Amended in Assembly May 16, 2016

Amended in Assembly March 18, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2365

Introduced by Assembly Member Gipson

(Coauthors: Assembly Members Brough and Wagner)

February 18, 2016

An act to add begin insert and repeal end insert Section 6010.15 begin delete to end delete begin insert of end insert the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

AB 2365, as amended, Gipson. Sales and use taxes: exclusion: pawnbrokers: transfer of vested property.

Existing sales and use tax laws impose 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 in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. Existing law defines “sale” and “purchase” for these purposes and provides certain exclusions from those definitions.

Existing law regulates pawnbrokers by, among other things, requiring every loan made by a pawnbroker for which goods are received in pledge as security to be evidenced by a written contract, a copy of which is required to be furnished to the pledgor. Existing law requires the loan period of a loan contract to be no less than 4 months, and requires the loan contract to set forth the loan period, the date on which the loan is due and payable, and to clearly inform the pledgor of his or her right to redeem the pledge during the loan period. Existing law provides procedures by which a pawnbroker may become vested with the title to pledged property.

This begin delete bill end delete begin insert bill, until January 1, 2022, end insert would provide that “sale” and “purchase” do not include the transfer of vested property, as defined, by a pawnbroker to a person who pledged the property to the pawnbroker as security for a loan if specified requirements are met, thus excluding that transfer from imposition of sales and use tax.

The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes cities and counties 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 generally conforms to the Sales and Use Tax Law. Amendments to state sales and use taxes are incorporated into these laws.

Existing law requires the state to reimburse cities and counties for revenue losses caused by the enactment of sales and use tax exemptions.

This bill would provide that, notwithstanding those provisions, no appropriation is made and the state shall not reimburse cities and counties for sales and use tax revenues lost by them pursuant to this bill.

This bill would take effect immediately as a tax levy.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

SECTION 1.  

Section 6010.15 is added to the Revenue and
Taxation Code, to read:

6010.15.  

(a) “Sale” and “purchase” for the purposes of this
part do not include the transfer of title to vested property by a
pawnbroker to a person who pledged the property to the
pawnbroker as security for a loan and from whom title to the
property transferred to the pawnbroker pursuant to Section 21201
of the Financial Code, if both of the following requirements are
met:

(1) The transfer occurs no more than six months after title to
the property transferred to the pawnbroker from the person pursuant
to Section 21201 of the Financial Code.

(2) As consideration for the transfer of the property, the person
is required to pay the pawnbroker only the remaining unpaid
balance of the amount borrowed under the loan as of the date the
pawnbroker becomes vested with title to the property, together
with one of the following:

(A) For an original loan amount not exceeding two thousand
four hundred ninety-nine dollars and ninety-nine cents ($2,499.99),
charges and interest due under the loan pursuant to Chapter 2
(commencing with Section 21200) of Division 8 of the Financial
Code, from the date the pawnbroker is vested with title to the
property to the date of the transfer to the person who pledged the
property.

(B) For an original loan amount of two thousand five hundred
dollars ($2,500) or more, charges and interest due in accordance
with the last monthly contractual interest rate, from the date the
pawnbroker is vested with title to the property until the date of the
transfer to the person who pledged the property.

(b) As used in this section:

(1) “Pawnbroker” has the meaning described in Section 21000
of the Financial Code.

(2) “Vested property” has the meaning described in subdivision
(b) of Section 21002 of the Financial Code.

begin insert

(c) This section shall become inoperative and shall be repealed
on January 1, 2022.

end insert

SEC. 2.  

Notwithstanding Section 2230 of the Revenue and
Taxation Code, no appropriation is made by this act and the state
shall not reimburse cities and counties for any sales and use tax
revenues lost by them 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.