Amended in Assembly September 10, 2015

Amended in Assembly September 9, 2015

California Legislature—2015–16 Second Extraordinary Session

Assembly Bill No. 18

Introduced by Assembly Member Bonilla

(Principal coauthor: Assembly Member Thurmond)

(Coauthors: Assembly Members Eggman, Frazier, Cristina Garcia, begin insert Gonzalez, end insert Mark Stone, and Wood)

August 31, 2015

An act to add Section 6012.4 to, and to add Part 14.5 (commencing with Section 33001) to Division 2 of, the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

AB 18, as amended, Bonilla. Taxation: distilled spirits: Cocktails for Healthy Outcomes Act.

(1) The Fee Collection Procedures Law, the violation of which is a crime, provides procedures for the collection of certain fees and surcharges.

This bill, on and after January 1, 2017, would impose a surtax on every individual for each purchase of a cocktail from an on-sale licensee for consumption or other use on the licensed, in-state premises of that on-sale licensee at the rate of $0.05 per cocktail, as defined. This bill would require the surtax rate to be adjusted annually, as specified. This bill would require an on-sale licensee to separately state and collect the surtax from an individual, as specified.

This bill would require the State Board of Equalization to administer and collect the surtax in accordance with the Fee Collection Procedures Law. By expanding the application of the Fee Collection Procedures Law, the violation of which is a crime, this bill would impose a state-mandated local program. The bill would require an on-sale licensee to register with the board, to prepare and file with the board returns using electronic media in the form prescribed by the board, containing specified information, and to remit the fee quarterly. The bill would require that all revenues, less refunds, be remitted to the board and deposited in the Healthy California Special Fund for the funding of, among other things, developmental disability services, upon appropriation by the Legislature.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

(2) 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 “gross receipts” subject to tax the amount of surtax imposed by this bill.

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.

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 any local agencies for sales and use tax revenues lost by them pursuant to this bill.

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: yes.

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

SECTION 1.  

Section 6012.4 is added to the Revenue and
Taxation Code, to read:

6012.4.  

Notwithstanding Section 6012, “gross receipts” shall
not include the surtax imposed pursuant to Part 14.5 (commencing
with Section 33001).

SEC. 2.  

Part 14.5 (commencing with Section 33001) is added
to Division 2 of the Revenue and Taxation Code, to read:

 

PART 14.5.  Cocktails for Healthy Outcomes Act

 

33001.  

This part is known, and may be cited, as the “Cocktails
for Healthy Outcomes Act.”

33002.  

(a) On and after January 1, 2017, there is hereby
imposed a surtax on every individual for each purchase of a cocktail
from an on-sale licensee for consumption or other use on the
licensed, in-state premises of that on-sale licensee at the rate of
five cents ($0.05) per cocktail.

(b)  begin delete For each calendar year beginning on and after January 1,
2018, the board shall recompute end delete begin insert Beginning January 1, 2018, and
on or before each January 1 of each year thereafter, the board
shall recompute, to the nearest whole cent, end insert the rate in subdivision
(a) in accordance with the percentage change in the California
Consumer Price Index, begin insert from June to June, inclusive, end insert and that
recomputed rate shall apply for that calendar year, except that the
rate shall not be less than five cents ($0.05). begin delete The board shall
recompute before January 1, 2018, and before each January 1
thereafter. end delete

33003.  

(a) Every on-sale licensee making sales of cocktails
for consumption or other use on the licensed, in-state premises of
the licensee shall, at the time of making such a sale to an individual,
collect the surtax as a charge separate from, and not included in,
any other fee, charge, or other amount paid by the purchaser.

(b) The on-sale licensee shall collect the surtax from the
individual purchasing cocktails on the licensee’s premises and
begin delete give to the purchaser a receipt therefore in the manner and form
prescribed by the board. end delete begin insert shall separately state the surtax imposed
pursuant to Section 33002 on the receipt or invoice given to the
purchaser at the time of sale. end insert

(c) The board shall administer and collect the surtax imposed
by this part pursuant to the Fee Collection Procedures Law (Part
30 (commencing with Section 55001)). begin insert For the purposes of this
section, the reference to “fee” shall include the surtax imposed
by this part, and references to “feepayer” shall include a person
required to pay the surtax imposed by this part. end insert

(d) (1) The surtax is required to be collected by an on-sale
licensee and any amount unreturned to the purchaser who paid an
amount in excess of the surtax, but was collected from the
purchaser under the representation by the licensee that it was owed
as a surtax, constitutes debts owed by the licensee to this state.

