BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2681|
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THIRD READING
Bill No: AB 2681
Author: Dababneh (D)
Amended: As introduced
Vote: 27
SENATE GOVERNANCE & FINANCE COMMITTEE : 7-0, 6/25/14
AYES: Wolk, Knight, Beall, DeSaulnier, Hernandez, Liu, Walters
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 75-0, 5/28/14 - See last page for vote
SUBJECT : Sales and use tax: retail sale: storage use:
counterfeit mark
SOURCE : Board of Equalization
DIGEST : This bill provides that a retail sale or sale at
retail also includes any sale by a convicted seller of tangible
personal property with a counterfeit mark regardless of whether
the sale is for resale in the regular course of business.
ANALYSIS : Existing law imposes the sales tax on every
retailer engaged in business in this state that sells tangible
personal property, and requires them to collect the appropriate
tax from the purchase and remit the amount to the Board of
Equalization (BOE). Sales tax applies whenever a retail sale is
made, which is basically any sale other than one for resale in
the regular course of business. Unless the person pays the
sales tax to the retailer, he or she is liable for the use tax,
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AB 2681
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which is imposed on any person consuming tangible personal
property in the state. The use tax rate is the same rate as the
sales tax rate, 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.
Federal and state law make it a criminal act to willfully
manufacture, intentionally sell, or knowingly possess for sale
any counterfeit of a mark registered with the Secretary of State
or the Principal Register of the United States Patent and
Trademark Office. Federal law also makes it a criminal act to
traffic in:
Goods and services knowingly using a counterfeit mark in
connection with the goods and services,
Specified products knowing that a counterfeit mark has been
applied to it, the use of which is likely to cause confusion,
a mistake, or deceive someone,
Counterfeit military goods or service, knowing that the use,
malfunction, or failure of which is likely to cause serious
bodily injury or death, disclosure of classified information,
impairment of or significant harm to combat operations, or to
national security or a member of the armed forces,
Counterfeit drugs.
Existing law applies the sales tax to illegal sales, but does
not apply to sales for resale.
This bill:
1.Provides that a "retail sale" or "sale at retail" includes any
sale of tangible personal property with a counterfeit mark by
an individual convicted of selling counterfeit merchandise
under state or federal law, regardless of whether it's for
resale. BOE must mail a determination for any unreported tax
to a convicted seller or purchaser within one year from the
date of the last month of conviction. Any fine or restitution
amount must first be satisfied before BOE can collect the tax.
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This bill disconnects unfair trade protection provisions in
the Business and Professions Code to any person other than the
seller once the tax is imposed.
2.Defines a "convicted seller" as a person convicted of a
violation under Penal Code Section 350 or 653(w) or United
States Code, Title 18, Section 2320. The conviction must have
occurred on or after the date of sale.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/4/14)
Board of Equalization (source)
California Retailers Association
ARGUMENTS IN SUPPORT : According to the author, "Counterfeit
goods unfairly compete with legitimate brands, while tarnishing
the brand's reputation, and causing a revenue loss to the state.
Moreover some counterfeit products potentially cause sickness
or injury, such as counterfeit drugs or auto parts. The removal
of the sale for resale exclusion under AB 2681 is appropriate,
considering these sales are illegal and can do significant harm
to the public. It also demonstrated California's intolerance
towards criminal activity."
ASSEMBLY FLOOR : 75-0, 5/28/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gorell, Gray,
Grove, Hagman, Hall, Harkey, Roger Hernández, Holden, Jones,
Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein,
Mansoor, Medina, Melendez, Mullin, Muratsuchi, Nazarian,
Nestande, Olsen, Pan, Patterson, Perea, John A. Pérez, V.
Manuel Pérez, Quirk, Quirk-Silva, Ridley-Thomas, Rodriguez,
Salas, Skinner, Stone, Wagner, Waldron, Weber, Wieckowski,
Wilk, Williams, Yamada, Atkins
NO VOTE RECORDED: Frazier, Gordon, Rendon, Ting, Vacancy
AB:nl 8/5/14 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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