BILL NUMBER: SB 400 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Florez
FEBRUARY 20, 2003
An act to amend Sections 6006, 6011, 6012, 6014, 6051, 6051.2,
6051.3, 6066, 6071, and 6072 of, and to add Sections 6015.5 and
6019.1 to, the Revenue and Taxation Code, relating to taxation, to
take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
SB 400, as introduced, Florez. Sales and use taxes.
The Sales and Use Tax Law imposes a tax on the gross receipts from
the sale in this state of, or the storage, use, or other consumption
in this state of, tangible personal property.
This bill would impose a tax on the gross receipts derived from a
specialized service, as defined, furnished or provided within this
state.
By imposing a new tax, this bill would result in a change in state
taxes for the purpose of increasing revenues within the meaning of
Section 3 of Article XIII A of the California Constitution, and thus
would require for passage the approval of 2/3 of the membership of
each house of the Legislature.
This bill would take effect immediately as a tax levy, but its
operative date would depend on its effective date.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 6006 of the Revenue and Taxation Code is
amended to read:
6006. "Sale" means and includes:
(a) Any transfer of title or possession, exchange, or barter,
conditional or otherwise, in any manner or by any means whatsoever,
of tangible personal property for a consideration. "Transfer of
possession" includes only transactions found by the board to be in
lieu of a transfer of title, exchange, or barter.
(b) The producing, fabricating, processing, printing, or
imprinting of tangible personal property for a consideration for
consumers who furnish either directly or indirectly the materials
used in the producing, fabricating, processing, printing, or
imprinting.
(c) The furnishing and distributing of tangible personal property
for a consideration by social clubs and fraternal organizations to
their members or others.
(d) The furnishing, preparing, or serving for a consideration of
food, meals, or drinks.
(e) A transaction whereby the possession of property is
transferred but the seller retains the title as security for the
payment of the price.
(f) A transfer for a consideration of the title or possession of
tangible personal property which has been produced, fabricated, or
printed to the special order of the customer, or of any publication.
(g) Any lease of tangible personal property in any manner or by
any means whatsoever, for a consideration, except a lease of:
(1) Motion pictures or animated motion pictures, including
television, films, and tapes.
(2) Linen supplies and similar articles when an essential part of
the lease agreement is the furnishing of the recurring service of
laundering or cleaning the articles.
(3) Household furnishings with a lease of the living quarters in
which they are to be used.
(4) Mobile transportation equipment for use in transportation of
persons or property as defined in Section 6023.
(5) Tangible personal property leased in substantially the same
form as acquired by the lessor or leased in substantially the same
form as acquired by a transferor, as to which the lessor or
transferor has paid sales tax reimbursement or has paid use tax
measured by the purchase price of the property. For purposes of this
paragraph, "transferor" shall mean the following:
(A) A person from whom the lessor acquired the property in a
transaction described in subdivision (b) of Section 6006.5.
(B) A decedent from whom the lessor acquired the property by will
or the laws of succession.
(6) A mobilehome, as defined in Sections 18008 and 18211 of the
Health and Safety Code, other than a mobilehome originally sold new
prior to July 1, 1980, and not subject to local property taxation.
(7) Paragraphs (1) and (5) and Section 6094.1 shall not apply to
rentals or leases of video cassettes, video tapes, and video discs
for private use under which the lessee or renter does not obtain or
acquire the right to license, broadcast, exhibit, or reproduce the
video cassette, video tape, or video disc.
(h) The furnishing or provision of a specialized service for
consideration, either separately or as part of a retail sale, unless
otherwise excluded by this part.
SEC. 2. Section 6011 of the Revenue and Taxation Code is amended
to read:
6011. (a) "Sales price" means the total amount for which tangible
personal property is sold or leased or rented, or the total
amount for which a specialized service is provided, as the case
may be, valued in money, whether paid in money or otherwise, without
any deduction on account of any of the following:
(1) The cost of the property sold.
(2) The cost of materials used, labor or service cost, interest
charged, losses, or any other expenses.
(3) The cost of transportation of the property, except as excluded
by other provisions of this section.
(b) The total amount for which the property is sold or leased or
rented , or for which a specialized service is provided,
includes all of the following:
(1) Any services that are a part of the a
sale.
(2) Any amount for which credit is given to the purchaser by the
seller.
(3) The amount of any tax imposed by the United States upon
producers and importers of gasoline and the amount of any tax imposed
pursuant to Part 2 (commencing with Section 7301) of this division.