(2) An individual is liable for the surtax until it has been paid
to the state, except that payment to the on-sale licensee relieves
the purchaser from further liability for the surtax. Any surtax
collected from a purchaser that has not been remitted to the board
shall be a debt owed to the state by the licensee required to collect
and remit the surtax.

(e)  begin insert (1) end insert begin insert   end insert The board may prescribe, adopt, and enforce regulations
relating to the administration and enforcement of this part,
including, but not limited to, collections, reporting, refunds, and
appeals.

begin insert

(2) The board may prescribe, adopt, and enforce any emergency
regulations as necessary to implement this part. Any emergency
regulation prescribed, adopted, or enforced pursuant to this section
shall be adopted in accordance with Chapter 3.5 (commencing
with Section 11340) of Part 1 of Division 3 of Title 2 of the
Government Code, and, for purposes of that chapter, including
Section 11349.6 of the Government Code, the adoption of the
regulation is an emergency and shall be considered by the Office
of Administrative Law as necessary for the immediate preservation
of the public peace, health and safety, and general welfare.

end insert begin insert

(3) The board may, by regulation, promulgate other rules with
respect to uncollected or worthless accounts as it shall deem
necessary to the fair and efficient administration of this part.

end insert

(f) (1) The surtax imposed by this part is due and payable to
the board quarterly on or before the last day of the month next
succeeding each quarterly period.

(2) On or before the last day of the month following each
quarterly period, a return for the preceding quarterly period shall
be filed with the board using electronic media, in the form
prescribed by the board. Returns shall be authenticated in a form
or pursuant to methods, as prescribed by the board.

33004.  

(a) An on-sale licensee required to collect the surtax
imposed under this part shall register with the board. Every
application for registration shall be made in a form prescribed by
the board and shall set forth the name under which the applicant
transacts or intends to transact business, the location of the
licensee’s place or places of business, and any other information
that the board may require. An application for registration shall
be authenticated in a form or pursuant to methods as may be
prescribed by the board.

(b) An application for registration filed pursuant to this section
may be filed using electronic media as prescribed by the board.
Electronic media includes, but is not limited to, computer modem,
magnetic media, optical disc, facsimile machine, or telephone.

begin insert

begin insert 33004.5. end insert   

Unless an on-sale licensee is expressly exempted
under the act adding this part, all on-sale licensees shall be subject
to the tax established under this part. The board shall establish
procedures to be utilized by a licensee to document that alcohol
consumed or otherwise used on the licensees premises are not a
purchase for the purposes of the tax imposed by this part.

end insert

33005.  

The taxes imposed by this part are in addition to any
other tax imposed under the Alcoholic Beverage Tax Law (Part
14 (commencing with Section 32001)), the Sales and Use Tax Law
(Part 1 (Commencing with Section 6001)), or the Bradley-Burns
Uniform Sales and Use Tax law (Part 1.5 (commencing with
Section 7200)), or in accordance with the Transactions and Use
Tax Law (Part 1.6 (commencing with Section 7251)).

33006.  

For purposes of this part, the following definitions shall
apply:

(a) “Board” means the State Board of Equalization.

(b) “Cocktail” means any beverage that is, or contains, distilled
spirits.

(c) “Distilled spirits” has the same meaning as that term is
defined by Section 23005 of the Business and Professions Code,
as in effect January 1, 2016.

(d) (1) “On-sale licensee” means an on-sale licensee under the
Alcoholic Beverage Control Act (Division 9 (commencing with
Section 23000) of the Business and Professions Code) that
exercises the privileges described in Section 23396 of the Business
and Professions Code, as in effect January 1, 2016.

(2) “On-sale licensee” does not include a licensee with any of
the following:

(A) An On-sale General for Train license.

(B) An On-sale General for Boat license.

(C) An On-sale General for Airplane license.

(D) A Daily On-sale General license.

(E) A Veterans’ Club license.

33007.  

The Healthy California Special Fund is hereby
established in the State Treasury. All revenues, less refunds,
collected pursuant to this part shall be made in remittances to the
board and shall be deposited in the Healthy California Special
Fund. Upon appropriation by the Legislature, all moneys in the
fund shall be expended for the following purposes:

(a) Developmental disability services, among other health
programs.

(b) Reimbursement to the board for expenses incurred in the
implementation, administration, and collection of the taxes imposed
by this chapter.

begin insert

begin insert 33008. end insert   

Funds for the tax implementation required pursuant to
this part shall be advanced as a General Fund or special fund loan
to the board no later than six months after the effective date of the
act adding this part and shall be repaid by the board from the
initial proceeds from taxes collected pursuant to this part.

end insert

SEC. 3.  

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.

SEC. 4.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

SEC. 5.  

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