Amended in Senate April 23, 2013

Amended in Senate April 11, 2013

Senate Bill No. 808

Introduced by Senator De León

February 22, 2013

An act to amend Section 6357.5 of, and to add Section 6357.6 to, the Revenue and Taxation begin delete Code, to amend Section 322 of, and to add Section 337 to, the Unemployment Insurance Code end delete begin insert Code end insert , relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

SB 808, as amended, De León. Sales and use taxes: air common carrier: employing Medi-Cal recipients.

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The Sales and Use Tax Law imposes

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begin insert Existing sales and use tax laws impose end insert a tax on begin insert retailers measured by end insert the gross receipts from the sale begin insert of tangible personal property sold at retail end insert in this state begin delete of end delete , or begin insert on end insert the storage, use, or other consumption in this state begin delete of, end delete begin insert of end insert tangible personal property begin insert purchased from a retailer for storage, use, or other consumption in this state end insert . begin delete That law end delete begin insert The Sales and Use Tax Law end insert provides various exemptions from begin delete that tax end delete begin insert those taxes end insert , including an exemption for the gross receipts from the sale of, and the storage, use, or other consumption of, fuel and petroleum products sold to an air common carrier for immediate consumption or shipment use in the conduct of its business as an air common carrier on an international flight.

This bill would begin delete prohibit end delete begin insert exclude from end insert the exemption begin delete for end delete the begin delete sole end delete begin insert sale end insert of fuel and petroleum products to an air common carrier during a calendar year following a year in which the air common carrier fails to send specified information to the begin delete Employment Development Department end delete begin insert State Board of Equalization end insert , or a year in which the State Board of Equalization provides notification that the air common carrier employs people enrolled in Medi-Cal or a contractor or subcontractor of the air common carrier employs people enrolled in Medi-Cal, as specified. This bill would subject the carrier to liability for payment of sales tax as if it were a retailer making a retail sale of the tangible personal property at the time of the purchase, as prescribed. This bill begin delete would require the Employment Development Department, in coordination and consultation with the State Department of Health Care Services, to collect and identify specified information relating to the air common carriers, and end delete would require begin delete the Employment Development Department and end delete the State Board of Equalization to provide specified notifications related to air common carriers and the status of the exemption, as prescribed.

This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of 2⁄3 of the membership of each house of the Legislature.

This bill would take effect immediately as a tax levy.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

SECTION 1.  

Section 6357.5 of the Revenue and Taxation
Code is amended to read:

6357.5.  

(a) 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, fuel and petroleum products sold to an
air common carrier for immediate consumption or shipment in the
conduct of its business as an air common carrier, on an international
flight.

(b) To qualify for the exemption, the air common carrier shall
furnish to the seller an exemption certificate in writing stating the
quantity of fuel and petroleum products claimed as exempt. That
certificate shall bear the purchaser’s valid seller’s permit number
or valid fuel exemption registration number and shall be
substantially in the form prescribed by the board. Acceptance in
good faith of that certificate shall relieve the seller from liability
for the sales tax.

(c) “Immediate consumption or shipment,” as used in this
section, means that the delivery of the fuel and petroleum products
by the seller is directly into an aircraft for consumption or
transportation on an international flight and not for storage by the
purchaser or any third party.

(d) “International flight,” as used in this section, is a flight whose
final destination is a point outside of the United States.

(e) Any air common carrier claiming exemption under this
section who is not required to hold a valid seller’s permit, shall be
required to register with the board and obtain a fuel exemption
registration number, and shall be required to file returns as the
board may prescribe, either if the board notifies the carrier that
returns must be filed or if the carrier is liable for taxes based upon
consumption or transportation of fuel or petroleum products
erroneously claimed as exempt under this section. A common
carrier required to hold a fuel exemption registration number shall
be subject to all applicable provisions of this part, Part 1.5
(commencing with Section 7200), and Part 1.6 (commencing with
Section 7251).

(f) An air common carrier claiming an exemption under this
section upon request, shall make available to the board records,
including, but not limited to, a copy of a log abstract, an air waybill,
or a cargo manifest, documenting its consumption or transportation
of the fuel or petroleum products on an international flight and the
amount claimed as exempt. If the carrier fails to provide these
records upon request, the board may revoke the carrier’s fuel
exemption registration number.

(g) The board may require any air common carrier claiming an
exemption under this section and required to obtain a fuel
exemption registration number, to place with it such security as
the board may determine pursuant to Section 6701.

(h) Pursuant to this section, any use of the fuel and petroleum
products by the purchasing carrier, other than that incident to the
delivery of the fuel and petroleum products to the carrier and the
consumption or transportation of the fuel and petroleum products
by the carrier on an international flight for use in the conduct of
its business as a common carrier, or a failure of the carrier to
document its consumption or transportation of the fuel and
petroleum products on an international flight, shall subject the
carrier to liability for payment of sales tax as if it were a retailer
making a retail sale of the property at the time of that use or failure,
and the sales price of the property to it shall be deemed to be the
gross receipts from the retail sale.

