BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 1412
                                                                  Page  1

          Date of Hearing:   May 8, 2013

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

            AB 1412 (Committee on Revenue and Taxation) - As Introduced:   
                                   March 19, 2013 

          Policy Committee:                              Revenue and  
          Taxation     Vote:                            8-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill allows the Board of Equalization (BOE) to refund  
          excess sales tax reimbursement directly to a customer, provided  
          specified conditions are met.  

           FISCAL EFFECT  

          BOE estimates administrative costs of approximately $1 million  
          to implement the provisions of this bill.  In addition, there  
          may be revenue losses to the extent additional refunds are paid  
          to customers.

           COMMENTS  

           1)Purpose  .  This bill would allow BOE to reimburse directly the  
            customer who was overcharged sales tax.  Existing law states  
            that when a retailer collects more sales tax reimbursement  
            than is due from a customer, that excess tax reimbursement  
            must either be returned to the customer or paid to the state.   
            Existing law also currently requires the BOE to refund any  
            overpayment of use tax directly to the purchaser, even though  
            the retailer collected and remitted the tax.  Conversely,  
            while this statute allows the BOE to refund excess use tax  
            directly to a purchaser, the BOE can currently refund excess  
            sales tax only to the retailer that collected and reported the  
            tax.  It is the retailer that will be afforded an opportunity  
            to refund the excess tax reimbursement to the customers from  
            whom it has collected.

           2)BOE proposal  .  BOE has expressed a number of administrative  








                                                                  AB 1412
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            concerns with this proposal. Because of their concerns and the  
            potential high administrative costs, BOE has proposed an  
            alternative proposal to authorize a direct refund or excess  
            sales tax reimbursement in the amount of $300,000 per  
            customer.  To obtain the direct refund both the retailer and  
            customer would need sign and submit required paperwork.  BOE  
            states their proposal would significantly reduce BOE  
            administrative costs.



           Analysis Prepared by  :    Roger Dunstan / APPR. / (916) 319-2081