(c) "Sales price" does not include any of the following:
(1) Cash discounts allowed and taken on sales or for the
provision of a specialized service .
(2) The amount charged for property returned by customers when
that entire amount is refunded either in cash or credit, but this
exclusion shall not apply in any instance when the customer, in order
to obtain the refund, is required to purchase other property or
a specialized service at a price greater than the amount
charged for the property that is returned or the specialized
service for which a credit is received . For the purpose of
this section, refund or credit of the entire amount shall be deemed
to be given when the purchase price less rehandling and restocking
costs , if applicable, are refunded or credited to the
customer. The amount withheld for rehandling and restocking costs
may be a percentage of the sales price determined by the average cost
of rehandling and restocking returned merchandise during the
previous accounting cycle.
(3) The amount charged for labor or services rendered in
installing or applying the property sold.
(4) (A) The amount of any tax (not including, however,
any manufacturers' or importers' excise tax, except as provided in
subparagraph (B)) imposed by the United States upon or with respect
to retail sales whether imposed upon the retailer or the consumer.
(B) The amount of manufacturers' or importers' excise tax imposed
pursuant to Section 4081 or 4091 of the Internal Revenue Code for
which the purchaser certifies that he or she is entitled to either a
direct refund or credit against his or her income tax for the federal
excise tax paid or for which the purchaser issues a certificate
pursuant to Section 6245.5.
(5)
(4) The amount of any tax imposed by any city, county, city
and county, or rapid transit district within the State of California
upon or with respect to retail sales of tangible personal property,
measured by a stated percentage of sales price or gross receipts,
whether imposed upon the retailer or the consumer.
(6)
(5) The amount of any tax imposed by any city, county, city
and county, or rapid transit district within the State of California
with respect to the storage, use or other consumption in that city,
county, city and county, or rapid transit district of tangible
personal property measured by a stated percentage of sales price or
purchase price, whether the tax is imposed upon the retailer or the
consumer.
(7)
(6) Separately stated charges for transportation from the
retailer's place of business or other point from which shipment is
made directly to the purchaser, but the exclusion shall not exceed a
reasonable charge for transportation by facilities of the retailer or
the cost to the retailer of transportation by other than facilities
of the retailer. However, if the transportation is by facilities of
the retailer, or the property is sold for a delivered price, this
exclusion shall be applicable solely with respect to transportation
which occurs after the purchase of the property is made.
(8)
(7) Charges for transporting landfill from an excavation
site to a site specified by the purchaser, either if the charge is
separately stated and does not exceed a reasonable charge or if the
entire consideration consists of payment for transportation.
(9)
(8) The amount of any motor vehicle, mobilehome, or
commercial coach fee or tax imposed by and paid the State of
California that has been added to or is measured by a stated
percentage of the sales or purchase price of a motor vehicle,
mobilehome, or commercial coach.
(10)
(9) (A) The amount charged for intangible personal property
transferred with tangible personal property in any technology
transfer agreement, if the technology transfer agreement separately
states a reasonable price for the tangible personal property.
(B) If the technology transfer agreement does not separately state
a price for the tangible personal property, and the tangible
personal property or like tangible personal property has been
previously sold or leased, or offered for sale or lease, to third
parties at a separate price, the price at which the tangible personal
property was sold, leased, or offered to third parties shall be used
to establish the retail fair market value of the tangible personal
property subject to tax. The remaining amount charged under the
technology transfer agreement is for the intangible personal property
transferred.
(C) If the technology transfer agreement does not separately state
a price for the tangible personal property, and the tangible
personal property or like tangible personal property has not been
previously sold or leased, or offered for sale or lease, to third
parties at a separate price, the retail fair market value shall be
equal to 200 percent of the cost of materials and labor used to
produce the tangible personal property subject to tax. The remaining
amount charged under the technology transfer agreement is for the
intangible personal property transferred.
(D) For purposes of this paragraph, "technology transfer agreement"
means any agreement under which a person who holds a patent or
copyright interest assigns or licenses to another person the right to
make and sell a product or to use a process that is subject to the
patent or copyright interest.
(11)
(10) The amount of any tax imposed upon diesel fuel pursuant
to Part 31 (commencing with Section 60001).
(12)
(11) (A) The amount of tax imposed by any Indian tribe
within the State of California with respect to a retail sale of
tangible personal property measured by a stated percentage of the
sales or purchase price, whether the tax is imposed upon the retailer
or the consumer.
