Senate Bill No. 533

Introduced by Senator Pan

February 26, 2015

An act to repeal and add Section 53084.5 of the Government Code, relating to local government.

LEGISLATIVE COUNSEL’S DIGEST

SB 533, as introduced, Pan. Cities and counties: sales and use tax agreements.

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. That law provides that for the purpose of a local sales tax adopted pursuant to that law, all retail sales are consummated at the place of business of the retailer unless otherwise specified.

Existing law prohibits a local agency, as defined to mean all cities and counties, from entering into any form of agreement with any other person that would involve the payment, transfer, diversion, or rebate of any amount of Bradley-Burns local tax proceeds for any purpose if the agreement results in a reduction in the amount of revenue that is received by another local agency from a retailer that is located within the territorial jurisdiction of that other local agency, and the retailer continues to maintain a physical presence within the territorial jurisdiction of that other local agency, with specified exceptions, including an exception for an agreement to pay or rebate any Bradley-Burns local tax revenue relating to a buying company, as defined.

This bill would repeal that prohibition and instead prohibit, on or after January 1, 2016, a local agency from entering into any form of agreement that would result, directly or indirectly, in the payment, transfer, diversion, or rebate of Bradley-Burns local tax proceeds to any person, as defined, for any purpose, if the agreement results in a reduction in the amount of Bradley-Burns tax proceeds that, in the absence of the agreement, would be received by another local agency and the retailer continues to maintain a physical presence within the territorial jurisdiction of that other local agency, with specified exceptions. This bill would also impose specified notification and reporting requirements on a local agency entering into an agreement that results in a reduction of the amount of Bradley-Burns tax proceeds, that in the absence of the agreement, would be received by another local agency, prior to the ratification of that agreement. This bill would also require any local agency to post such an agreement on its Internet Web site the local agency has entered into, including any agreements entered into prior to the effective date of this bill that are still in effect. By imposing these notification and reporting requirements on a local agency, this bill would impose a state-mandated local program.

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.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

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

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

SECTION 1.  

Section 53084.5 of the Government Code is
repealed.

begin delete

53084.5.  

(a) On or after the date the act adding this section
takes effect, a local agency shall not enter into any form of
agreement that would result, directly or indirectly, in the payment,
transfer, diversion, or rebate of any tax revenue resulting from the
imposition of a sales and use tax under the Bradley-Burns Uniform
Local Sales and Use Tax Law (Part 1.5 (commencing with Section
7200) of Division 2 of the Revenue and Taxation Code) to any
person for any purpose when both of the following apply:

(1) The agreement results in a reduction in the amount of
revenue that is received by another local agency from a retailer
that is located within the territorial jurisdiction of that other local
agency from the tax proceeds collected under the Bradley-Burns
Uniform Local Sales and Use Tax Law (Part 1.5 (commencing
with Section 7200) of Division 2 of the Revenue and Taxation
Code). This subdivision shall not apply to a reduction in the use
tax proceeds that are distributed to that other local agency through
one or more countywide pools.

(2) The retailer continues to maintain a physical presence within
the territorial jurisdiction of that other local agency. This
subdivision shall not apply if the retailer has expanded its
operations into another jurisdiction with the result that the retailer
is conducting a comparable operation within the jurisdiction of
both local agencies.

(b) For the purposes of this section, the following definitions
have the following meanings:

(1) “Local agency” means a chartered or general law city, a
chartered or general law county, or a city and county.

(2) “Retailer” means a retailer as defined by Section 6015 of
the Revenue and Taxation Code.

(3) “Physical presence” means the lease or ownership of any
real property for the purpose of carrying on business operations.

(c) This section shall not apply to local tax proceeds provided
by a local agency to a retailer if the funds are used to reimburse
the retailer for the construction of public works improvements that
serve all or a portion of the territorial jurisdiction of the local
agency.

