Amended in Senate April 1, 2013

Senate Bill No. 560

Introduced by Senator Anderson

February 22, 2013

An act begin delete relating to disaster relief end delete begin insert to add Sections 6357.9, 17137, and 24311 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy end insert .

LEGISLATIVE COUNSEL’S DIGEST

SB 560, as amended, Anderson. Disaster begin delete relief. end delete begin insert relief: sales and use tax: exemption: income taxes: gross income: exclusion. end insert

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Existing sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. Those laws provide various exemptions from those taxes.

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This bill would exempt from those taxes, on and after January 1, 2014, the gross receipts from the sale of, and the storage, use, or other consumption of, tangible personal property purchased during a disaster period for use by a qualified person to be used primarily for the performance of disaster- or emergency-related work in this state, as provided. The bill would require the purchaser to furnish the retailer with an exemption certificate, as specified.

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The Personal Income Tax Law and the Corporation Tax Law impose taxes on taxpayers measured by the amount of the taxpayer’s taxable income for the taxable year, but exclude certain items of income from the computation of tax.

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This bill would, under both laws, for taxable years beginning on and after January 1, 2014, exclude from income amounts received by a qualified person, as defined, for the performance of disaster- or emergency-related work in this state that is performed during the disaster period, as provided.

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The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and existing law authorizes districts, as specified, to impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which conforms to the Sales and Use Tax Law. Amendments to state sales and use taxes are incorporated into these laws.

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Section 2230 of the Revenue and Taxation Code provides that the state will reimburse counties and cities for revenue losses caused by the enactment of sales and use tax exemptions.

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This bill would provide that, notwithstanding Section 2230 of the Revenue and Taxation Code, no appropriation is made and the state shall not reimburse any local agencies for sales and use tax revenues lost by them pursuant to this bill.

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This act provides for a tax levy within the meaning of Article IV of the Constitution and shall go into immediate effect.

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The California Emergency Services Act specifies those events, including conditions of disaster or of extreme peril to the safety of persons and property within the state caused by such conditions as fire, flood, storm, or earthquake, constituting a state emergency for purposes of the act and provides for specified activities in preparation or response to those events.

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This bill would state the Legislature’s intent to enact legislation that would facilitate rapid response and aid by out-of-state businesses to state declared disasters by providing that an out-of-state business that conducts operations within the state for purposes of performing work or services related to a declared state disaster or emergency should not be considered to have established a level of presence that would require that business or its out-of-state employees to be subject to any state and local licensing or registration requirements or to register, file, and remit state or local taxes and fees, such as state corporation taxes or personal income taxes, unemployment insurance, sales and use taxes on equipment used for performing the work or service, or state or local occupational licensing fees.

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Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

SECTION 1.  

The Legislature finds and declares all of the
following:

(a) During times of storm, flood, fire, earthquake, hurricane, or
other disaster or emergency, many companies bring in resources
and personnel from other states throughout the United States on a
temporary basis to expedite the often enormous and overwhelming
task of cleaning up, restoring and repairing damaged buildings,
equipment, and property, or even deploying or building new
replacement facilities in the state.

(b) This may involve the need for out-of-state companies,
including out-of-state affiliates of companies based in the state to
bring in resources, property or personnel that previously have had
no connection to the state, to perform activity in the state including,
but not limited to, repairing, renovating, installing, building,
rendering services, or other business activities and for which
personnel may be located in the state for extended periods of time
to perform such activities.

(c) During such time of operating in the state on a temporary
basis solely for purposes of helping the state recover from the
disaster or emergency, these companies and individual employees
should not be burdened by any requirements for begin delete business and
employee end delete begin insert income end insert taxes as a result of such activities in the state
for a temporary period.

(d) The state’s nexus begin delete and residency end delete thresholds are intended for
businesses begin delete and individuals end delete in the state as part of the conduct of
regular business operations begin delete or who intend to reside in the state end delete and
should not be directed at companies begin delete and individuals end delete coming into
the state on a temporary basis to provide help and assistance in
response to a declared state disaster or emergency.

(e) To ensure that companies may focus on quick response to
the needs of the state and its citizens during a declared state disaster
or emergency it is appropriate for the Legislature to deem that such
activity for a reasonable period of time during and after the disaster
or emergency for repairing and restoration of the often devastating
damage to property and infrastructure in the state shall not establish
begin delete presence, residency, nor end delete doing business in the state begin delete nor any other
criteria end delete for purposes of state begin delete and local end delete begin insert income end insert taxes begin delete , licensing, and
regulatory requirements end delete .

