BILL NUMBER: AB 810 AMENDED
BILL TEXT
AMENDED IN SENATE JANUARY 13, 2010
INTRODUCED BY Assembly Member Caballero
FEBRUARY 26, 2009
An act to amend Sections 65089.6, 65302, 66484, and
66484.3 of the Government Code, to amend Section 99150 of the Public
Utilities Code, to amend Section 75.9 of the Streets and Highways
Code, and to amend Sections 21101 and 35701 of the Vehicle Code,
relating to land use. An act to add Section 6376.6 to
the Revenue and Taxation Code, relating to taxation.
LEGISLATIVE COUNSEL'S DIGEST
AB 810, as amended, Caballero. Circulation and
transportation element. Sales and use tax exemption:
manufacturing equipment: research and development.
The Sales and Use Tax Law imposes a tax on retailers measured by
the gross receipts from the sale of tangible personal property sold
at retail in this state, or on the storage, use, or other consumption
in this state of tangible personal property purchased from a
retailer for storage, use, or other consumption in this state, and
provides various exemptions from the taxes imposed by that law.
This bill would exempt from a specified portion of those taxes,
for calendar years beginning on or after January 1, 2011, the gross
receipts from the sale of, and the storage, use, or other consumption
of, sustainable development equipment investments of tangible
personal property purchased for use by a qualified person to be used
in manufacturing or other processes, as specified, and tangible
personal property purchased by a qualified person and used primarily
during the research and development process for qualified research,
as defined.
This bill would specify that this exemption does not apply to
local sales and use taxes or transactions and use taxes.
Existing law requires a general plan to include a statement of
development policies and, among other elements, a circulation element
consisting of the general location and extent of existing and
proposed major thoroughfares, transportation routes, terminals, and
military airports and ports, and other local public utilities and
facilities, all correlated with the land use element of the plan.
This bill would rename the circulation element the circulation and
transportation element and make other technical and conforming
changes.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. It is the intent of the Legislature to
enact a competitive tax policy for manufacturers by providing for
partial exemptions from state sales and use taxes for the sale of and
the storage, use, or other consumption of specified manufacturing
equipment and for sustainable manufacturing and research and
development equipment investments used in the manufacturing process.
SEC. 2. Section 6376.6 is added to the
Revenue and Taxation Code , to read:
6376.6. (a) On and after January 1, 2011, there are exempted from
the taxes imposed by this part the gross receipts from the sale of,
and the storage, use, or other consumption in this state of, all of
the following:
(1) Tangible personal property purchased by a qualified person for
use primarily in any stage of the manufacturing, processing,
refining, fabricating, or recycling of property, beginning at the
point any raw materials are received by the qualified person and
introduced into the process and ending at the point at which the
manufacturing, processing, refining, fabricating, or recycling has
altered property to its completed form, including packaging, if
required.
(2) Tangible personal property purchased for use by a contractor
purchasing that property for use in the performance of a construction
contract for the qualified person who will use the property as an
integral part of the manufacturing, processing, refining,
fabricating, or recycling process, or as a storage facility for use
in connection with the manufacturing process.
(3) Sustainable development equipment investments of tangible
personal property purchased by a qualified person for use primarily
in any stage of the manufacturing, processing, refining, fabricating,
or recycling of property beginning at the point any raw materials
are received by the qualified person and introduced into the process
and ending at the point at which the manufacturing, processing,
refining, fabricating, or recycling has altered property to its
completed form, including packaging, if required.
(4) Tangible personal property purchased by a qualified person for
use primarily during the research and development process on
qualified research.
(b) For purposes of this section:
(1) "Fabricating" means to make, build, create, produce, or
assemble components or property to work in a new or different manner.
(2) "Manufacturing" means the activity of converting or
conditioning property by changing the form, composition, quality, or
character of the property for ultimate sale at retail or use in the
manufacturing of a product to be ultimately sold at retail.
Manufacturing includes any improvements to tangible personal property
that result in a greater service life or greater functionality than
that of the original property.
(3) "Primarily" means, for the purposes of subdivision (a),
tangible personal property used 50 percent or more of the time in an
activity described in subdivision (a).
(4) "Process" means the period beginning at the point at which any
raw materials are received by the qualified person and introduced
into the manufacturing, processing, refining, fabricating, or
recycling activity of the qualified person and ending at the point at
which the manufacturing, processing, refining, fabricating, or
recycling activity of the qualified person has altered tangible
personal property to its completed form, including packaging, if
required. Raw materials shall be considered to have been introduced
into the process when the raw materials are stored on the same
premises where the qualified person's manufacturing, processing,
refining, or recycling activity is conducted. Raw materials that are
stored on premises other than where the qualified person's
manufacturing, processing, refining, fabricating, or recycling
activity is conducted, shall not be considered to have been
introduced into the manufacturing, processing, refining, fabricating,
or recycling process.