(B) The exclusion authorized by subparagraph (A) shall only apply
to those retailers who are in substantial compliance with this part.
SEC. 3. Section 6012 of the Revenue and Taxation Code is amended
to read:
6012. (a) "Gross receipts" mean the total amount of the sale or
lease or rental price, as the case may be, of the retail sales of
retailers, or the provision of a specialized service by a
service provider, valued in money, whether received in money or
otherwise, without any deduction on account of any of the following:
(1) The cost of the property sold. However, in accordance with
any rules and regulations as the board may prescribe, a deduction may
be taken if the retailer has purchased property for some other
purpose than resale, has reimbursed his or her vendor for tax which
the vendor is required to pay to the state or has paid the use tax
with respect to the property, and has resold the property prior to
making any use of the property other than retention, demonstration,
or display while holding it for sale in the regular course of
business. If that deduction is taken by the retailer, no refund or
credit will be allowed to his or her vendor with respect to the sale
of the property.
(2) The cost of the materials used, labor or service cost,
interest paid, losses, or any other expense.
(3) The cost of transportation of the property, except as excluded
by other provisions of this section.
(4) The amount of any tax imposed by the United States upon
producers and importers of gasoline and the amount of any tax imposed
pursuant to Part 2 (commencing with Section 7301) of this division.
(b) The total amount of the sale or ,
lease or , rental , or
service price includes all of the following:
(1) Any services that are a part of the a
sale.
(2) All receipts, cash, credits and property of any kind.
(3) Any amount for which credit is allowed by the seller to the
purchaser.
(c) "Gross receipts" do not include any of the following:
(1) Cash discounts allowed and taken on sales or for the
provision of a specialized service .
(2) Sale price of property returned by customers when that entire
amount is refunded either in cash or credit, but this exclusion shall
not apply in any instance when the customer, in order to obtain the
refund, is required to purchase other property or a specialized
service at a price greater than the amount charged for the
property that is returned or the specialized service for which a
credit is received . For the purpose of this section, refund
or credit of the entire amount shall be deemed to be given when the
purchase price less rehandling and restocking costs , if
applicable, are refunded or credited to the customer. The
amount withheld for rehandling and restocking costs may be a
percentage of the sales price determined by the average cost of
rehandling and restocking returned merchandise during the previous
accounting cycle.
(3) The price received for labor or services used in
installing or applying the property sold.
(4) (A) The amount of any tax (not including, however,
any manufacturers' or importers' excise tax, except as provided in
subparagraph (B)) imposed by the United States upon or with respect
to retail sales whether imposed upon the retailer or the consumer.
(B) The amount of manufacturers' or importers' excise tax imposed
pursuant to Section 4081 or 4091 of the Internal Revenue Code for
which the purchaser certifies that he or she is entitled to either a
direct refund or credit against his or her income tax for the federal
excise tax paid or for which the purchaser issues a certificate
pursuant to Section 6245.5.
(5)
(4) The amount of any tax imposed by any city, county, city
and county, or rapid transit district within the State of California
upon or with respect to retail sales of tangible personal property
measured by a stated percentage of sales price or gross receipts
whether imposed upon the retailer or the consumer.
(6)
(5) The amount of any tax imposed by any city, county, city
and county, or rapid transit district within the State of California
with respect to the storage, use or other consumption in that city,
county, city and county, or rapid transit district of tangible
personal property measured by a stated percentage of sales price or
purchase price, whether the tax is imposed upon the retailer or the
consumer.
(7)
(6) Separately stated charges for transportation from the
retailer's place of business or other point from which shipment is
made directly to the purchaser, but the exclusion shall not exceed a
reasonable charge for transportation by facilities of the retailer or
the cost to the retailer of transportation by other than facilities
of the retailer. However, if the transportation is by facilities of
the retailer, or the property is sold for a delivered price, this
exclusion shall be applicable solely with respect to transportation
which occurs after the sale of the property is made to the purchaser.
(8)
(7) Charges for transporting landfill from an excavation
site to a site specified by the purchaser, either if the charge is
separately stated and does not exceed a reasonable charge or if the
entire consideration consists of payment for transportation.
(9)
(8) The amount of any motor vehicle, mobilehome, or
commercial coach fee or tax imposed by and paid to the State of
California that has been added to or is measured by a stated
percentage of the sales or purchase price of a motor vehicle,
mobilehome, or commercial coach.