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begin insert SEC. 2. end insert   

end insert

begin insert Section 6357.9 is added to the end insert begin insert Revenue and Taxation
Code end insert begin insert , to read: end insert

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begin insert 6357.9. end insert   

(a) On and after January 1, 2014, there are exempted
from the taxes imposed by this part the gross receipts from the
sale of, and the storage, use, or other consumption of, tangible
personal property purchased during a disaster period for use by
a qualified person to be used primarily for the performance of
disaster- or emergency-related work in this state.

(b) For purposes of this section, all of the following shall apply:

(1) “Declared state disaster or emergency” means a disaster
or emergency event for which the Governor has proclaimed a state
of emergency or a major disaster or emergency for which the
President of the United States has declared to exist in this state.

(2) “Disaster- or emergency-related work” means repairing,
renovating, installing, building, or rendering services or other
business activities that relate to infrastructure that has been
damaged, impaired, or destroyed as a result of a declared state
disaster or emergency.

(3) “Disaster period” means the period of time that begins no
later than 10 days following the Governor’s proclamation of a
state of emergency or the President’s declaration of a major
disaster or emergency in this state, whichever occurs first, and
that extends for a period of 60 calendar days following the
termination of the declared disaster or emergency as proclaimed
by the Governor or by concurrent resolution by the Legislature
pursuant to Section 8629 or the President of the United States,
whichever occurs first.

(4) “Infrastructure” means property and equipment owned or
used by communication networks, gas and electric distribution
systems, water pipelines, and public roads and bridges, and related
support facilities that service multiple customers or citizens,
including, but not limited to, real and personal property, including
buildings, offices, power lines, poles, pipes, structures, and
equipment.

(5) “Local agency” means a local agency as defined in Section
8680.2 of the Government Code.

(6) “Primarily” means 50 percent or more of the time.

(7) “Qualified person” means a person, as defined in Section
6005, but excluding an individual, that meets all of the following:

(A) Prior to the commencement date of the declared state
disaster or emergency, as specified in the Governor’s proclamation
of a state of emergency or the President’s declaration of a major
disaster or emergency in this state, was not doing business in this
state as defined in Section 23101.

(B) Is doing business in this state as defined in Section 23101
after the commencement date of the declared state disaster or
emergency, as specified in the Governor’s proclamation of a state
of emergency or the President’s declaration of a major disaster
or emergency in this state, upon the request of a registered business
or by a state agency or a local agency, for the purpose of
performing of disaster- or emergency-related work.

(8) “Registered business” means a business entity that is
registered to do business in this state prior to the commencement
date of the declared state disaster or emergency, as specified in
the Governor’s proclamation of a state of emergency or the
President’s declaration of a major disaster or emergency in this
state.

(9) “State agency” means a state agency as defined in Section
8680.8 of the Government Code.

(c) An exemption shall not be allowed under this section unless
the purchaser furnishes the retailer with an exemption certificate,
completed in accordance with any instructions or regulations as
the board may prescribe, and the retailer retains the exemption
certificate in its records and furnishes the exemption certificate
to the board upon request. The exemption certificate shall contain
the sales price of the qualified tangible personal property.

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begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 17137 is added to the end insert begin insert Revenue and Taxation
Code end insert begin insert , to read: end insert

begin insert

begin insert 17137. end insert   

(a) For taxable years beginning on and after January
1, 2014, gross income shall not include any amount received by a
qualified person for the performance of disaster- or
emergency-related work in this state that is performed during the
disaster period.

(b) For purposes of this section, all of the following shall apply:

(1) “Declared state disaster or emergency” means a disaster
or emergency event for which the Governor has proclaimed a state
of emergency or a major disaster or emergency for which the
President of the United States has declared to exist in this state.

(2) “Disaster- or emergency-related work” means repairing,
renovating, installing, building, or rendering services or other
business activities that relate to infrastructure that has been
damaged, impaired, or destroyed as a result of a declared state
disaster or emergency.

(3) “Disaster period” means the period of time that begins no
later than 10 days following the Governor’s proclamation of a
state of emergency or the President’s declaration of a major
disaster or emergency in this state, whichever occurs first, and
that extends for a period of 60 calendar days following the
termination of the declared disaster or emergency as proclaimed
by the Governor or by concurrent resolution by the Legislature
pursuant to Section 8629 or the President of the United States,
whichever occurs first.

(4) “Infrastructure” means property and equipment owned or
used by communication networks, gas and electric distribution
systems, water pipelines, and public roads and bridges, and related
support facilities that service multiple customers or citizens,
including, but not limited to, real and personal property, including
buildings, offices, power lines, poles, pipes, structures, and
equipment.

