BILL ANALYSIS Ó
AB 821
Page 1
Date of Hearing: January 21, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
821 (Gipson) - As Amended January 13, 2016
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill, until January 1, 2022, authorizes the Board of
Equalization (BOE) to allow medicinal marijuana dispensaries
whose tax liability averages $10,000 or more per month, to make
payment by other than electronic fund transfers.
AB 821
Page 2
FISCAL EFFECT:
Minor administrative savings to the BOE in reduced requests for
relief of penalties to specific individuals who currently make
cash payments in excess of $10,000.
COMMENTS:
1)Background. Current law requires that any person whose
estimated tax liability to the BOE exceeds $10,000 per month
remit those amounts by electronic fund transfers. Failure to
make the payments by electronic fund transfer results in a
penalty equal to 10% of the funds incorrectly transmitted.
Current law does allow the BOE to waive the penalty for good
reason, if a waiver request is made; however the penalty is
waived after a taxpayer is billed for the penalty, and the
taxpayer is billed every time these excessive cash payments
are made.
Currently, nearly all financial institutions refuse to do
business with medical marijuana dispensaries due to federal
law implications. Consequently, these establishments are
unable to comply with existing law and the corresponding
penalty is waived, but not before a taxpayer is billed and a
waiver request is submitted to the BOE.
2)Purpose. According to the author, "AB 821 seeks to increase
voluntary payments of sales and use taxes by providing
businesses that are "unbankable" with an exemption to current
requirements that sales and use taxes over $10,000 be paid
through an electronic funds transfer."
This bill will provide the BOE with the ability to establish
an ongoing electronic funds transfer exemption for medicinal
marijuana dispensaries in order to collect tax revenues due.
AB 821
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This authority will sunset in five years.
Analysis Prepared by:Pedro R. Reyes / APPR. / (916)
319-2081