(10)
(9) (A) The amount charged for intangible personal property
transferred with tangible personal property in any technology
transfer agreement, if the technology transfer agreement separately
states a reasonable price for the tangible personal property.
(B) If the technology transfer agreement does not separately state
a price for the tangible personal property, and the tangible
personal property or like tangible personal property has been
previously sold or leased, or offered for sale or lease, to third
parties at a separate price, the price at which the tangible personal
property was sold, leased, or offered to third parties shall be used
to establish the retail fair market value of the tangible personal
property subject to tax. The remaining amount charged under the
technology transfer agreement is for the intangible personal property
transferred.
(C) If the technology transfer agreement does not separately state
a price for the tangible personal property, and the tangible
personal property or like tangible personal property has not been
previously sold or leased, or offered for sale or lease, to third
parties at a separate price, the retail fair market value shall be
equal to 200 percent of the cost of materials and labor used to
produce the tangible personal property subject to tax. The remaining
amount charged under the technology transfer agreement is for the
intangible personal property transferred.
(D) For purposes of this paragraph, "technology transfer agreement"
means any agreement under which a person who holds a patent or
copyright interest assigns or licenses to another person the right to
make and sell a product or to use a process that is subject to the
patent or copyright interest.
(11)
(10) The amount of any tax imposed upon diesel fuel pursuant
to Part 31 (commencing with Section 60001).
(12)
(11) (A) The amount of tax imposed by any Indian tribe
within the State of California with respect to a retail sale of
tangible personal property measured by a stated percentage of the
sales or purchase price, whether the tax is imposed upon the retailer
or the consumer.
(B) The exclusion authorized by subparagraph (A) shall only apply
to those retailers who are in substantial compliance with this part.
For purposes of the sales tax, if the retailers establish to the
satisfaction of the board that the sales tax has been added to the
total amount of the sale price and has not been absorbed by them, the
total amount of the sale price shall be deemed to be the amount
received exclusive of the tax imposed. Section 1656.1 of the Civil
Code shall apply in determining whether or not the retailers have
absorbed the sales tax.
SEC. 4. Section 6014 of the Revenue and Taxation Code is amended
to read:
6014. (a) "Seller" includes every person engaged in
the business of selling of:
(1) Selling tangible personal property of a kind the gross
receipts from the retail sale of which are required to be included in
the measure of the sales tax.
For
(2) Providing a specialized service of a kind of which the gross
receipts are required to be included in the measure of sales tax.
(b) For the purposes of this section, the
section:
(1) The phrase "tangible personal property of a kind the
gross receipts from the retail sale of which are required to be
included in the measure of the sales tax" includes all tangible
personal property of a kind the gross receipts from the retail sale
of which is, or would be, required to be included in the measure of
the sales tax if sold at retail, whether or not the tangible personal
property is ever sold at retail or is suitable for sale at retail.
(2) The phrase "provision of a specialized service for which
consideration is received" includes ____.
SEC. 5. Section 6015.5 is added to the Revenue and Taxation Code,
to read:
6015.5. "Provider of a specialized service" includes:
SEC. 6. Section 6019.1 is added to the Revenue and Taxation Code,
to read:
6019.1. "Specialized services" includes:
SEC. 7. Section 6051 of the Revenue and Taxation Code is amended
to read:
6051. For the privilege of selling tangible personal property at
retail or providing a specialized service, a tax , as
set forth below, is hereby imposed upon all retailers at the
rate of 21/2 percent of the gross receipts of any retailer from the
sale of all tangible personal property sold at retail in this state
on or after August 1, 1933, and to and including June 30, 1935, and
at the rate of 3 percent thereafter, and at the rate of 21/2 percent
on and after July 1, 1943, and to and including June 30, 1949, and at
the rate of 3 percent on and after July 1, 1949, and to and
including July 31, 1967, and at the rate of 4 percent on and after
August 1, 1967, and to and including June 30, 1972, and at the rate
of 33/4 percent on and after July 1, 1972, and to and including June
30, 1973, and at the rate of 43/4 percent on and after July 1, 1973,
and to and including September 30, 1973, and at the rate of 33/4
percent on and after October 1, 1973, and to and including March 31,
1974, and at the rate of 43/4 percent thereafter
to and including ____, and at that same rate thereafter upon
both the gross receipts of any retailer from the sale of all tangible
personal property sold in this state, and the gross receipts of any
provider of a specialized service from the provision of specialized
services in this state .
