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                          |                              |
           ----------------------------------------------------------------- 
           
                                           
                                    THIRD READING


          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:kd  8/7/14   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  NONE RECEIVED

                                   ****  END  ****














                                                                CONTINUED