(d) This section shall not apply to an agreement to pay or rebate
any tax revenue resulting from the imposition of a sales and use
tax under the Bradley-Burns Uniform Local Sales and Use Tax
Law (Part 1.5 (commencing with Section 7200) of Division 2 of
the Revenue and Taxation Code) relating to a buying company.
“Buying company” means, and is limited to, a legal entity that is
separate from another legal entity that owns, controls, or is
otherwise related to, the buying company and which has been
created for the purpose of performing administrative functions,
including acquiring goods and services for the other entity, as
defined by the State Board of Equalization, and meets requirements
of a buying company under Sections 6066 to 6075, inclusive, of
the Revenue and Taxation Code, and the regulations adopted
pursuant to those sections.

(e) This section shall not apply to any agreement by a local
agency to pay or rebate any use tax revenue resulting from the
imposition of a sales and use tax under the Bradley-Burns Uniform
Local Sales and Use Tax Law (Part 1.5 (commencing with Section
7200) of Division 2 of the Revenue and Taxation Code) relating
to a use tax direct payment permit issued under Section 7051.3 of
the Revenue and Taxation Code.

(f) Nothing in this section shall be interpreted to limit the ability
of a local agency to contract with or otherwise enter into an
agreement pursuant to subdivision (b) of Section 7056 of the
Revenue and Taxation Code.

end delete

SEC. 2.  

Section 53084.5 is added to the Government Code, to
read:

53084.5.  

(a) On or after January 1, 2016, a local agency shall
not enter into any form of agreement that would result, directly or
indirectly, in the payment, transfer, diversion, or rebate of any tax
revenue resulting from the imposition of a sales and use tax under
the Bradley-Burns Uniform Local Sales and Use Tax Law (Part
1.5 (commencing with Section 7200) of Division 2 of the Revenue
and Taxation Code) to any person for any purpose when both of
the following apply:

(1) The agreement results in a reduction in the amount of
revenue under the Bradley-Burns Uniform Local Sales and Use
Tax Law that, in the absence of the agreement, would be received
by another local agency.

(2) The retailer continues to maintain a physical presence within
the territorial jurisdiction of that other local agency.

(b) (1) A local agency entering into an agreement that results
in a reduction of the amount of revenue under the Bradley-Burns
Uniform Local Sales and Use Tax Law that, in the absence of the
agreement, would be received by another local agency shall post
the proposed agreement on its Internet Web site for at least 30
days prior to ratification or approval of that agreement by its
governing body.

(2) A local agency entering into an agreement that results in a
reduction of the amount of revenue under the Bradley-Burns
Uniform Local Sales and Use Tax Law that, in the absence of the
agreement, would be received by another local agency shall notify
the other local agency by certified mail addressed to the attention
of the chief executive of that other local agency at least 60 days
prior to ratification or approval of that agreement by its governing
body.

(3) A local agency shall post any agreement on its Internet Web
site it has entered into that results in a reduction of the amount of
revenue under the Bradley-Burns Uniform Local Sales and Use
Tax Law that, in the absence of the agreement, would be received
by another local agency, including any agreements entered into
prior to the effective date of this section that are still in effect.

(c) For the purposes of this section, the following definitions
have the following meanings:

(1) “Local agency” means a chartered or general law city, a
chartered or general law county, or a city and county, of this state.

(2) “Person” means a person as defined in Section 6005 of the
Revenue and Taxation Code.

(3) “Physical presence” means the lease or ownership of any
real property for the purpose of carrying on business operations.

(4) “Retailer” means a retailer as defined by Section 6015 of
the Revenue and Taxation Code.

(d) This section shall not apply to any agreement by a local
agency to pay or rebate any use tax revenue resulting from the
imposition of a use tax under the Bradley-Burns Uniform Local
Sales and Use Tax Law relating to a use tax direct payment permit
issued under Section 7051.3 of the Revenue and Taxation Code.

(e) Nothing in this section shall be interpreted to limit the ability
of a local agency to contract with or otherwise enter into an
agreement pursuant to subdivision (b) of Section 7056 of the
Revenue and Taxation Code.

SEC. 3.  

If the Commission on State Mandates determines that
this act contains costs mandated by the state, reimbursement to
local agencies and school districts for those costs shall be made
pursuant to Part 7 (commencing with Section 17500) of Division
4 of Title 2 of the Government Code.