Amended in Assembly January 4, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 821

Introduced by Assembly Member Gipson

February 26, 2015

begin delete An act to add Section 6369.6 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. end delete begin insert An act to amend Section 6479.3 of the Revenue and Taxation Code, relating to taxation. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 821, as amended, Gipson. begin delete Sales and use taxes: exemption: medical marijuana: terminally ill patient. end delete begin insert Sales and use taxes: administration: payments. end insert

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The Sales and Use Tax Law, which is administered by the State Board of Equalization, requires any person whose estimated tax liability averages $10,000 or more per month to remit amounts due by electronic funds transfer, as provided.

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This bill would authorize the board to allow persons to remit amounts due by other than an electronic funds transfer if the board deems it necessary to facilitate collection of amounts due.

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Existing sales and use tax laws impose taxes 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 and provides various exemptions from those taxes. Existing law relieves the seller from liability for the sales tax if an exemption certificate is taken in good faith, and imposes liability for sales tax on the purchaser if the tangible personal property purchased is used in a manner or for a purpose not qualifying for the exemption, as provided.

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This bill would exempt from those taxes the gross receipts from the sale of, and the storage, use, or other consumption of, medical marijuana for consumption by a terminally ill patient, and would require the purchaser to provide an exemption certificate 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 bill would take effect immediately as a tax levy, but its operative date would depend on its effective date.

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

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

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begin insert SECTION 1. end insert   

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begin insert Section 6479.3 of the end insert begin insert Revenue and Taxation Code end insert
begin insert is amended to read: end insert

6479.3.  

(a)  begin delete Any end delete begin insert Except as provided in subdivision (k), any end insert
person whose estimated tax liability under this part averages ten
thousand dollars ($10,000) or more per month, as determined by
the board pursuant to methods of calculation prescribed by the
board, shall remit amounts due by an electronic funds transfer
under procedures prescribed by the board. Any person who collects
use tax on a voluntary basis is not required to remit amounts due
by electronic funds transfer.

(b) Any person whose estimated tax liability under this part
averages less than ten thousand dollars ($10,000) per month or
any person who voluntarily collects use tax may elect to remit
amounts due by electronic funds transfer with the approval of the
board.

(c) Any person remitting amounts due pursuant to subdivision
(a) or (b) shall perform electronic funds transfer in compliance
with the due dates set forth in Article 1 (commencing with Section
6451) and Article 1.1 (commencing with Section 6470). Payment
is deemed complete on the date the electronic funds transfer is
initiated, if settlement to the state’s demand account occurs on or
before the banking day following the date the transfer is initiated.
If settlement to the state’s demand account does not occur on or
before the banking day following the date the transfer is initiated,
payment is deemed to occur on the date settlement occurs.

(d) Any person remitting taxes by electronic funds transfer shall,
on or before the due date of the remittance, file a return for the
preceding reporting period in the form and manner prescribed by
the board. Any person who fails to timely file the required return
shall pay a penalty of 10 percent of the amount of taxes, exclusive
of prepayments, with respect to the period for which the return is
required.

(e) (1) Except as provided in paragraph (2), any person required
to remit taxes pursuant to this article who remits those taxes by
means other than appropriate electronic funds transfer shall pay a
penalty of 10 percent of the taxes incorrectly remitted.

(2) A person required to remit prepayments pursuant to this
article who remits a prepayment by means other than an appropriate
electronic funds transfer shall pay a penalty of 6 percent of the
prepayment amount incorrectly remitted.

(f) Except as provided in Sections 6476 and 6477, any person
who fails to pay any tax to the state or any amount of tax required
to be collected and paid to the state, except amounts of
determinations made by the board under Article 2 (commencing
with Section 6481) or Article 3 (commencing with Section 6511),
within the time required shall pay a penalty of 10 percent of the
tax or amount of tax, in addition to the tax or amount of tax, plus
interest at the modified adjusted rate per month, or fraction thereof,
established pursuant to Section 6591.5, from the date on which
the tax or the amount of tax required to be collected became due
and payable to the state until the date of payment.

