Senate BillNo. 732


Introduced by Senator Berryhill

February 22, 2013


An act to amend Sections 6011 and 6012 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

SB 732, as introduced, Berryhill. Sales and use taxes: exclusion: trade-in motor vehicle.

The Sales and Use Tax Law imposes 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 of tangible personal property purchased from a retailer for the storage, use, or other consumption in this state measured by sales price. That law defines the terms “gross receipts” and “sales price.”

This bill would exclude from the terms “gross receipts” and “sales price” the value of a motor vehicle traded in for a new motor vehicle, including a new motorcycle, if the value of the trade-in motor vehicle is separately stated on the new motor vehicle invoice or bill of sale or similar document provided to the purchaser.

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 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 the Sales and Use Tax Law are incorporated into these laws.

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.

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

This bill would take effect immediately as a tax levy, but its operative date would depend on its effective date.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

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

P2    1

SECTION 1.  

Section 6011 of the Revenue and Taxation Code
2 is amended to read:

3

6011.  

(a) “Sales price” means the total amount for which
4tangible personal property is sold or leased or rented, as the case
5may be, valued in money, whether paid in money or otherwise,
6without any deduction on account of any of the following:

7(1) The cost of the property sold.

8(2) The cost of materials used, labor or service cost, interest
9charged, losses, or any other expenses.

10(3) The cost of transportation of the property, except as excluded
11by other provisions of this section.

12(b) The total amount for which the property is sold or leased or
13rented includes all of the following:

14(1) Any services that are a part of the sale.

15(2) Any amount for which credit is given to the purchaser by
16the seller.

17(3) The amount of any tax imposed by the United States upon
18producers and importers of gasoline and the amount of any tax
19imposed pursuant to Part 2 (commencing with Section 7301) of
20this division.

21(c) “Sales price” does not include any of the following:

22(1) Cash discounts allowed and taken on sales.

23(2) The amount charged for property returned by customers
24when that entire amount is refunded either in cash or credit, but
25this exclusion shall not apply in any instance when the customer,
26in order to obtain the refund, is required to purchase other property
27at a price greater than the amount charged for the property that is
28returned. For the purpose of this section, refund or credit of the
29entire amount shall be deemed to be given when the purchase price
P3    1less rehandling and restocking costs are refunded or credited to
2the customer. The amount withheld for rehandling and restocking
3costs may be a percentage of the sales price determined by the
4average cost of rehandling and restocking returned merchandise
5during the previous accounting cycle.

6(3) The amount charged for labor or services rendered in
7installing or applying the property sold.

8(4) (A) The amount of any tax (not including, however, any
9manufacturers’ or importers’ excise tax, except as provided in
10subparagraph (B)) imposed by the United States upon or with
11respect to retail sales whether imposed upon the retailer or the
12consumer.

13(B) The amount of manufacturers’ or importers’ excise tax
14imposed pursuant to Section 4081 or 4091 of the Internal Revenue
15Code for which the purchaser certifies that he or she is entitled to
16either a direct refund or credit against his or her income tax for
17the federal excise tax paid or for which the purchaser issues a
18certificate pursuant to Section 6245.5.

19(5) The amount of any tax imposed by any city, county, city
20and county, or rapid transit district within the State of California
21upon or with respect to retail sales of tangible personal property,
22measured by a stated percentage of sales price or gross receipts,
23whether imposed upon the retailer or the consumer.

24(6) The amount of any tax imposed by any city, county, city
25and county, or rapid transit district within the State of California
26with respect to the storage, use or other consumption in that city,
27county, city and county, or rapid transit district of tangible personal
28property measured by a stated percentage of sales price or purchase
29price, whether the tax is imposed upon the retailer or the consumer.

30(7) Separately stated charges for transportation from the
31retailer’s place of business or other point from which shipment is
32made directly to the purchaser, but the exclusion shall not exceed
33a reasonable charge for transportation by facilities of the retailer
34or the cost to the retailer of transportation by other than facilities
35of the retailer. However, if the transportation is by facilities of the
36retailer, or the property is sold for a delivered price, this exclusion
37shall be applicable solely with respect to transportation which
38occurs after the purchase of the property is made.

39(8) Charges for transporting landfill from an excavation site to
40a site specified by the purchaser, either if the charge is separately
P4    1stated and does not exceed a reasonable charge or if the entire
2consideration consists of payment for transportation.

3(9) The amount of any motor vehicle, mobilehome, or
4commercial coach fee or tax imposed by and paidbegin insert toend insert the State of
5California that has been added to or is measured by a stated
6percentage of the sales or purchase price of a motor vehicle,
7mobilehome, or commercial coach.

