BILL ANALYSIS
SB 809
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Date of Hearing: August 19, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
SB 809 (Committee on Veterans Affairs) - As Amended: July 15,
2009
Policy Committee: Revenue and
Taxation Vote: 8-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill allows disabled veteran itinerant vendors to pay sales
taxes on their wholesale purchases instead of having to collect
the tax on the retail sales made to their customers. The bill
does not apply to sales of alcohol, catering, vending machines,
or for sales of items of over $100, and it becomes inoperative
on January 1, 2012.
FISCAL EFFECT
The Board of Equalization estimates that this bill would reduce
state and local revenues by $24,000 annually based on its
assumption that both the number of individuals meeting the
qualifications set forth by this bill and the value of goods
sold by these individuals is quite small.
COMMENTS
1)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 certain tangible personal property that they purchase for
resale. These include certain items purchased by optometrists,
physicians, pharmacists, veterinarians, and others where the
sales are, to varying degrees, incidental to their main
SB 809
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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 the wholesale and retail price of the
products being sold. In the case of cooked food, the state
loses the full value of the product since the raw materials
are exempt from the tax.
Under current law disabled veteran itinerant venders are
subject to the normal sales and use tax requirements, in that
their wholesale purchases are exempt and the tax is due at the
time they sell the products to their customers. Under this
bill, qualifying itinerant disabled veterans would be
considered consumers when they make wholesale purchases, and
thus would be relieved from collecting sales taxes and
maintaining records on their retail sales.
2)Rationale . This bill is intended to address the application of
the sales and use tax law to disabled veterans who make sales
of goods they own, such as food, handcrafted items, paintings,
memorabilia, and blankets. It is meant to acknowledge the
sacrifices that these individuals have made to our country and
to help remove recordkeeping burdens they face when attempting
to earn a living through itinerant vending sales.
3)Related legislation . This bill is identical to AB 1265 (Ma),
which is in the Senate Appropriations Committee.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081