SEC. 8. Section 6051.2 of the Revenue and Taxation Code is amended
to read:
6051.2. (a) In addition to the taxes imposed by Section 6051 and
any other provision of this part, for the privilege of selling
tangible personal property at retail or providing a specialized
service , a tax is hereby imposed upon all retailers at the
rate of 1/2 percent of the gross receipts of any retailer from the
sale of all tangible personal property sold at retail in this state
on and after July 15, 1991 , to and including ____, and at that
same rate thereafter upon both the gross receipts of any retailer
from the sale of all tangible personal property sold in this state,
and the gross receipts of any provider of a specialized service from
the provision of specialized services in this state .
(b) All revenues received pursuant to this section shall be
deposited in the State Treasury to the credit of the Local Revenue
Fund, as established pursuant to Section 17600 of the Welfare and
Institutions Code.
(c) This section shall cease to be operative on the first day of
the first month of the calendar quarter following notification to the
board by the Department of Finance of a final judicial determination
by the California Supreme Court or any California court of appeal
that the revenues collected pursuant to this section and Section
6201.2 that are deposited in the Local Revenue Fund are either of the
following:
(1) "General Fund proceeds of taxes appropriated pursuant to
Article XIII B of the California Constitution," as used in
subdivision (b) of Section 8 of Article XVI of the California
Constitution.
(2) "Allocated local proceeds of taxes," as used in subdivision
(b) of Section 8 of Article XVI of the California Constitution.
SEC. 9. Section 6051.3 of the Revenue and Taxation Code is amended
to read:
6051.3. In addition to the taxes imposed by Sections 6051,
6051.2, 6051.5, and any other provision of this part, for the
privilege of selling tangible personal property at retail or
providing a specialized service , a tax is hereby imposed upon
all retailers at the rate of 1/4 percent of the gross receipts of any
retailer from the sale of all tangible personal property sold at
retail in this state on and after July 15, 1991, and
to and including ____, and at that same rate
thereafter upon both the gross receipts of any retailer from the sale
of all tangible personal property sold in this state, and the gross
receipts of any provider of a specialized service provider in this
state during any period in which this section is operative
pursuant to Section 6051.4.
SEC. 10. Section 6066 of the Revenue and Taxation Code is amended
to read:
6066. (a) Every person desiring to engage in or conduct business
as a seller or a provider of a specialized service within
this state shall file with the board an application for a permit for
each place of business. Every application for a permit 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 his place or places of business, and such other
information as the board may require. An application for a permit
shall be authenticated in a form or pursuant to methods as may be
prescribed by the board. The application shall state that the
applicant will actively engage in or conduct business as a seller of
tangible personal property.
(b) An application filed pursuant to this section may be filed
using electronic media as prescribed by the board.
(c) Electronic media includes, but is not limited to, computer
modem, magnetic media, optical disk, facsimile machine, or telephone.
SEC. 11. Section 6071 of the Revenue and Taxation Code is amended
to read:
6071. A person who engages in business as a seller or as a
provider of a specialized service in this state without a
permit or permits or after a permit has been suspended or revoked,
and each officer of any corporation which so engages in business, is
guilty of a misdemeanor punishable as provided in Section 7153.
SEC. 12. Section 6072 of the Revenue and Taxation Code is amended
to read:
6072. A permit shall be held only by persons actively engaging in
or conducting a business as a seller of tangible personal property
or as a provider of a specialized service . Any person
not so engaged shall forthwith surrender his or her permit to the
board for cancellation. The board may revoke the permit of a person
found to be not actively engaged in or conducting a business as a
seller of tangible personal property or as a provider of a
specialized service .
Any person who knowingly issues a resale certificate while the
person is not actively engaged in business as a seller or as a
provider of a specialized service , for personal gain or to
evade the payment of taxes, shall be liable for the taxes that would
otherwise have been due on the transaction, plus a penalty of 10
percent or five hundred dollars ($500), whichever is greater, in
addition to all other penalties
imposed by this part, and interest at the modified adjusted rate
per month, or fraction thereof, established pursuant to Section
6591.5, from the last day of the month following the quarterly period
for which the amount or any portion thereof should have been
returned until the date of payment.
SEC. 13. This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.
However, the provisions of this act shall become operative on the
first day of the first calendar quarter commencing more than 90 days
after the effective date of this act.
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