BILL ANALYSIS Ó
AB 2321
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Date of Hearing: April 4, 2016
ASSEMBLY COMMITTEE ON TRANSPORTATION
Jim Frazier, Chair
AB 2321
(Rodriguez) - As Amended March 28, 2016
SUBJECT: Vehicles and vessels: transfers of title or interest:
use tax
SUMMARY: Requires the Department of Motor Vehicles (DMV) to
code transactions in the collection of the Bradley-Burns Uniform
Sales and Use Tax to specific address data when vehicles or
vessels are registered to ensure the remittance of that tax
revenue to the specific city or county in which the person
resides. Specifically, this bill:
1)Requires DMV to determine all local use taxes that a person
registering a vehicle or vessel, purchased through a
private-to-private sale, is responsible to pay based upon
address data provided of where the vehicle or vessel would be
registered.
2)Requires DMV to use this address data to determine the correct
tax area code for the applicable local jurisdiction (city or
unincorporated county) that the local use tax revenue would be
allocated.
3)Requires DMV to remit this data to the Board of Equalization
AB 2321
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(BOE) for direct allocation to the local jurisdictions.
4)Declares the intent of the Legislature that DMV and BOE
administer this in a manner that ensures the applicable
Bradley-Burns Uniform local use taxes and transactions and use
taxes are collected and allocated directly to the specific
jurisdiction where the vehicle is registered based on the tax
area code.
5)Requires the BOE to allocate the tax revenue collected to the
jurisdiction where the purchaser registered the vehicle or
vessel.
6)Requires BOE to reimburse the DMV for costs associated with
this transaction.
EXISTING LAW:
1)Authorizes the imposition of various local sales and use
taxes.
2)Requires DMV to collect sales and use taxes at the time of the
registration of a vehicle, off-highway vehicle, mobile home,
or vessel in a private-to private party sale.
3)Requires DMV to remit the collected tax revenue to BOE for
distribution to the local jurisdictions.
4)Requires BOE to reimburse DMV for its costs incurred in
carrying out these provisions.
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FISCAL EFFECT: Unknown
COMMENTS: This analysis only speaks to the process in which DMV
administers the collection of local use taxes and what changes
would need to be made to implement these new requirements. The
tax policies included in this bill will be considered by the
Revenue and Taxation Committee, where this bill will be
referred, should it pass out of this committee.
Currently, DMV collects local sales and use taxes, including the
Bradley Burns taxes upon registration of a vehicle or vessel
purchased through a private-to-private party sale. At the point
of collection, DMV codes the local transaction and use taxes,
such as a local add-on tax like a countywide tax dedicated to
transportation, to the specific city or county jurisdiction in
which the applicant registering the vehicle or vessel resides.
However, the Bradley-Burns portion of the taxes collected from
the applicant is coded only to the county in which the vehicle
is being registered. All tax revenue collected is remitted to
BOE for distribution to appropriate local jurisdictions. The
Bradley-Burns portion is remitted to the county of jurisdiction
for distribution through a countywide pool.
According to the author, AB 2321 seeks to improve BOE's
allocation of the local Bradley-Burns portion of use taxes
collected by DMV utilizing DMV's existing infrastructure that is
currently used to process private-to-private vehicle and vessel
registrations. This can be accomplished by using the specific
local tax area codes to identify the location of the registrant,
as used in the collection of the local transaction and use
taxes, rather than the countywide tax area codes currently used
for Bradley-Burns. He contends that improving the process will
result in more accurate allocations and may stand to benefit
smaller and disadvantaged cities and unincorporated county
areas.
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As mentioned, DMV currently utilizes a system that allows for
the coding of collections to a specific tax area code for the
purposes of the local transaction and use taxes which represent
approximately 100 jurisdictions. This bill would require DMV to
code specific tax area codes to the Bradley-Burns portion of the
tax revenue collected, which would entail the use of codes for
482 cities plus 58 counties.
This proposal may be able to be implemented administratively.
It is unclear what process steps would need to take place with
BOE and DMV to make the changes required in this bill, but the
author should continue to work with the agencies. It is also
unclear what the impacts of this bill would have on DMV's
workforce, however, changes to DMV's computer systems typically
require significant programming efforts. Costs associated with
the new coding could be recovered through DMV's interagency
agreement with BOE.
Double referral: This bill will be referred to the Assembly
Revenue and Taxation Committee should it pass out of this
committee.
REGISTERED SUPPORT / OPPOSITION:
Support
League of California Cities (Sponsor)
AB 2321
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Opposition
None on file
Analysis Prepared by:Melissa White / TRANS. / (916) 319-2093