8(10) (A) The amount charged for intangible personal property
9transferred with tangible personal property in any technology
10transfer agreement, if the technology transfer agreement separately
11states a reasonable price for the tangible personal property.

12(B) If the technology transfer agreement does not separately
13state a price for the tangible personal property, and the tangible
14personal property or like tangible personal property has been
15previously sold or leased, or offered for sale or lease, to third
16parties at a separate price, the price at which the tangible personal
17property was sold, leased, or offered to third parties shall be used
18to establish the retail fair market value of the tangible personal
19property subject to tax. The remaining amount charged under the
20technology transfer agreement is for the intangible personal
21property transferred.

22(C) If the technology transfer agreement does not separately
23state a price for the tangible personal property, and the tangible
24personal property or like tangible personal property has not been
25 previously sold or leased, or offered for sale or lease, to third
26parties at a separate price, the retail fair market value shall be equal
27to 200 percent of the cost of materials and labor used to produce
28the tangible personal property subject to tax. The remaining amount
29charged under the technology transfer agreement is for the
30intangible personal property transferred.

31(D) For purposes of this paragraph, “technology transfer
32agreement” means any agreement under which a person who holds
33a patent or copyright interest assigns or licenses to another person
34the right to make and sell a product or to use a process that is
35subject to the patent or copyright interest.

36(11) The amount of any tax imposed upon diesel fuel pursuant
37to Part 31 (commencing with Section 60001).

38(12) (A) The amount of tax imposed by any Indian tribe within
39the State of California with respect to a retail sale of tangible
40personal property measured by a stated percentage of the sales or
P5    1purchase price, whether the tax is imposed upon the retailer or the
2consumer.

3(B) The exclusion authorized by subparagraph (A) shall only
4apply to those retailers who are in substantial compliance with this
5part.

begin insert

6(13) The value of a motor vehicle traded in for a new motor
7vehicle, including a new motorcycle, if the value of the trade-in
8motor vehicle is separately stated on the new motor vehicle invoice
9or bill of sale or similar document provided to the purchaser.

end insert
10

SEC. 2.  

Section 6012 of the Revenue and Taxation Code is
11amended to read:

12

6012.  

(a) “Gross receipts” mean the total amount of the sale
13or lease or rental price, as the case may be, of the retail sales of
14retailers, valued in money, whether received in money or otherwise,
15without any deduction on account of any of the following:

16(1) The cost of the property sold. However, in accordance with
17any rules and regulations as the board may prescribe, a deduction
18may be taken if the retailer has purchased property for some other
19purpose than resale, has reimbursed his or her vendor for tax which
20the vendor is required to pay to the state or has paid the use tax
21with respect to the property, and has resold the property prior to
22making any use of the property other than retention, demonstration,
23or display while holding it for sale in the regular course of business.
24If that deduction is taken by the retailer, no refund or credit will
25be allowed to his or her vendor with respect to the sale of the
26property.

27(2) The cost of the materials used, labor or service cost, interest
28paid, losses, or any other expense.

29(3) The cost of transportation of the property, except as excluded
30by other provisions of this section.

31(4) The amount of any tax imposed by the United States upon
32producers and importers of gasoline and the amount of any tax
33imposed pursuant to Part 2 (commencing with Section 7301) of
34this division.

35(b) The total amount of the sale or lease or rental price includes
36all of the following:

37(1) Any services that are a part of the sale.

38(2) All receipts, cash, credits and property of any kind.

39(3) Any amount for which credit is allowed by the seller to the
40purchaser.

P6    1(c) “Gross receipts” do not include any of the following:

2(1) Cash discounts allowed and taken on sales.

3(2) Sale price of property returned by customers when that entire
4amount is refunded either in cash or credit, but this exclusion shall
5not apply in any instance when the customer, in order to obtain
6the refund, is required to purchase other property at a price greater
7than the amount charged for the property that is returned. For the
8purpose of this section, refund or credit of the entire amount shall
9be deemed to be given when the purchase price less rehandling
10and restocking costs are refunded or credited to the customer. The
11amount withheld for rehandling and restocking costs may be a
12percentage of the sales price determined by the average cost of
13rehandling and restocking returned merchandise during the
14previous accounting cycle.

15(3) The price received for labor or services used in installing or
16applying the property sold.

17(4) (A) The amount of any tax (not including, however, any
18manufacturers’ or importers’ excise tax, except as provided in
19subparagraph (B)) imposed by the United States upon or with
20respect to retail sales whether imposed upon the retailer or the
21consumer.

