BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1486|
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THIRD READING
Bill No: AB 1486
Author: Furutani (D)
Amended: 7/14/09 in Senate
Vote: 21
SENATE REVENUE & TAXATION COMMITTEE : 7-0, 7/8/09
AYES: Wolk, Walters, Alquist, Ashburn, Florez, Padilla,
Wiggins
NO VOTE RECORDED: Runner
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 76-0, 6/2/09 (Consent) - See last page for
vote
SUBJECT : Sales taxes: consumer: nonprofit membership
organizations
SOURCE : California State Council of Laborers
DIGEST : This bill provides that specified nonprofit
organizations shall be regarded as consumers, rather than
retailers, of tangible personal property they purchase and
resell, at cost, to their members. Sunsets on 1/1/15.
ANALYSIS : 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.
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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 results in no
costs to the state; however, since the "consumer status"
only applies to those items purchased by non-profit
organizations that are sold to their embers at no mark-up.
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
distributed for purposes of organized political
campaigning or issue advocacy.
4.Sunsets January 1, 2015.
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.
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FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/18/09)
California State Council of Laborers (source)
California Chamber of Commerce
California International Longshore Workers Union
California Labor Federation
California Nurses Association
California Professional Firefighters
California School Employees Association
Betty T. Yee, Chairwoman, State Board of Equalization
ARGUMENTS IN SUPPORT : 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 items are no more than the
price paid by the organization.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Tom
Berryhill, Blakeslee, Blumenfield, Brownley, Buchanan,
Caballero, Charles Calderon, Carter, Chesbro, Conway,
Cook, Coto, Davis, De La Torre, De Leon, DeVore, Duvall,
Emmerson, Eng, Evans, Feuer, Fletcher, Fong, Fuentes,
Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore,
Hagman, Harkey, Hayashi, Hernandez, Hill, Huber, Huffman,
Jeffries, Jones, Knight, Krekorian, Lieu, Logue, Bonnie
Lowenthal, Ma, Mendoza, Miller, Monning, Nava, Nestande,
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
NO VOTE RECORDED: Bill Berryhill, Block, Hall, Bass
DLW:cm 8/19/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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