SB 640, as amended, Beall. Sales and use taxes: claim for refund: customer refunds.
Under the Sales and Use Tax Law, any amount collected or paid in excess of what is due under that law is required to be credited by the State Board of Equalization against any other amounts due and payable from the person from whom the excess amount was collected or by whom it was paid, and the balance refunded to the person, as provided. Under existing law, when an amount represented by a person to a customer as constituting reimbursement for taxes due under the Sales and Use Tax Law is computed upon an amount that is not taxable or is in excess of the taxable amount and is actually paid by the customer to the person, the amount paid is required to be returned by the person to the customer upon notification by the board or by the customer that this excess has been ascertained.
This bill would authorize a person that has paid the tax to make an irrevocable election to assign to the customer the right to file a claim for refund to receive the amount that would be refunded to the person, provided specified conditions are met, including that the amount be $50,000 or more. This bill would authorize the board to make a payment to the customer of the balance of any excess amount collected or paid, after any amounts due and payable from the person or customer are credited against that excess amount. This bill would also require an amount subject to refund that is credited to the person that paid the tax and not refunded to the customer to be paid by that person directly to the customer.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 6901 of the Revenue and Taxation Code
2 is amended to read:
(a) If the board determines that any amount, penalty, or
4interest has been paid more than once or has been erroneously or
5illegally collected or computed, the board shall set forth that fact
6in the records of the board and shall certify the amount collected
7in excess of the amount legally due and the person from whom it
8was collected or by whom paid. The excess amount collected or
9paid shall be credited by the board on any amounts then due and
10payable from the person from whom the excess amount was
11collected or by whom it was paid under this part, and the balance
12shall be refunded to the person, or his or her successors,
13administrators, or executors, or customers, as provided in
14subdivision (b), if a
determination by the board is made in any of
15the following cases:
16(1) Any amount of tax, interest, or penalty was not required to
17be paid.
18(2) Any amount of prepayment of sales tax, interest, or penalty
19paid pursuant to Article 1.5 (commencing with Section 6480) of
20Chapter 5 was not required to be paid.
21(3) Any amount that is approved as a settlement pursuant to
22Section 7093.5.
23(b) (1) When an amount represented by a person to a customer
24as constituting reimbursement for taxes due under this part is
25computed upon an amount that is not legally due, that is paid by
26the customer to the person, and that is remitted by the person to
27
the board, the person that paid the tax may make an irrevocable
28election to assign to the customer the right to file a claim for refund
P3 1and receive the amount refunded if all of the following conditions
2are met:
3(A) The entire amount represents excess tax reimbursement that
4is required to be paid by the begin insertsingle end insertperson begin insertthat paid the tax end insertto a
5single customer under Section 6901.5.
6(B) The amount to be refunded is fifty thousand dollars
7($50,000) or more.
8(C) The irrevocable election to assign to the customer the right
9to
file a claim for refund and receive the amount refunded is
10evidenced by a statement, signed by the person and the customer,
11that authorizes that customer to file a claim for refund and receive
12the amount refunded.
13(D) The signed statement is submitted to the board in
14conjunction with the claim for refund.
15(2) The person that paid the tax and collected the excess tax
16reimbursement shall make the records to verify the refund available
17for inspection by the board, and no refund shall be payable until
18the board verifies by audit or other means that the amounts are
19properly due for refund.
20(3) The excess amount collected or paid shall be credited by the
21board on any amounts then due and payable from the person that
22paid
the tax or amounts for which a notice of determination has
23been issued to the person that paid the tax, and amounts due and
24payable from the customer from which the excess tax
25reimbursement was collected. The balance shall be refunded to
26the customer that paid the excess tax reimbursement. An amount
27subject to refund that is credited to the person that paid the tax and
28not refunded to the customer that paid the excess tax reimbursement
29shall be paid by the person that paid the tax directly to the
30customer. In the event the person does not make that payment, the
31credit that was on the amount due from the person shall be
32reversed.
33(c) Any overpayment of the use tax by a purchaser to a retailer
34who is required to collect the tax and who gives the purchaser a
35receipt therefor pursuant to Article 1 (commencing with Section
366201) of Chapter
3 shall be credited or refunded by the state to the
37purchaser.
38(d) Any proposed determination by the board pursuant to this
39section with respect to an amount in excess of fifty thousand dollars
P4 1($50,000) shall be available as a public record for at least 10 days
2prior to the effective date of that determination.
3(e) As used in this section, the following definitions shall apply:
end insertbegin insert
4 (1) “Person that paid the tax” means a single “person” as
5defined in Section 6005.
6(2) “Customer” means a single “person” as defined by Section
7
6005.
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