BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 640|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: SB 640
Author: Beall (D), et al.
Amended: 6/2/15
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 4/15/15
AYES: Hertzberg, Nguyen, Bates, Beall, Hernandez, Lara, Pavley
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SUBJECT: Sales and use taxes: claim for refund: customer
refunds
SOURCE: Author
DIGEST: This bill authorizes a retailer to make an irrevocable
election to assign the right to file a claim for refund of
excess sales tax reimbursement in the amount of $1,000 or
greater to a single customer so that the Board of Equalization
(BOE) may directly refund the amount to the customer.
ANALYSIS: Existing law allows BOE to issue a refund for excess
sales tax reimbursement only to the retailer that collected and
reported the tax.
This bill:
1)Authorizes BOE to refund excess sales tax reimbursement to the
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customer who was overcharged upon the retailer's irrevocable
assignment of the right to file a claim for refund and to
receive the refund.
2)Only allows refunds of $1,000 or more to a single customer.
3)Requires the retailer and the customer to sign the irrevocable
assignment and submit it to the BOE with the customer's claim
for refund.
Background
State law imposes a sales tax on retailers for the privilege of
selling tangible personal property, absent a specific exemption.
The tax is based upon the retailer's gross receipts from sales
in this state. BOE must credit against any other amounts due
from the person from whom the excess amount was collected or, by
whom it was paid.
When a customer remits sales tax to a retailer, but the
transaction is either not taxable or is in excess of the taxable
amount, the retailer must return the amount paid to the customer
or remit it to the state. The customer cannot obtain a refund
directly from BOE.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee, BOE would
likely incur costs in the hundreds of thousands of dollars
annually to implement the provisions of the bill.
SUPPORT: (Verified5/29/15)
California Chamber of Commerce
California Manufacturers & Technology Association
California Retailers Association
California Society of CPAs
California State Board of Equalization
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California Taxpayers Association
Matson Inc.
Ryan
TechAmerica
TechNet
OPPOSITION: (Verified5/29/15)
None received
ARGUMENTS IN SUPPORT: According to the author, "SB 640 would
streamline the process by which a customer files for and
receives a refund of excess sales tax from the Board of
Equalization (BOE). Currently, the Revenue and Taxation Code
requires the BOE to refund any overpayment of use tax directly
to the purchaser, even though the retailer collected and
remitted the tax. This process is different for excess sales
tax reimbursement. Current statute requires the BOE to refund
excess sales tax only to the retailer that collected and
reported the tax. This creates a situation where the retailer
serves as the middleman between customers and the BOE.
Unfortunately, customers who are rightfully owed a sales tax
refund are not able to access it if the retailer is not willing
or able to file a claim for the refund on their behalf.
Additionally, there have been instances where customers were not
given the refunds once the retailer received them from the BOE.
SB 640 would allow, under limited circumstances, a retailer to
assign to a customer the right to access their sales tax refund
directly from the BOE. This would shorten the refund process by
approximately two to three months and eliminate processing by
the retailer as the middleman. This bill will enable customers
to receive refunds in a more expeditious fashion and ease the
workload of certain retailers who will no longer be required to
issue refund checks themselves, nor file a claim for refund on
the customer's behalf. SB 640 is a common sense measure that
increases government efficiency and gets California businesses
the money they are owed in a timely manner."
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Prepared by:Myriam Bouaziz / GOV. & F. / (916) 651-4119
6/2/15 15:28:58
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