(g) In determining whether a person’s estimated tax liability
averages ten thousand dollars ($10,000) or more per month, the
board may consider tax returns filed pursuant to this part and any
other information in the board’s possession.

(h) Except as provided in subdivision (i), the penalties imposed
by subdivisions (d), (e), and (f) shall be limited to a maximum of
10 percent of the taxes due, exclusive of prepayments, for any one
return. Any person remitting taxes by electronic funds transfer
shall be subject to the penalties under this section and not Section
6591.

(i) The penalties imposed with respect to paragraph (2) of
subdivision (e) and Sections 6476 and 6477 shall be limited to a
maximum of 6 percent of the prepayment amount.

(j) The board shall promulgate regulations pursuant to Chapter
3.5 (commencing with Section 11340) of Part 1 of Division 3 of
Title 2 of the Government Code for purposes of implementing this
section.

(k)  begin delete This section shall be operative on January 1, 2006. end delete begin insert If the
board deems it necessary to facilitate collection of amounts due,
the board may allow persons to remit amounts due by other than
an electronic funds transfer. end insert

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SECTION 1.  

Section 6369.6 is added to the Revenue and
Taxation Code, to read:

6369.6.  

(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 in this state of, medical marijuana for
consumption by a terminally ill patient.

(b) (1) No exemption shall be allowed under this section unless
the purchaser furnishes the retailer with a medical marijuana
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. The medical
marijuana exemption certificate shall contain the cost of the
medical marijuana that is exempt pursuant to subdivision (a),
identification card serial number, and any other information
deemed necessary by the board.

(2) The board shall establish and maintain a program for the
issuance of a medical marijuana exemption certificate. A medical
marijuana exemption certificate shall be issued to a person or his
or her primary caregiver upon satisfactory proof of terminal illness,
and shall be valid for the same period as the identification card
issued to the terminally ill patient pursuant to Article 2.5
(commencing with Section 11362.7) of Chapter 6 of Division 10
of the Health and Safety Code and may be renewed once, unless
otherwise authorized by the board under regulations adopted
pursuant to this section.

(c) A person who seeks a medical marijuana exemption
certificate shall provide all of the following to the board, in a
manner as determined by the board:

(1) The name of the terminally ill patient.

(2) Written documentation by the patient’s attending physician
that certifies the patient is terminally ill based on the circumstances
and information available to the physician at the time of diagnosis.

(3) The name, office address, office telephone number, and
California medical license number of the patient’s attending
physician.

(4) The name and the duties of the primary caregiver.

(5) A government-issued photo identification card of the person
and of the designated primary caregiver, if any.

(6) The identification card issued by the Department of Public
Health.

(7) Any other information deemed necessary by the board.

(d) For purposes of this section:

(1) “Attending physician” has the same meaning as that term
is defined in Section 11362.7 of the Health and Safety Code.

(2) “Marijuana” has the same meaning as that term is defined
in Section 11018 of the Health and Safety Code.

(3) “Medical marijuana” means marijuana used for medical
purposes in accordance with Sections 11362.5 and 11362.7 of the
Health and Safety Code.

(4) “Primary caregiver” has the same meaning as that term is
defined in Section 11362.7 of the Health and Safety Code.

(5) “Terminally ill” has the same meaning as that term is defined
in subdivision (c) of Section 11159.2 of the Health and Safety
Code.

(6) “Written documentation” means certification by the attending
physician that the patient is terminally ill.

(e) Any person that uses a medical marijuana exemption
certificate in a manner contrary to the requirements of this section
shall be liable for payment of sales tax as if the purchaser were a
retailer making a retail sale of the property at the time of that use
and the cost of the marijuana to the purchaser shall be deemed the
gross receipts from the retail sale.

SEC. 2.  

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. 3.  

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

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