made the purchase. The Legislature added the
use tax in 1935 in response to complaints from in-state
retailers that California residents would evade the sales tax it
enacted in 1933 by purchasing property out-of-state but use it
here.
Generally, when a California resident purchases tangible
personal property in another state, the obligation rests on the
consumer to remit the use tax due. Californians may remit the
use tax directly to the Board of Equalization, or on the income
tax form (SB 858, Senate Budget Committee, Chapter 721, Statutes
of 2010).
State law contains some exemptions for use taxes based on when
the property entered the state, and where its first use takes
place. State law presumes that the use tax applies whenever the
property's first use occurs within the state, or if the taxpayer
brings the property into the state within 90 days of purchase.
If neither condition is met, the property is not subject to use
tax. Additionally, if the taxpayer paid the sales tax to a
retailer in another state for the property, he or she need only
pay the difference between tax paid and the amount applied under
California law.
State law treats vehicles slightly differently: if a California
resident brings a vehicle into the state within the first year
after purchase, and registers it, the law presumes that the use
tax applies (SB 1100, Senate Budget Committee, Chapter 226,
Statutes of 2004). Nonresidents storing or using the vehicle in
the state more than half the time of the one year period
following the sale also are presumed to be subject to tax.
Taxpayers may rebut the presumption. However, members of the
armed services who purchase a vehicle prior to the effective
date of discharge are only subject to use tax if he or she
intended to use it in this state, and not pursuant to official
orders transferring him or her to this state.
This bill:
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1.Exempts from the use tax property purchased by a qualified
active duty or reserve member of the armed forces or National
Guard, or his or her spouse or registered domestic partner,
outside the state and prior to the report date on official
orders transferring the qualified service member to the state.
Does not affect state law guiding use taxes on vehicles.
2.Provides definitions for its terms, contains a waiver for
reimbursing any revenue loss to local agencies imposing a
sales or use tax, and sunsets the measure on January 1, 2019.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/20/13)
American Legion - Department of California
AMVETS - Department of California
Board of Equalization
Board of Equalization Member, George Runner
California Association of County Veterans Service Officers
California State Commanders Veterans Council
Veterans Democratic Club of Sacramento County
VFW of the United States - Department of California
Vietnam Veterans of America - California State Council
ARGUMENTS IN SUPPORT : According to the author, "Our brave men
and women in the Armed Forces sacrifice every day to protect and
defend the United States of America. In the recent two wars,
over two million American military personnel have been called to
serve in Afghanistan and Iraq, and more than 40 percent of them
have been deployed more than once. California is home to 12.9%
of the active duty members stationed in the United States.
Under current law, any purchases by an active duty member of the
military from an out-of-state retailer would be subjected to Use
Tax, if the military member were to be redeployed to California
within three months of the purchase. AB 143 would exempt active
military members who are transferring into California on
official military business. It is commonsense legislation that
will alleviate the unnecessary tax burden on our active military
members."
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ASSEMBLY FLOOR : 77-0, 5/29/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hernández,
Jones, Jones-Sawyer, Levine, Logue, Lowenthal, Maienschein,
Mansoor, Medina, Melendez, Mitchell, Morrell, Mullin,
Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea,
V. Manuel Pérez, Quirk, Quirk-Silva,
Rendon, Salas, Skinner, Stone, Ting, Wagner, Waldron, Weber,
Wieckowski, Wilk, Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Holden, Linder, Vacancy
AB:nl 8/21/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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