BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1412
                                                                  Page  1

          Date of Hearing:  April 29, 2013

                     ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
                                Raul Bocanegra, Chair

            AB 1412 (Committee on Revenue and Taxation) - As Introduced:   
                                   March 19, 2013
           
           Majority vote.  Fiscal committee.

           SUBJECT  :  Sales and use taxes:  claim for refund:  customer  
          refunds

           SUMMARY  :  Authorizes a person to irrevocably assign to a  
          customer the right to receive a refund under the Sales and Use  
          Tax (SUT) Law, provided specified conditions are met.   
          Specifically,  this bill  authorizes a person (i.e., a retailer)  
          to make an irrevocable election to assign to a customer the  
          right to receive a SUT refund if all of the following conditions  
          are met:

          1)The amount represents excess tax reimbursement that must be  
            paid by the person to the customer under existing law;

          2)The irrevocable election to assign to the customer the amount  
            refunded is evidenced by a statement signed by the person and  
            the customer authorizing the named customer to receive the  
            amount refunded; and, 

          3)The signed statement is submitted to the State Board of  
            Equalization (BOE) in conjunction with the person's claim for  
            refund. 

           EXISTING LAW  :

          1)Imposes a sales tax on retailers for the privilege of selling  
            tangible personal property (TPP), absent a specific exemption.  
             The tax is based upon the retailer's gross receipts from TPP  
            sales in this state.

          2)Imposes a complementary use tax on the storage, use, or other  
            consumption in this state of TPP purchased from any retailer.   
            The use tax is imposed on the purchaser, and unless the  
            purchaser pays the use tax to a retailer registered to collect  
            the California use tax, the purchaser remains liable for the  








                                                                  AB 1412
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            tax, unless the use is exempted.  The use tax is set at the  
            same rate as the state's sales tax and must generally be  
            remitted to the BOE.

          3)Provides that any amount collected or paid in excess of what  
            is due under the SUT Law must be credited by the BOE against  
            any other amounts due from the person from whom the excess  
            amount was collected or by whom it was paid, and the balance  
            refunded, as specified.  

          4)Provides that, when an amount represented to a customer as SUT  
            reimbursement is computed upon an amount that is not taxable  
            or is in excess of the taxable amount and is actually paid by  
            the customer, the amount paid must be returned to the customer  
            upon notification by the BOE or by the customer that this  
            excess has been ascertained.  

           FISCAL EFFECT  :  Unknown.  

           COMMENTS  :  
           
           1)An overview of current law  :  Revenue and Taxation Code Section  
            6901 currently requires the BOE to refund any overpayment of  
            use tax directly to the purchaser, even though the retailer  
            collected and remitted the tax.  While this statute allows the  
            BOE to refund excess use tax directly to a purchaser, the BOE  
            may currently issue a refund for excess sales tax  
            reimbursement only to the retailer that collected and reported  
            the tax.  

           2)What would this bill do?  :  This bill authorizes a retailer to  
            irrevocably assign to a customer the right to receive a refund  
            of excess sales tax reimbursement, provided certain conditions  
            are met.  Specifically, the retailer and the customer would  
            need to sign the irrevocable assignment and submit it to the  
            BOE with the retailer's claim for refund.  This, in turn,  
            would allow the BOE to directly refund the customer who paid  
            the excess tax.  

           3)Working with the BOE  :  At the January 15, 2013 BOE Legislative  
            Committee Meeting, the BOE members unanimously voted to  
            sponsor a proposal to authorize a direct refund of excess  
            sales tax reimbursement in the amount of $300,000 or more to a  
            single customer.  The BOE's staff analysis notes that the  
            absence of this threshold could result in certain  








                                                                  AB 1412
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            administrative complications.  The author's office is engaged  
            in ongoing conversations with BOE staff to resolve these  
            issues.  

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          None on file

           Opposition 
           
          None on file
           
          Analysis Prepared by  :  M. David Ruff / REV. & TAX. / (916)  
          319-2098