BILL ANALYSIS
AB 1486
Page 1
Date of Hearing: May 28, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 1486 (Furutani) - As Amended: May 21, 2009
Policy Committee: Revenue and
Taxation Vote: 8-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill provides that specified non-profit organizations shall
be regarded as consumers, rather than retailers, of tangible
personal property they purchase and resell, at cost, to their
members. Specifically, this bill:
1)Requires that the tangible personal property bear a logo or
other identifying mark of the organization and is a
promotional item.
2)Requires that the organization take reasonable steps to ensure
that its members do not acquire more than 30 identical items
or resale the items.
3)Prohibits the tangible personal property from being used for
political campaigning or issue advocacy.
4)Becomes inoperative on January 1, 2015.
FISCAL EFFECT
The Board of Equalization estimates no revenue impact from this
measure.
COMMENTS
1)Purpose. This bill is sponsored by the California State
Council of Laborers, to relieve nonprofit organizations from
the burdensome and time-consuming task of maintaining records
and filing sales tax returns for their sales of promotional
items to members, when the sales prices of those promotional
AB 1486
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items are no more than the price paid by the organization.
2 Background . The California sales tax is 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
retailer at the point of final sale to its customers.
Current law allows about 15 entities that purchase products
for resale to be designated as "consumers," and not retailers,
of tangible personal property that they purchase for resale.
These include optometrists, physicians, pharmacists,
veterinarians, and others where the sales are, to varying
degrees, incidental to their main businesses. For these
entities, sales taxes are due when they purchase the product
from the wholesaler, instead of when they resell the products
to their customers. The benefit is that these businesses and
the Board of Equalization avoid the recordkeeping and auditing
burdens on an incidental 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 would result in no cost to the state, however, since the
"consumer status" would only apply to items purchased by
non-profit organizations that are sold to their members at no
markup.
3)Related legislation . Several bills have been introduced this
year that provide "consumer status" to specified entities.
These include AB 659 (Hayashi), which provides consumer status
to certain dry cleaners, AB 676 (Jeffries) which extends the
status to destination management companies, and AB 1265 (Ma),
which provides the status to disabled veteran itinerant
venders.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081