(5) "Processing" means the physical application of the materials
and labor necessary to modify or change the characteristics of
property.
(6) "Qualified person" means either of the following:
(A) A person who is primarily engaged in those lines of business
described in Codes 3111 to 3399, inclusive, or 5112 of the North
American Industry Classification System (NAICS) published by the
United States Office of Management and Budget, 2007 edition.
(B) An affiliate of a person described in subparagraph (A)
provided that the affiliate is a member of the qualified person's
unitary group for which a combined report is required to be filed
under Article 1 (commencing with Section 25101) of Chapter 17 of Part
11.
(7) "Qualified research" means research that meets the
requirements of Section 174 of the Internal Revenue Code.
(8) "Refining" means the process of converting a natural resource
to an intermediate or finished product.
(9) "Sustainable development equipment" means qualified
manufacturing or research and development equipment that meets any of
the following:
(A) Is consistent with meeting the goals and objectives of
compliance with greenhouse gas emissions standards as set forth in
Division 25.5 (commencing with Section 38500) of the Health and
Safety Code.
(B) Promotes the reduction of wasteful, inefficient, unnecessary,
or uneconomic uses of energy.
(C) Encourages the utilization of cost-effective water use
efficiency practices to curtail the waste of water and to ensure that
water use does not exceed reasonable needs.
(D) Promotes the utilization of recycled or reusable materials in
the manufacturing process.
(10) "Tangible personal property" includes, but is not limited to,
all of the following:
(A) Machinery and equipment, including component parts and
contrivances such as belts, shafts, moving parts, and operating
structures.
(B) Equipment or devices used or required to operate, control,
regulate, or maintain the machinery and equipment, including, without
limitation, computers, data processing equipment, and computer
software, together with all repair and replacement parts with a
useful life of one or more years, whether purchased separately or in
conjunction with a complete machine and regardless of whether the
machine or component parts are assembled by the qualified person or
another party.
(C) Property used in pollution control that meets standards
established by this state or any local or regional governmental
agency within this state.
(D) Special purpose buildings and foundations used as an integral
part of the manufacturing, processing, refining, or fabricating
process, or that constitute a research or storage facility used
during the manufacturing process.
(E) Fuels used or consumed in the manufacturing process.
(11) "Tangible personal property" does not include any of the
following:
(A) Consumables with a normal useful life of less than one year,
except as provided in subparagraph (E) of paragraph (10).
(B) Furniture, inventory, and equipment used in the extraction
process, or equipment used to store finished products that have
completed the manufacturing process.
(C) Buildings or components of buildings used solely for
warehousing purposes after completion of the manufacturing process.
(D) Tangible personal property used primarily in administration,
general management, or marketing.
(c) No exemption shall be allowed under this section unless the
purchaser furnishes the retailer with an exemption certificate,
completed in accordance with any instructions or regulations as the
board may prescribe.
(d) Notwithstanding any provision of the Bradley-Burns Uniform
Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200))
or the Transactions and Use Tax Law (Part 1.6 (commencing with
Section 7251)), the exemption established by this section shall not
apply with respect to any tax levied by a county, city, or district
pursuant to, or in accordance with, either of those laws.
(e) (1) Notwithstanding subdivision (a), the exemption provided by
this section shall not apply to any sale or use of property that,
within one year from the date of purchase, is either removed from
California, converted from an exempt use under subdivision (a) to
some other use not qualifying for the exemption, or used in a manner
not qualifying for the exemption.
(2) Notwithstanding subdivision (a), the exemption established by
paragraphs (1) and (2) of subdivision (a) shall not apply with
respect to any tax levied pursuant to Section 6051.2, 6051.5, 6051.7,
6201.2, 6201.5, or 6201.7 or pursuant to Section 35 of Article XIII
of the California Constitution.
(3) Notwithstanding subdivision (a), the exemption established by
paragraphs (3) and (4) of subdivision (a) shall not apply with
respect to any tax levied pursuant to Section 6051.2, 6051.5, 6201.2,
or 6201.5 or pursuant to Section 35 of Article XIII of the
California Constitution.
(f) If a purchaser certifies in writing to the seller that the
property purchased without payment of the tax will be used in a
manner entitling the seller to regard the gross receipts from the
sale as exempt from the sales tax, and within one year from the date
of purchase, the purchaser (1) removes that property from California,
(2) converts that property for use in a manner not qualifying for
the exemption, or (3) uses that property in a manner not qualifying
for the exemption, the purchaser shall be liable for payment of sales
tax, with applicable interest, as if the purchaser were a retailer
making a retail sale of the property at the time the property is so
removed, converted, or used, and the sales price of the property to
the purchaser shall be deemed the gross receipts from that retail
sale. All matter omitted in this version of the bill appears in
the bill as introduced in the Assembly, February 26, 2009. (JR11)