BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 884|
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THIRD READING
Bill No: SB 884
Author: Ashburn (R)
Amended: 7/15/10
Vote: 27 - Urgency
SENATE REVENUE & TAXATION COMMITTEE : 5-0, 7/1/10
AYES: Wolk, Walters, Alquist, Ashburn, Padilla
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Sales and use taxes: administration
SOURCE : Author
DIGEST : This bill revises the use tax registration
program enacted by
AB 18 X4 including extending the April 15th use tax filing
deadline for personal income and corporate tax filers and
waiving penalties for various reporting periods.
ANALYSIS : Existing law imposes a use tax on the storage,
use, or other consumption in California of tangible
personal property purchased from any retailer. The use tax
is imposed on the purchaser, and unless that purchaser pays
the use tax to a retailer registered to collect the
California use tax, the purchaser is liable for the tax,
unless the use of that property is specifically exempted or
excluded from tax. The use tax is the same rate as the
sales tax. Generally, a use tax liability occurs when a
California consumer or business purchases tangible items
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for their own use from an out-of-state retailer that is not
registered with the Board of Equalization (BOE) to collect
the California use tax. Existing law requires "qualified
purchasers" to register with BOE and report and pay by
April 15, the use tax owed for purchases made during the
preceding calendar year (AB 18 X4 [Assembly Budget
Committee), Chapter 16, Statutes of 2009-10, Fourth
Extraordinary Session). The bill defines "qualified
purchaser" as a person not required to hold a seller's
permit, not already otherwise registered or required to
register with BOE, and that receives at least $100,000 in
gross receipts from business operations per calendar year.
This bill makes several changes related to the use tax
registration program enacted by last year's AB 18 X4.
Specifically, this bill:
1. Eliminates the April 15 due date for qualified
purchasers and give BOE the authority to establish
calendar year or fiscal year reporting bases for these
qualified purchasers - as BOE currently has for most
sales and use tax taxpayers. Accordingly, the returns
and due dates of the use tax would either be on January
31 following the calendar year for those taxpayers BOE
designates to be on a calendar year reporting basis, or
July 31 for those taxpayers BOE designates to be on a
fiscal year (July 1 to June 30) basis.
2. Authorizes BOE to grant a reasonable extension of time
for filing 2009 returns pursuant to this program up to
six months, as specified.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to BOE, to the extent some taxpayers delay
remitting their use tax until March 15, 2011, some shifting
of revenues from fiscal year 2009-10 to 2010-11 could
occur. There could also be some foregone penalty revenue
attributable to those taxpayers who voluntarily remitted
the penalty and did not request relief. BOE states that
the amount of revenue shifting is indeterminable at this
time. However, the amount of foregone penalty revenue
would amount to $991,144, as BOE would have refunded this
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penalty revenue "as promptly as feasible" under this bill.
SUPPORT : (Verified 8/9/10)
Betty Yee, Chair, Board of Equalization
California Chamber of Commerce (if amended)
California Society of Enrolled Agents
California Taxpayers' Association
ARGUMENTS IN SUPPORT : The author states:
"Assembly Bill X4 18, which passed last year, required
residents who receive $100,000 in gross receipts in
business operations, who are not registered with the
board as retailers, to register and file a use tax return
by April 15. This new filing requirement has created some
confusion among tax payers. The requirement to register
for use tax was signed by the Governor in July of 2009
which gave the Board of Equalization less than 6 months
to notify taxpayers of the mandate. As a result not all
applicable taxpayers were informed or have had adequate
time to prepare for this year's first time filing.
Moreover, the April deadline is different from the fiscal
year calendar by which many taxpayers file with the FTB.
Consequently, taxpayers may be unfairly penalized for
this year's missed deadline.
"[SB 884] will extend the April 15th use tax filing
deadline for personal income and corporate tax filers.
This legislation will also allow the Board of
Equalization to exempt use tax filers from the penalties
that could result from confusion related to the current
filing deadlines. The extension of the use tax filing
deadline and the ability to exempt filers from penalties
will allow the state the time necessary to implement this
new requirement and properly notify the affected
taxpayers."
DLW:mw 8/9/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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