BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 2676|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 2676
Author: Ma (D)
Amended: 4/27/10 in Assembly
Vote: 21
SENATE REVENUE & TAXATION COMMITTEE : 3-0, 6/23/10
AYES: Wolk, Alquist, Padilla
NO VOTE RECORDED: Walters, Ashburn
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 49-28, 6/1/10 - See last page for vote
SUBJECT : Board of Equalization: administration
SOURCE : Board of Equalization
DIGEST : This bill makes permanent the use-tax reporting
line currently found on state personal income tax returns
and makes several other changes relating to tax laws
administered by the Board of Equalization.
ANALYSIS :
Existing law:
1. Imposes a sales tax on retailers for the privilege of
selling tangible personal property (TPP), absent a
specific exemption. The tax is based upon the
retailer's gross receipts from TPP sales in this state.
CONTINUED
AB 2676
Page
2
2. Imposes a complementary use tax on the storage, use, or
other consumption of TPP purchased out of state and
brought into California. The use tax is imposed on the
purchaser, and unless the purchaser pays the use tax to
an out-of-state retailer registered to collect
California's use tax, the purchaser remains liable for
the tax. The use tax is set at the same rate as the
state's sales tax and must be remitted to the Board of
Equalization (BOE).
3. Allows taxpayers to elect to report and remit qualified
use tax on an acceptable income tax return, as defined.
4. Provides that, upon the termination, dissolution, or
abandonment of the business of a corporation,
partnership, limited partnership, limited liability
partnership, or limited liability company (LLC),
specified individuals shall be held personally liable
for any unpaid SUT if the individual willfully fails to
pay any sales and use tax (SUT) owed by the business
entity, as specified.
5. Provides the Franchise Tax Board, but not BOE, with
access to information contained in the new employee
registry maintained by the Employment Development
Department (EDD).
This bill:
1. Reinstates and makes permanent the statutory provisions
allowing taxpayers to elect to report and remit
qualified use tax on an acceptable income tax return, as
defined.
2. Provides that, upon suspension of a "closely held
corporation" or "closely held LLC", certain individuals
shall be held personally liable for any unpaid SUT
liability of that business entity incurred during the
period of suspension.
A. Provides that the following individuals shall be
subject to personal liability:
AB 2676
Page
3
(1) Any corporate officer, shareholder, or
member with "control over operations or
management" during a time in which the entity's
powers, rights, and privileges are suspended.
(2) Any "responsible person" who fails to pay
any taxes due from the business entity during a
time in which the entity's powers, rights, and
privileges are suspended.
B. Provides that the corporate officer, shareholder,
member, or responsible person shall be liable for the
unpaid tax, along with interest and penalties,
regardless of the basis for the business entity's
suspension.
C. Provides that, if the business entity can
establish that it has taken all actions necessary to
qualify for revival within 60 days of suspension, no
personal liability shall be imposed.
D. Provides that personal liability applies only when
BOE establishes that, during the period of
suspension, the business entity did any of the
following:
(1) Sold TPP in the conduct of its business and
collected sales tax reimbursement without
remitting the tax when due.
(2) Collected use tax without reporting and
paying the tax.
(3) Consumed TPP without paying the applicable
tax to the seller or BOE.
E. Defines a "closely held corporation" as a
corporation in which ownership is concentrated in one
individual, one family, or a small number of
individuals and the majority stockholders manage the
business or have delegated the management to the
corporate officers.
F. Defines a "closely held LLC" as an LLC in which
AB 2676
Page
4
ownership is concentrated in one individual, one
family, or a small number of individuals, and the
majority members manage the business or have
delegated management to the company officers.
G. Defines "control over operations or management" to
mean the power to manage or affect day-to-day
operations of the business. It shall be rebuttably
presumed that an officer has control over operations
and management.
H. Defines a "responsible person" as any officer,
shareholder, or member who is charged with the
responsibility for the filing of returns or the
payment of tax or who has a duty to act for the
business entity in complying with any provision of
the SUT law, and who derives a direct financial
benefit from the failure to pay the tax liability.
I. Provides that a suspended corporation or LLC shall
remain liable for the unpaid tax, interest, and
penalties incurred during the period of suspension
without regard to any personal liability imposed.
3. Adds personal liability provisions comparable to those
contained in Section 6829 of the Revenue and Taxation
Code, as amended, to various special tax and fee
programs that BOE administers. Specifically, personal
liability provisions would be added to the following:
The Motor Vehicle Fuel Tax Law
The Use Fuel Tax Law
The Hazardous Substances Tax Law
The Integrated Waste Management Fee Law
The Oil Spill Response, Prevention, and
Administration Fees Law
The Fee Collection Procedures Law
The Diesel Fuel Tax Law
4. Grants BOE authority to use the information contained in
the EDD new employee registry for tax or fee enforcement
purposes.
Comments
AB 2676
Page
5
The author states: "AB 2676 is sponsored by the Board of
Equalization and contains various provisions that will
assist the BOE in its administration of its various tax and
fee programs."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/2/10)
Board of Equalization (source)
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Bass, Beall, Blakeslee, Block,
Blumenfield, Bradford, Brownley, Buchanan, Caballero,
Charles Calderon, Carter, Chesbro, Coto, Davis, De La
Torre, De Leon, Eng, Evans, Feuer, Fong, Fuentes,
Furutani, Galgiani, Hall, Hayashi, Hernandez, Hill,
Huffman, Jones, Lieu, Bonnie Lowenthal, Ma, Mendoza,
Monning, Nava, Portantino, Ruskin, Salas, Saldana,
Skinner, Solorio, Swanson, Torlakson, Torres, Torrico,
Yamada, John A. Perez
NOES: Adams, Anderson, Bill Berryhill, Conway, Cook,
DeVore, Emmerson, Fletcher, Fuller, Gaines, Garrick,
Gilmore, Hagman, Harkey, Huber, Jeffries, Knight, Logue,
Miller, Nestande, Niello, Nielsen, Norby, V. Manuel
Perez, Silva, Smyth, Tran, Villines
NO VOTE RECORDED: Tom Berryhill, Audra Strickland, Vacancy
DLW:mw 8/3/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****