BILL ANALYSIS
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THIRD READING
Bill No: SB 809
Author: Senate Veterans Affairs Committee
Amended: 4/23/09
Vote: 21
SENATE REVENUE & TAXATION COMMITTEE : 7-0, 5/13/09
AYES: Wolk, Walters, Alquist, Florez, Padilla, Runner,
Wiggins
NO VOTE RECORDED: Ashburn
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Sales and use taxes: consumers: veterans:
itinerant vendors
SOURCE : Author
DIGEST : This bill specifies that United States itinerant
veteran vendors would be regarded as consumers, rather
than retailers, of tangible personal property that they
sell.
ANALYSIS : Existing law imposes the sales and use tax on
the gross receipts on tangible personal property unless
statutorily exempted. The law does not contain a general
exemption from the sales or use tax for sales to or by
veterans. The following chart shows the basic sales and
use tax rate for the state. In addition, cities and
counties may levy transactions and use taxes with a vote of
the people for either general or special purposes in that
CONTINUED
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city.
Rate Jurisdiction
5.75 percent State (General Fund)
0.25 percent State (Fiscal Recovery Fund)
0.50 percent State (Local Revenue Fund)
0.25 percent State (General Fund)
0.50 percent State (Local Public Safety Fund)
1.00 percent Local (County/City)
0.25 percent County transportation
funds
0.75 percent City and county
operations
8.25 percent Total Statewide Base Sales/Use Tax
Under the law, every retailer or any other person engaged
in the business of selling tangible personal property which
is taxable in this state is required to obtain a seller's
permit and report the tax on his/her sales on a return
prescribed by the Board of Equalization. However,
California's Sales and Use Tax Law places a variety of
retailers making taxable sales of tangible personal
property under a "consumer" reporting status. Under a
"consumer" reporting status, a qualifying retailer making
otherwise taxable sales is not required to obtain a
seller's permit or report tax on those sales. Rather, the
qualifying retailer is only required to pay tax on his/her
cost of the taxable components of the products he/she
sells.
The "consumer" reporting status is primarily intended to
minimize reporting burdens placed on smaller businesses and
entities, while minimizing the associated revenue loss that
can accompany a complete exemption from the tax. The law
has extended this consumer reporting status to certain
sales by such entities as nonprofit youth groups, PTAs,
nonprofit veterans' organizations, various charitable
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organizations, schools and school districts, optometrists,
veterinarians, podiatrists, licensed hearing aid
dispensers, and others with respect to certain products
they sell.
This bill specifies that a "qualified itinerant vendor" is
a consumer (not a retailer) of tangible personal property
owned by the qualified itinerant vendor, except alcoholic
beverages.
This bill specifies that a person is a "qualified itinerant
vendor" when all of the following apply:
1. The person was a member of the United States Armed
Forces who received an honorable discharge or a release
from active duty under honorable conditions from
service,
2. The person is unable to obtain a livelihood by manual
labor due to a service-connected disability.
3. For the purposes of selling tangible personal property,
the person is a sole proprietor with no employees.
4. The person has no permanent place of business in this
state.
This bill defines "permanent place of business" as any
building or other permanently affixed structure, including
a residence that is used in whole or in part for the
purpose of making sales of, or taking orders and arranging
for shipment of, tangible personal property, and would
exclude from that term, any building or other permanently
affixed structure, including a residence, used for any of
the following:
1. The storage of tangible personal property.
2. The cleaning or the storage of equipment or other
property used in connection with the manufacture or sale
of tangible personal property.
This bill specifies that its provisions do not apply to
either of the following:
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1. A person engaged in the business of serving meals, food,
or drinks to a customer at a location owned, rented, or
otherwise supplied by the customer.
2. A person operating a vending machine.
This bill becomes operative on the first day of the first
calendar quarter commencing more than 90 days from the
bill's effective date.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
The BOE estimates a total revenue loss of $24,855
associated with this bill.
SUPPORT : (Verified 5/26/09)
Board of Equalization
ARGUMENTS IN SUPPORT : Proponents note, "In recent years,
we have seen large numbers of veterans return home from two
major foreign conflicts in which the United States Armed
Forces are actively engaged. Many of these returning
veterans face continuing challenges from physical or
psychological disabilities directly related to their
military service. The BOE has been advised in public
hearings that some of these veterans seek to make a modest
living from the itinerant sales of food and beverages."
BOE's support letter states that this bill represents one
small step towards recognizing our disabled veterans who
have already made, or are making the transition from
military to civilian employment. Enactment of this bill
assists in this transition by simplifying reporting
requirements under the Sales and Use Tax Law for those
qualifying disabled veterans that are honorably discharged
or released from service that desire to engage in the
business of selling goods they own. For qualifying
disabled veterans without employees or a permanent place of
business, this bill eliminates the need for them to hold a
seller's permit, file sales tax returns, and remit sales
tax on their sales.
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DLW:mw 5/27/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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