BILL ANALYSIS Ó
SB 898
Page 1
SENATE THIRD READING
SB
898 (Nguyen)
As Amended June 27, 2016
Majority vote
SENATE VOTE: 39-0
------------------------------------------------------------------
|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Revenue & |9-0 |Ridley-Thomas, | |
|Taxation | |Brough, Dababneh, | |
| | |Gipson, Mullin, | |
| | |O'Donnell, Patterson, | |
| | |Quirk, Wagner | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |17-3 |Gonzalez, Bigelow, |Gallagher, Jones, |
| | |Bloom, Bonilla, |Obernolte |
| | |Bonta, Calderon, | |
| | |Chang, Daly, Eggman, | |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
| | |Holden, Quirk, | |
| | |Santiago, Wagner, | |
| | |Weber, Wood, Chau | |
SB 898
Page 2
| | | | |
| | | | |
------------------------------------------------------------------
SUMMARY: Establishes a sales and use tax (SUT) exemption for
animal whole blood, plasma, blood products, and blood
derivatives, sold by a "nonprofit" animal blood banking business
for use in the cure, mitigation, treatment, or prevention of
injury or disease in animals pursuant to Food and Agricultural
Code Section 9241. Specifically, this bill:
1)Defines "nonprofit" as an organization exempt from federal
income taxation as an organization described in Internal
Revenue Code Section 501(c)(3).
2)Provides that, notwithstanding existing law, the state shall
not reimburse cities and counties for any SUT revenues lost by
them under this bill.
3)Takes immediate effect as a tax levy.
4)Sunsets the exemption on January 1, 2022.
EXISTING LAW:
1)Imposes a sales tax on retailers for the privilege of selling
tangible personal property (TPP), absent a specific exemption.
The tax is based upon the retailer's gross receipts from TPP
sales in this state.
2)Imposes a complimentary use tax on the storage, use, or other
consumption of TPP purchased out-of-state and brought into
California. The use tax is imposed on the purchaser; and
SB 898
Page 3
unless the purchaser pays the use tax to an out-of-state
retailer registered to collect California's use tax, the
purchaser remains liable for the tax. The use tax is set at
the same rate as the state's sales tax and must generally be
remitted to the State Board of Equalization (BOE).
3)Provides that human whole blood, plasma, blood products, and
blood derivatives, or any human body parts held in a bank for
medical purposes, are exempt from taxation for any purpose.
(Revenue and Taxation Code (R&TC) Section 33).
4)Exempts from SUT any container used to collect or store human
whole blood, plasma, blood products, or blood derivatives that
are exempt from taxation under R&TC Section 33, including
blood collection units and blood pack units. (R&TC Section
6364.5).
5)Prohibits any person from offering for sale or use any of the
following:
a) Any biologic unless it is manufactured pursuant to the
terms of a valid license or permit issued by the United
States Department of Agriculture; or,
b) Any blood or blood component product unless it is
produced in a licensed establishment. (Food and
Agricultural Code Section 9241).
FISCAL EFFECT: According to the Assembly Appropriations
Committee, annual state and local revenue loss of approximately
$80,000, including $38,400 in General Fund loss.
COMMENTS:
SB 898
Page 4
1)The author has provided the following statement in support of
this bill:
Senate Bill 898 amends the California Revenue and
Taxation [C]ode to clarify that the sale and use of
animal blood, blood products, and derivatives by a
licensed CDFA-licensed nonprofit animal blood bank are
not subject to tax when sold for use in the cure,
mitigation, treatment or prevention of injury or disease
in animals.
Animal blood banks serve an important role in saving the
lives of animals that are in need of surgical procedures.
Human blood banks, such as the American Red Cross, enjoy
a similar exemption, partly in recognition that human
blood banks help save lives. This same exemption does
not apply to nonprofit animal blood banks.
SB 898 will help ensure that animal blood banks continue
to be treated under the law the same as human blood
banks.
2)The BOE notes the following in its staff analysis of this
bill:
This bill does not materially impact the BOE's tax audit
or administrative functions: "Since this bill applies to
one nonprofit licensed animal blood bank that currently
exists in California, this bill would not materially
impact the BOE's administrative responsibilities."
3)Committee Staff Comments
SB 898
Page 5
What would this bill do? This bill would provide a
complete SUT exemption for animal whole blood, plasma,
blood products, and blood derivatives, sold by a
nonprofit animal blood banking business for use in the
cure, mitigation, treatment, or prevention of injury or
disease in animals.
The BOE notes that, according to the California
Department of Food and Agriculture, there are two
California animal blood bank establishments with licenses
to produce, market, and sell animal blood and products.
These facilities provide whole blood, plasma, platelets,
and clotting factors to veterinary hospitals and clinics.
The blood used to make these products is collected from
the animal "blood donors" housed permanently or
semi-permanently at the blood bank. The BOE notes that,
under California law, pet owners are not allowed to
volunteer their animals as donors to these commercial
blood banks. The BOE further notes that, of the two
licensed animal blood banks in California, only one of
them operates as a nonprofit business. Thus, it would
appear that this bill is designed to provide relief,
through a complete SUT exemption, to a single entity.
Analysis Prepared by:
M. David Ruff / REV. & TAX. / (916) 319-2098
FN: 0003840
SB 898
Page 6