BILL NUMBER: AB 1687 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 20, 2010
INTRODUCED BY Assembly Member Jeffries
JANUARY 26, 2010
An act to add and repeal Section 6018.9 of the Revenue and
Taxation Code, relating to taxation, to take effect immediately, tax
levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 1687, as amended, Jeffries. Sales and use taxes: consumer:
destination management company.
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. That
law, with certain exceptions, defines a retailer as a seller that
makes any retail sale of tangible personal property and as a person
that makes more than 2 retail sales of tangible personal property
during any 12-month period, and defines a retail sale as a sale of
tangible personal property for any purpose other than resale in the
regular course of business.
This bill would provide, until January 1, 2016, that a qualified
destination management company, as defined, is a consumer, and not a
retailer, of tangible personal property it provides to its clients
pursuant to a qualified contract, as defined, for destination
management services, so that the sale of the tangible personal
property to the destination management company is the retail sale
subject to tax.
The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes
counties and cities to impose local sales and use taxes in conformity
with the Sales and Use Tax Law, and the Transactions and Use Tax Law
authorizes districts, as specified, to impose transactions and use
taxes in conformity with the Sales and Use Tax Law. Exemptions from
state sales and use taxes are incorporated in these 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: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 6018.9 is added to the Revenue and Taxation
Code, to read:
6018.9. (a) A qualified destination management company is a
consumer of, and shall not be considered a retailer of, the tangible
personal property it provides to its client pursuant to a qualified
contract for destination management services.
(b) For the purposes of this section:
(1) "Destination management services" means the provision of four
or more of the following services:
(A) Transportation.
(B) Entertainment.
(C) Meals.
(D) Recreational activities.
(E) Tours.
(F) Registration.
(G) Staffing.
(2) "Qualified destination management company" means a corporation
that meets all of the following conditions:
(A) Is substantially engaged in the business of providing
destination management services. For purposes of this subparagraph,
"substantially" means that 80 percent or more of the gross sales are
derived from the business of providing destination management
services.
(B) Is designated as an Accredited Destination Management Company
by the Association of Destination Management Executives, or is an
executive member of the Association of Destination Management
Executives and enrolled in the Association of Destination Management
Executives accreditation program.
(B)
(C) Is not doing business as a caterer.
(C)
(D) Maintains a permanent nonresidential office in
California from which the destination management services are
provided.
(D)
(E) Has three or more full-time employees.
(E)
(F) Expends at least 1 percent of its gross revenue
annually to market California and local destinations for tourism.
(F)
(G) Does not own any equipment used to provide
destination management services, including, but not limited to, dance
floors, decorative props, lighting, podiums, sound or video systems,
stages, or equipment for catered meals. This condition shall not
apply to office equipment used in the conduct of the destination
management company's business.
(G)
(H) Does not provide services for weddings.
(3) "Qualified contract" means a contract between a qualified
destination management company and its client for destination
management services that meets all of the following conditions:
(A) The client is a corporation, partnership, limited liability
company, trade association, or other business entity principally
located outside of the county in which the destination management
services are provided. The client is not an individual, social club,
or fraternal organization.
(B) The client is responsible for paying the qualified destination
management company for all the destination management services
provided to the client.
(C) The qualified destination management company is responsible
for paying all the vendors that sell or lease tangible personal
property to the qualified destination management company for the
contract services, including vendors' charges for sales tax
reimbursement or collection of use tax.
(D) The destination management services occur on two or more
consecutive days.
(c) This section shall remain in effect only until January 1,
2016, and as of that date is repealed.
SEC. 2. 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. 3. 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.