BILL NUMBER: AB 847	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JUNE 23, 2009

INTRODUCED BY   Assembly Member  Charles Calderon 
 Salas 

                        FEBRUARY 26, 2009

    An act to repeal Section 6396 of the Revenue and Taxation
Code,   An act to amend Sections 6011 and 6012 of, and
to add Part 14.5 (commencing with Section 33001) to Division 2 of,
the Revenue and Taxation Code,  relating to taxation, to take
effect immediately, tax levy.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 847, as amended,  Charles Calderon   Salas
 .  Sales tax:  property shipped outside state.
  Adult Entertainment Venue Impact Fund. 
   The Sales and Use Tax Law imposes a sales tax on a retailer
measured by the gross receipts from the retail sale in this state of
tangible personal property and a use tax on the storage, use, or
other consumption of tangible personal property in this state of
tangible personal property purchased from a retailer for storage,
use, or other consumption in this state.  That law provides
various exemptions from those taxes, including an exemption from
sales tax for a sale of tangible personal property in this state,
when the contract of sale requires that property to be shipped, and
it is shipped, in a specified manner, to a point outside the state.
 
   Counties and cities are authorized to impose local sales and use
taxes in conformity with the Sales and Use Tax Law, and districts are
authorized to impose transactions and use taxes in conformity with
the Sales and Use Tax Law. Amendments to the Sales and Use Tax Law
are incorporated into these taxes. 
   This bill  would repeal that sales tax exemption. The
retail sale of tangible personal property in this state would be
subject to tax, regardless of whether a contract of sale requires the
property to be shipped, and it is shipped, to a point outside the
state   would, in addition, impose a tax on retailers
that operate adult entertainment venues, as defined, measured by the
gross receipts from its sales of tangible personal property sold at
retail in this state, at a rate of 20%, as provided. The tax would
generally be collected, administered, and enforced in the same manner
as the taxes imposed under the Sales and Use Tax Law. This bill
would create the Adult Entertainment Venue Impact Fund and require
that all revenues, less refunds and the costs of the  
administration of the tax, derived from the tax be transferred to the
fund. This bill would provide that moneys in the fund, upon
appropriation by the Legislature, be used to ameliorate the secondary
effects of adult entertainment venues, as provided. This bill makes
findings and declarations with regard to adult entertainment venues
and the imposition of this tax  . 
   This bill would result in a change in state taxes for the purpose
of increasing state 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.  
   Counties and cities are authorized to impose local sales and use
taxes in conformity with state sales and use taxes. Exemptions from
state sales and use taxes enacted by the Legislature are incorporated
into the local taxes.  
   Section 2230 of the Revenue and Taxation Code provides that the
state will reimburse counties and cities for revenue losses caused by
the enactment of sales and use tax exemptions.  
   This bill would provide that, notwithstanding Section 2230 of the
Revenue and Taxation Code, no appropriation is made and the state
shall not reimburse local agencies for sales and use tax revenues
lost by them pursuant to this bill. 
   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   yes  .


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    The Legislature finds and declares all
of the following:  
   (a) Adult entertainment venues adversely impact the character of
local neighborhoods by, among other things, reducing local property
values, curtailing development, and engendering many types of
criminal activities.  
   (b) Adult entertainment venues endanger the health, safety, and
welfare of citizens in their vicinity.  
   (c) These findings are consistent with, and supported by, the
findings of numerous municipalities. For example, when the City of
Los Angeles conducted a comprehensive study of adult entertainment
venues, it concluded that such establishments are associated with
higher rates of prostitution, robbery, assault, and theft in
surrounding communities.  
   (d) These negative secondary effects, in turn, drain public
resources dedicated to public social services, and place a
significant strain on the courts of this state.  
   (e) The taxes imposed by this measure are not intended as a
prohibition of legally protected forms of expression.  
   (f) The taxes imposed by this measure are intended to represent a
balancing of competing interests. Specifically, these taxes are
designed to balance the need to combat the negative secondary effects
of adult entertainment venues against the legally protected rights
of adult entertainment providers.  
   (g) The taxes imposed by this measure are not intended to allow or
license any business, establishment, or activity that would
otherwise be unlawful under the laws of this state or of the United
States.  
   (h) The taxes imposed by this measure are not intended to affect,
or in any way limit, the ability of local governments to address the
negative secondary effects of adult entertainment venues. 
   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, 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 includes all of the following:
   (1) Any services that are a part of the 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.
   (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 at a
price greater than the amount charged for the property that is
returned. 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 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) 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) 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) 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) 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) 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) (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) The amount of any tax imposed upon diesel fuel pursuant to
Part 31 (commencing with Section 60001).
   (12) (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.