(i) In the event that the federal exemption provided in Section
1309 of Title 19 of the United States Code, relating to supplies for
certain vessels and aircraft, is repealed, this section is repealed as
of that date.

(j)  begin delete The end delete begin insert Notwithstanding subdivision (a), the end insert exemption provided
by this section shall not apply if the fuel and petroleum products
are sold to an air common carrier during a calendar year following
a year in which the air common carrier fails to send the information
required under subdivision (a) of Section 6357.6 to the
begin delete Employment Development Department or a year in which the
board provided notification pursuant to paragraph (1) of subdivision
(c) of Section 6357.6 end delete begin insert board end insert . Any exemption claimed for that
purchase shall subject the carrier to liability for payment of sales
tax as if it were a retailer making a retail sale of the tangible
personal property at the time of the purchase, and the begin delete sales price end delete
begin insert cost end insert of the property to it shall be deemed to be the gross receipts
from the retail sale.

SEC. 2.  

Section 6357.6 is added to the Revenue and Taxation
Code, to read:

6357.6.  

(a) On or before June 30, 2014, and on or before every
June 30 thereafter, an air common carrier that furnishes or intends
to furnish an exemption certificate under Section 6357.5 for fuel
purchased during the next calendar year shall send begin delete the following
information to the Employment Development Department: end delete
begin insert documentation to the board that demonstrates that contractors
and subcontractors performing labor or services on behalf of the
air common carrier are providing employer-provided health care
coverage for employees and their dependents. end insert

begin delete

(1) A list of the names, addresses, and telephone numbers of
persons with which the air common carrier has entered into a
contract or agreement for labor or services in the state.

(2) A list of the names, addresses, and telephone numbers of
persons with which the persons listed in paragraph (1) have entered
into a contract or agreement for labor or services performed in the
state for or on behalf of the air common carrier, regardless of
whether the person has a direct contractual relationship with the
air common carrier.

(b) On or before November 1, 2014, and on or before every
November 1 thereafter, the Employment Development Department
shall send a notification to the board of an air common carrier, or
person listed in paragraph (1) or (2), that employs a person enrolled
in the Medi-Cal program.

(c) (1) Upon receipt of the notification in subdivision (b),

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begin insert (b) end insert begin insert   end insert begin insert If the board fails to receive the documentation required in
subdivision (a), end insert the board shall, on or before December 1, 2014,
and on or before every December 1 thereafter, provide notification
to an air common carrier to inform the carrier that the exemption
under Section 6357.5 shall not apply to a purchase of fuel and
petroleum products during the following calendar year, and any
subsequent calendar year, unless begin delete a subsequent notification
described in paragraph (2) is provided. end delete begin insert the documentation is
subsequently submitted. end insert

begin delete

(2) If the Employment Development Department sends a
notification pursuant to subdivision (b) to the board that does not
contain an air common carrier to which the board provided
notification in paragraph (1), the board shall, on or before
December 1 of the calendar year in which the air common carrier
was not allowed the exemption, send a subsequent notification to
the air common carrier informing that carrier that the exemption
under Section 6357.5 shall apply during the following calendar
year.

end delete begin insert

(c) The documentation required by this section shall be
submitted in a format and manner prescribed by the board.

end insert

begin delete

SEC. 3.  

Section 322 of the Unemployment Insurance Code is
amended to read:

322.  

The department may exchange information with other
governmental departments and agencies, both federal and state,
which are concerned with the administration of unemployment
insurance, or the collection of taxes which may be used to finance
the administration of unemployment insurance, or the relief of
unemployed or destitute individuals, or legislation concerning,
regulating, or in any manner affecting the obligations arising out
of an employer-employee relation, with the board and the State
Department of Health Care Services for the administration of
Section 6357.6 of the Revenue and Taxation Code, and with other
departments or agencies of government as the department deems
necessary or desirable for the proper administration of this division
in accordance with authorized regulations.

SEC. 4.  

Section 337 is added to the Unemployment Insurance
Code, to read:

337.  

The department, in consultation and coordination with
the State Department of Health Care Services, shall do all the
following:

(a) Collect the names of air common carriers and persons
described under paragraph (1) or (2) of subdivision (a) of Section
6357.6 of the Revenue and Taxation Code.

(b) Identify the names of any air common carrier that employs
a person enrolled in the Medi-Cal program, or the name of any air
common carrier that contracts or subcontracts with a person for
labor or services for or on behalf of the air common carrier in the
state that employs a person enrolled in the Medi-Cal program.

end delete

begin delete SEC. 5. end delete
begin insert SEC. 3. end insert   

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