BILL ANALYSIS
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THIRD READING
Bill No: AB 659
Author: Hayashi (D)
Amended: 8/17/09 in Senate
Vote: 21
SENATE REVENUE & TAXATION COMMITTEE : 8-0, 7/8/09
AYES: Wolk, Walters, Alquist, Ashburn, Florez, Padilla,
Runner, Wiggins
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 76-0, 5/28/09 (Consent) - See last page
for vote
SUBJECT : Sales and use taxes: consumer: garment
cleaner
SOURCE : Board of Equalization
DIGEST : This bill provides, until January 1, 2013, that
specified garment cleaning businesses shall be regarded as
consumers, rather than retailers, of tangible personal
property they sell, provided those sales do not exceed 0.5
percent of their total gross receipts for the preceding
calendar year.
ANALYSIS : The California sales tax imposed on retail
sales of tangible personal property unless specifically
exempted. The tax is not normally applied to sales of
wholesalers to retailers, but rather is imposed on the
CONTINUED
AB 659
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retailer at the point of final sale to its customers. For
businesses where sales of tangible property are incidental
to their main line of business, the recordkeeping
requirements associated with these negligible sales can be
burdensome. In recognition of the burdensome compliance
costs for incidental sales, current law allows about 15
different types of businesses that have incidental sales to
be treated as consumers for purposes of sales tax
obligations. As a result, the purchases they make from the
wholesalers are subject to the sales tax, but they are no
longer required to collect the tax when they resale the
products to their customers. The benefit is that these
businesses and the Board of Equalization (BOE) avoid the
recordkeeping and auditing burdens on a negligible amount
of sales. The "cost" to the state is that it loses the
sales tax on the mark up between wholesale and retail price
of the products being sold.
This bill is sponsored by the BOE, which states that the
bill is intended to "relieve dry cleaning establishments
from the burdensome and time-consuming task of maintaining
records and filing sales tax returns for negligible sales
of tangible items." The BOE also asserts that "some dry
cleaners make incidental sales of items such as lint
brushes and collar stays simply as a matter of convenience
to customers with very little profit margin, and the burden
associated with complying with the tax law far outweighs
the economic benefit to California."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/18/09)
Board of Equalization (source)
California Cleaners Association
California Senior Legislature
Federation of Korean Drycleaners
Korean Drycleaners Association of Northern California
Korean Drycleaners Association of Southern California
Korean Drycleaners-Laundry Association
San Diego Korean Drycleaners Association
AB 659
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ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Emmerson, Eng, Feuer, Fletcher, Fong, Fuentes,
Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore,
Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber,
Huffman, Jeffries, Jones, Knight, Krekorian, Lieu, Logue,
Bonnie Lowenthal, Ma, Miller, Monning, Nava, Niello,
Nielsen, John A. Perez, V. Manuel Perez, Portantino,
Price, Ruskin, Salas, Saldana, Silva, Skinner, Smyth,
Solorio, Audra Strickland, Swanson, Torlakson, Torres,
Torrico, Tran, Villines, Yamada, Bass
NO VOTE RECORDED: Duvall, Evans, Mendoza, Nestande
DLW:mw 8/19/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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