Amended in Assembly May 3, 2016

Amended in Assembly March 28, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2749

Introduced by Assembly Member Brough

(Coauthor: Senator Pan)

February 19, 2016

An act to add Section 1656.5 to the Civil Code, begin insert and to add Part 13.7 (commencing with Section 31201) to Division 2 of the Revenue and Taxation Code, end insert relating to heavy equipment rentals.

LEGISLATIVE COUNSEL’S DIGEST

AB 2749, as amended, Brough. Heavy equipment rentals: rental begin delete agreements. end delete begin insert agreements: property tax reimbursement. end insert

Existing law prescribes the manner in which contracts or agreements may be created. begin insert end insert begin insert The Fee Collection Procedures Law, the violation of which is a crime, provides procedures for the collection of certain fees and surcharges. end insert

This bill would establish, in a rental agreement of heavy equipment property by a qualified heavy equipment renter, a rebuttable presumption that the parties agreed to the addition of estimated personal property tax reimbursement to the rental price of heavy equipment property to a lessee if specified conditions occur, including that the rental agreement states that the estimated personal property tax reimbursement amount charged is the amount estimated by the qualified heavy equipment renter owed for personal property tax on that heavy equipment property for a specified lien date and that any amounts in excess of the actual amount of personal property taxes owed on the heavy equipment property will be remitted to the State Board of Equalization for deposit into the state General Fund.

begin insert

This bill would require every qualified heavy equipment renter to register with the State Board of Equalization, as provided, and would require a qualified heavy equipment renter to file an annual return with the board, in a form prescribed by the board, that shows the ad valorem property tax levied on qualified heavy equipment property for the previous fiscal year lien date and the property tax reimbursement collected in the aggregate on any heavy equipment property for the 12-month period ending August 31. This bill would require any property tax reimbursement that is collected in excess of the ad valorem property tax levied to be paid to the board and would require the board to collect those excess reimbursement amounts pursuant to the procedures set forth in the Fee Collection Procedures Law. This bill would require all amounts, less refunds, to be deposited into the General Fund.

end insert begin insert

By expanding the application of the Fee Collection Procedures Law, which imposes criminal penalties for various acts, this bill would impose a state-mandated local program.

end insert begin insert

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.

end insert begin insert

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

end insert begin delete

This bill would require, on or before October 1, 2017, and on or before every October 1 each year thereafter, a qualified heavy equipment renter to file a return with the State Board of Equalization, in the form and manner as prescribed by the board, if the qualified heavy equipment renter has collected estimated personal property tax reimbursement amounts in excess of the actual amount of personal property tax owed on the heavy equipment property for the previous fiscal year lien date. The bill would require the qualified heavy equipment renter to remit that excess estimated personal property tax reimbursement amount with the return and would require the board to deposit those amounts into the General Fund.

end delete

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

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

SECTION 1.  

Section 1656.5 is added to the Civil Code, to
read:

1656.5.  

(a) Whether a qualified heavy equipment renter may
add estimated personal property tax reimbursement to the rental
price of heavy equipment property to a lessee depends solely upon
the terms of the rental agreement. It shall be presumed that the
parties agreed to the addition of estimated personal property tax
reimbursement to the rental price of heavy equipment property to
a lessee if all of the following conditions occur:

(1) The rental agreement expressly provides for the addition of
estimated personal property tax reimbursement.

(2) Estimated personal property tax reimbursement is separately
stated and charged on the rental agreement.

(3) The rental agreement states that the estimated personal
property tax reimbursement amount charged is the amount
estimated by the qualified heavy equipment renter owed for
personal property tax on that heavy equipment property for a
specified lien date, and that any amounts in excess of the actual
amount of personal property taxes owed on the heavy equipment
property will be remitted to the State Board of Equalization for
deposit into the state General Fund.

(4) The estimated personal property tax reimbursement amount
shall not exceed 0.75 percent of the rental price of the heavy
equipment property.

