BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 2758| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- CONSENT Bill No: AB 2758 Author: Assembly Revenue and Taxation Committee Amended: 4/10/14 in Assembly Vote: 21 SENATE GOVERNANCE & FINANCE COMMITTEE : 6-0, 6/25/14 AYES: Wolk, Knight, Beall, DeSaulnier, Hernandez, Walters NO VOTE RECORDED: Liu SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : 73-0, 5/23/14 (Consent) - See last page for vote SUBJECT : Sales and use taxes: administration: qualified use tax: acceptable tax return SOURCE : Author DIGEST : This bill provides that an amount equal to the qualified use tax a taxpayer reports on an acceptable tax return filed with the Franchise Tax Board (FTB) shall be applied to that taxpayer's use tax liability. ANALYSIS : Existing law 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. Existing law imposes, on transactions not subject to sales tax, CONTINUED AB 2758 Page 2 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 California's use tax, the purchaser remains liable for the 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 State Board of Equalization (BOE). Existing law authorizes a person to make an irrevocable election to report qualified use tax, as defined, on that person's income tax return and provides that any payments and credits shown on the return of a person reporting qualified use tax shall be applied in the following order: Taxes imposed under the Personal Income Tax Law or the Corporation Tax Law, including penalties and interest, if any; and Qualified use tax reported. This bill first applies the amount of payments or credits available on the tax return to the use tax liability reported on the tax return, and then to outstanding taxes, penalties, or interest. This bill becomes effective January 1, 2015, and applies to taxable years beginning on or after January 1, 2014. Comments Since 1933, the state has imposed a sales tax on California retailers for the privilege of selling TPP, absent a specific exemption. The tax is based upon the retailer's gross receipts from TPP sales in this state. In 1935, California adopted a complementary "use tax" on the storage, use, or other consumption of TPP purchased out-of-state and brought into California. The use tax was designed to protect California merchants who would otherwise be at a competitive disadvantage when out-of-state retailers sell to California customers without charging tax. Unlike the sales tax, the use tax is imposed on the purchaser and not the retailer. Unless the purchaser pays the use tax to CONTINUED AB 2758 Page 3 an out-of-state retailer registered to collect California's use tax, the purchaser remains liable for the tax. The use tax is set at the same rate as the state's sales tax and must generally be remitted to the BOE. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No ASSEMBLY FLOOR : 73-0, 5/23/14 AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom, Bocanegra, Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley, Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray, Grove, Hagman, Hall, Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein, Mansoor, Medina, Mullin, Muratsuchi, Nazarian, Olsen, Pan, Patterson, Perea, John A. Pérez, Quirk, Quirk-Silva, Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, Atkins NO VOTE RECORDED: Bonilla, Harkey, Roger Hernández, Melendez, Nestande, V. Manuel Pérez, Vacancy AB:k 8/5/14 Senate Floor Analyses SUPPORT/OPPOSITION: NONE RECEIVED **** END **** CONTINUED