(5) “Local agency” means a local agency as defined in Section
8680.2 of the Government Code.

(6) “Qualified person” means a limited partnership, limited
liability partnership, and limited liability company that meets both
of the following:

(A) Prior to the commencement date of the declared state
disaster or emergency, as specified in the Governor’s proclamation
of a state of emergency or the President’s declaration of a major
disaster or emergency in this state, was not doing business in this
state as defined in Section 23101.

(B) Is doing business in this state as defined in Section 23101
after the commencement date of the declared state disaster or
emergency, as specified in the Governor’s proclamation of a state
of emergency or the President’s declaration of a major disaster
or emergency in this state, upon the request of a registered business
or by a state agency or a local agency, for the purpose of
performing disaster- or emergency-related work.

(7) “Registered business” means a business entity that is
registered to do business in this state prior to the commencement
date of the declared state disaster or emergency, as specified in
the Governor’s proclamation of a state of emergency or the
President’s declaration of a major disaster or emergency in this
state.

(8) “State agency” means a state agency as defined in Section
8680.8 of the Government Code.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 24311 is added to the end insert begin insert Revenue and Taxation
Code end insert begin insert , to read: end insert

begin insert

begin insert 24311. end insert   

(a) For taxable years beginning on and after January
1, 2014, gross income shall not include any amount received by a
qualified person for the performance of disaster- or
emergency-related work in this state that is performed during the
disaster period.

(b) For purposes of this section, all of the following shall apply:

(1) “Declared state disaster or emergency” means a disaster
or emergency event for which the Governor has proclaimed a state
of emergency or a major disaster or emergency for which the
President of the United States has declared to exist in this state.

(2) “Disaster- or emergency-related work” means repairing,
renovating, installing, building, or rendering services or other
business activities that relate to infrastructure that has been
damaged, impaired, or destroyed as a result of a declared state
disaster or emergency.

(3) “Disaster period” means the period of time that begins no
later than 10 days following the Governor’s proclamation of a
state of emergency or the President’s declaration of a major
disaster or emergency in this state, whichever occurs first, and
that extends for a period of 60 calendar days following the
termination of the declared disaster or emergency as proclaimed
by the Governor or by concurrent resolution by the Legislature
pursuant to Section 8629 or the President of the United States,
whichever occurs first.

(4) “Infrastructure” means property and equipment owned or
used by communication networks, gas and electric distribution
systems, water pipelines, and public roads and bridges, and related
support facilities that service multiple customers or citizens,
including, but not limited to, real and personal property, including
buildings, offices, power lines, poles, pipes, structures, and
equipment.

(5) “Local agency” means a local agency as defined in Section
8680.2 of the Government Code.

(6) “Qualified person” means a corporation that meets all of
the following:

(A) Prior to the commencement date of the declared state
disaster or emergency, as specified in the Governor’s proclamation
of a state of emergency or the President’s declaration of a major
disaster or emergency in this state, was not doing business in this
state as defined in Section 23101.

(B) Is doing business in this state as defined in Section 23101
after the commencement date of the declared state disaster or
emergency, as specified in the Governor’s proclamation of a state
of emergency or the President’s declaration of a major disaster
or emergency in this state, upon the request of a registered business
or by a state agency or a local agency, for the purpose of
performing disaster- or emergency-related work.

(7) “Registered business” means a business entity that is
registered to do business in this state prior to the commencement
date of the declared state disaster or emergency, as specified in
the Governor’s proclamation of a state of emergency or the
President’s declaration of a major disaster or emergency in this
state.

(8) “State agency” means a state agency as defined in Section
8680.8 of the Government Code.

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begin insert

begin insert SEC. 5. end insert   

end insert begin insert

Notwithstanding Section 2230 of the Revenue and
Taxation Code, no appropriation is made by this act and the state
shall not reimburse any local agency for any sales and use tax
revenues lost by it under this act.

end insert

begin insert

begin insert SEC. 6. end insert   

end insert begin insert

This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.

end insert

begin delete

SEC. 2.  

It is the intent of the Legislature to enact legislation
that would facilitate rapid response and aid by out-of-state
businesses to state declared disasters by providing that an
out-of-state business that conducts operations within the state for
purposes of performing work or services related to a declared state
disaster or emergency should not be considered to have established
a level of presence that would require that business or its
out-of-state employees to be subject to any state and local licensing
or registration requirements or to register, file, and remit state or
local taxes and fees, such as state corporation taxes or personal
income taxes, unemployment insurance, sales and use taxes on
equipment used for performing the work or service, or state or
local occupational licensing fees.

end delete