   (13) The amount of any tax imposed pursuant to Part 14.5
(commencing with Section 33001) of this division. 
   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, 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 price includes
all of the following:
   (1) Any services that are a part of the 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.
   (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 at a price greater
than the amount charged for the property that is returned. 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 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) 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) 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) 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) 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) 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) (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) The amount of any tax imposed upon diesel fuel pursuant to
Part 31 (commencing with Section 60001).
   (12) (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. 
   (13) The amount of any tax imposed pursuant to Part 14.5
(commencing with Section 33001) of this division. 
   SEC. 4.    Part 14.5 (commencing with Section 33001)
is added to Division 2 of the   Revenue and Taxation Code
  , to read:  

      PART 14.5.  Adult Entertainment Venue Tax


   33001.  Except where the context otherwise requires, the
definitions set forth in Part 1 (commencing with Section 6001) govern
the construction of this part.
   33002.  For purposes of this part, the following definitions
apply:
   (a) (1) "Adult entertainment venue" means any of the following:
   (A) A retail establishment whose gross receipts from the sale or
rental of adult material exceed 50 percent of all gross receipts of
the retail establishment.
   (B) The premises of any facility located in California that
provides a public or private viewing of adult material.
   (C) The public premises of any facility located in California that
offers live sexually explicit conduct that is prohibited to
audiences under 18 years of age or 21 years of age, depending on
whether alcoholic beverages are sold on the premises.
   (2) "Adult entertainment venue" shall not mean a business whose
primary purpose is the provision of live performances that may
include the display of complete nudity, so long as the live
performance is a legitimate play, opera, ballet, or concert at a
concert house, playhouse or theater, museum, or educational
institution or facility on whose premises alcoholic beverages may be
sold but which derives less than 20 percent of its gross receipts
from the sale of alcoholic beverages.
   (b) "Adult material" includes, but is not limited to, all of the
following:
   (1) Harmful matter, as defined in Section 313 of the Penal Code.
   (2) Live sexually explicit conduct provided at a business
establishment.
   (3) Any item that includes sexually explicit conduct or is subject
to the requirements of Section 2257 of Title 18 of the United States
Code.
   (c) "Gross receipts" includes receipts, from whatever source,
received by the adult entertainment venue, excepting any sales taxes
imposed on the transaction.
   (d) "Sexually explicit conduct" means any of the following actual,
but not simulated, conduct:
   (1) Sexual intercourse, including genital-genital, oral-genital,
anal-genital, or oral-anal, whether between persons of the same or
opposite sex.
   (2) Masturbation.
   (3) Sadistic or masochistic abuse.
   (4) Lascivious exhibition of the genitals or pubic area of any
person.
   33003.  On or after October 1, 2009, in addition to any tax
imposed under Chapter 2 (commencing with Section 6051) of Part 1, a
tax is hereby imposed upon the privilege of selling tangible personal
property at retail in this state at an adult entertainment venue at
the rate of 20 percent of the gross receipts from the retail sale of
tangible personal property.
   33004.  To the extent feasible or practicable, Section 1656.1 of
the Civil Code, and the provisions of Part 1 (commencing with Section
6001) shall govern determinations, collections of tax, overpayments
and refunds, and administration under this part.
   33005.  The board shall enforce the provisions of this part and
may prescribe, adopt, and enforce rules and regulations relating to
the administration and enforcement of this part. The board may
prescribe the extent to which any ruling or regulation shall be
applied without retroactive effect.
   33006.  (a) All amounts required to be paid to the state under
this part shall be paid to the board in the form of remittances
payable to the State Board of Equalization. It is the intent of the
Legislature that the board shall transmit the payments, less refunds
and the board's costs of administration, to the Treasurer to be
deposited in the State Treasury to the credit of the Adult
Entertainment Impact Fund, which is hereby created.
   (b) Moneys in the Adult Entertainment Impact Fund shall, upon
appropriation by the Legislature, be used to ameliorate the secondary
effects of adult entertainment venues. Amelioration of secondary
effects includes, but is not limited to:
   (1) Increased funding to state and local law enforcement to combat
any increased criminal activity in the vicinity of adult
entertainment venues including, but not limited to, criminal activity
like the illegal sale of controlled substances, prostitution, and
crimes against women.
   (2) Programs to address the negative secondary effects of adult
entertainment venues on property values.
   (3) Provision of funding to address related health issues,
including the testing and treatment of sexually transmitted diseases
and mental health treatment.
   (4) Supplemental funding for existing state and local substance
abuse treatment programs. 
   SEC. 5.    Notwithstanding Section 2230 of the
Revenue and Taxation Code, no appropriation is made by this act and
the state shall not reimburse any local agency for any sales and use
tax revenues lost by it under this act. 
   SEC. 6.   This act provides for a tax levy within the
meaning of Article IV of the Constitution and shall go into
immediate effect.  
  SECTION 1.    Section 6396 of the Revenue and
Taxation Code is repealed.  
  SEC. 2.    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.