22(B) The amount of manufacturers’ or importers’ excise tax
23imposed pursuant to Section 4081 or 4091 of the Internal Revenue
24Code for which the purchaser certifies that he or she is entitled to
25either a direct refund or credit against his or her income tax for
26the federal excise tax paid or for which the purchaser issues a
27certificate pursuant to Section 6245.5.

28(5) The amount of any tax imposed by any city, county, city
29and county, or rapid transit district within the State of California
30upon or with respect to retail sales of tangible personal property
31measured by a stated percentage of sales price or gross receipts
32whether imposed upon the retailer or the consumer.

33(6) The amount of any tax imposed by any city, county, city
34and county, or rapid transit district within the State of California
35with respect to the storage, use or other consumption in that city,
36county, city and county, or rapid transit district of tangible personal
37property measured by a stated percentage of sales price or purchase
38price, whether the tax is imposed upon the retailer or the consumer.

39(7) Separately stated charges for transportation from the
40retailer’s place of business or other point from which shipment is
P7    1made directly to the purchaser, but the exclusion shall not exceed
2a reasonable charge for transportation by facilities of the retailer
3or the cost to the retailer of transportation by other than facilities
4of the retailer. However, if the transportation is by facilities of the
5retailer, or the property is sold for a delivered price, this exclusion
6shall be applicable solely with respect to transportation which
7occurs after the sale of the property is made to the purchaser.

8(8) Charges for transporting landfill from an excavation site to
9a site specified by the purchaser, either if the charge is separately
10stated and does not exceed a reasonable charge or if the entire
11 consideration consists of payment for transportation.

12(9) The amount of any motor vehicle, mobilehome, or
13commercial coach fee or tax imposed by and paid to the State of
14California that has been added to or is measured by a stated
15percentage of the sales or purchase price of a motor vehicle,
16mobilehome, or commercial coach.

17(10) (A) The amount charged for intangible personal property
18transferred with tangible personal property in any technology
19transfer agreement, if the technology transfer agreement separately
20states a reasonable price for the tangible personal property.

21(B) If the technology transfer agreement does not separately
22state a price for the tangible personal property, and the tangible
23personal property or like tangible personal property has been
24previously sold or leased, or offered for sale or lease, to third
25parties at a separate price, the price at which the tangible personal
26property was sold, leased, or offered to third parties shall be used
27to establish the retail fair market value of the tangible personal
28property subject to tax. The remaining amount charged under the
29technology transfer agreement is for the intangible personal
30property transferred.

31(C) If the technology transfer agreement does not separately
32state a price for the tangible personal property, and the tangible
33personal property or like tangible personal property has not been
34previously sold or leased, or offered for sale or lease, to third
35parties at a separate price, the retail fair market value shall be equal
36to 200 percent of the cost of materials and labor used to produce
37the tangible personal property subject to tax. The remaining amount
38charged under the technology transfer agreement is for the
39intangible personal property transferred.

P8    1(D) For purposes of this paragraph, “technology transfer
2agreement” means any agreement under which a person who holds
3a patent or copyright interest assigns or licenses to another person
4the right to make and sell a product or to use a process that is
5subject to the patent or copyright interest.

6(11) The amount of any tax imposed upon diesel fuel pursuant
7to Part 31 (commencing with Section 60001).

8(12) (A) The amount of tax imposed by any Indian tribe within
9the State of California with respect to a retail sale of tangible
10personal property measured by a stated percentage of the sales or
11purchase price, whether the tax is imposed upon the retailer or the
12consumer.

13(B) The exclusion authorized by subparagraph (A) shall only
14apply to those retailers who are in substantial compliance with this
15part.

begin insert

16(13) The value of a motor vehicle traded in for a new motor
17vehicle, including a new motorcycle, if the value of the trade-in
18motor vehicle is separately stated on the new motor vehicle invoice
19or bill of sale or similar document provided to the purchaser.

end insert

20For purposes of the sales tax, if the retailers establish to the
21satisfaction of the board that the sales tax has been added to the
22total amount of the sale price and has not been absorbed by them,
23the total amount of the sale price shall be deemed to be the amount
24received exclusive of the tax imposed. Section 1656.1 of the Civil
25Code shall apply in determining whether or not the retailers have
26absorbed the sales tax.

27

SEC. 3.  

Notwithstanding Section 2230 of the Revenue and
28Taxation Code, no appropriation is made by this act and the state
29shall not reimburse any local agency for any sales and use tax
30revenues lost by it under this act.

31

SEC. 4.  

This act provides for a tax levy within the meaning
32of Article IV of the Constitution and shall go into immediate effect.
33However, the provisions of this act shall become operative on the
34first day of the first calendar quarter commencing more than 90
35days after the effective date of this act.



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