(b) The presumptions created by this section are rebuttable
presumptions.

begin delete

(c) On or before October 1, 2017, and on or before every
October 1 each year thereafter, a qualified heavy equipment renter
shall file a return with the State Board of Equalization, in the form
and manner as prescribed by the board, if the qualified heavy
equipment renter has collected estimated personal property tax
reimbursement amounts in excess of the actual amount of personal
property tax owed on the heavy equipment property for the
previous fiscal year lien date. The qualified heavy equipment renter
shall remit that excess estimated personal property tax
reimbursement amount with the return and the board shall deposit
those amounts into the General Fund.

(d) For purposes of this section, all of the following definitions
shall apply:

(1) “Heavy equipment property” means rental property of a
qualified heavy equipment renter.

(2) “Qualified heavy equipment renter” means a renter that
satisfies both of the following:

(A) The principal business of the renter is the rental of qualified
heavy equipment.

(B) The renter is engaged in a line of business described in Code
532412 or 532310 of the North American Industry Classification
System published by the United States Office of Management and
Budget, 2012 edition.

(3) “Rental price”

end delete

begin insert (c) end insert begin insert   end insert begin insert For purposes of this section, “rental price” end insert means the total
amount of the charge for renting the heavy equipment property,
excluding any separately stated charges that are not rental charges,
including, but not limited to, separately stated charges for delivery
and pickup fees, damage waivers, environmental mitigation fees,
sales tax reimbursement, or use taxes.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Part 13.7 (commencing with Section 31201) is added
to Division 2 of the end insert begin insert Revenue and Taxation Code end insert begin insert , to read: end insert

begin insert

 

PART  begin insert 13.7. end insert   Property Tax Reimbursement Law

 

begin insert 31201. end insert   

This part shall be known and may be cited as the
Property Tax Reimbursement Law.

begin insert 31202. end insert   

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

(a) “Heavy equipment property” means rental property of a
qualified heavy equipment renter.

(b) “Qualified heavy equipment renter” means a renter that
satisfies both of the following:

(1) The principal business of the renter is the rental of qualified
heavy equipment.

(2) The renter is engaged in a line of business described in Code
532412 or 532310 of the North American Industry Classification
System published by the United States Office of Management and
Budget, 2012 edition.

begin insert 31203. end insert   

Every qualified heavy equipment renter shall register
with the board. Every application for registration shall be made
upon 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 its place or places of business, and other
information as 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.

begin insert 31204. end insert   

On or before September 30 of each year, a qualified
heavy equipment renter shall file a return with the board for the
preceding 12-month period ending August 31, in a form prescribed
by the board. Returns shall be authenticated in a form or pursuant
to methods as may be prescribed by the board.

begin insert 31205. end insert   

The return shall show the ad valorem property tax
levied on qualified heavy equipment property for the previous
fiscal year lien date and the property tax reimbursement collected
in the aggregate on any heavy equipment property for the 12-month
period ending August 31. If a qualified heavy equipment renter
collected property tax reimbursement in excess of the ad valorem
property tax levied, the excess property tax reimbursement
constitutes a debt owed by the qualified heavy equipment renter
to the state. The excess property tax reimbursement collected is
due and payable to the state annually on or before September 30
and shall be paid in the form of remittances payable to the board.

begin insert 31206. end insert   

The board shall collect any property tax reimbursement
pursuant to the Fee Collection Procedures Law (Part 30
(commencing with Section 55001)) to the extent these provisions
are not inconsistent with this part. For purposes of administration
of this part, references in the Fee Collection Procedures Law to
“feepayer” and “fee” shall include “qualified heavy equipment
renter” and “property tax reimbursement.”

begin insert 31207. end insert   

Any property tax reimbursement collected by a qualified
heavy equipment renter shall conform to Section 1656.5 of the
Civil Code.

begin insert 31208. end insert   

All revenues derived under this part, less refunds, shall
be deposited in the General Fund.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert begin insert

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.

end insert