BILL NUMBER: SB 1373	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JUNE 2, 2010

INTRODUCED BY   Senator Leno

                        FEBRUARY 19, 2010

   An act to add Section 6007.7 to the Revenue and Taxation Code,
relating to taxation, to take effect immediately, tax levy.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1373, as amended, Leno. Sales and use taxes: retailer: 
paving  construction contractor. 
   (1) The 
    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. A construction contractor generally does not sell
materials to his or her customer, but instead uses the materials in
furnishing and installing the materials in the performance of a
construction contract, with either sales tax applying to the sale of
materials to the construction contractor, or if sales tax does not
apply, use tax applying to the storage, use, or other consumption of
the materials  purchased  by the construction contractor.
 If the contractor has not purchased the materials, but has
acquired them from its real property, no sales or use tax applies.

   This bill would  exclude from tax, the sale of materials
to, or the storage, use, or other consumption of materials by, a
paving construction contractor, and instead   , for
contracts awarded on and after April 1, 2011,  deem a 
paving  construction contractor the retailer of  the
  any aggregate-based  materials  he or
she furnishes and installs in the performance of a paving
construction contract, and   that the contractor
fabricates, manufactures, processes, or produces, and permanently
incorporates into a construction project. The bill  would
specify how the gross receipts from the  deemed  retail sale
are determined. 
   (2) The 
    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 existing law
authorizes districts, as specified, to impose transactions and use
taxes in conformity with the Transactions and Use Tax Law, which
conforms to the Sales and Use Tax Law.  Exemptions from state
sales and use taxes are incorporated into these laws.  
Those laws require that a local sales and use tax ordinance or
transactions and use tax ordinance provide that amendments to the
Sales and Use Tax Law automatically become a part of the ordinance.
 
   The provisions of this bill would automatically be incorporated
into those ordinances.  
   This bill would result in a change in state taxes for the purpose
of increasing state revenues within the meaning of Section 3 of
Article XIII A of the California Constitution, and thus would require
for passage the approval of 2/3 of the membership of each house of
the Legislature.  
   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.
   Vote:  majority   2/3  . Appropriation:
no. Fiscal committee: yes. State-mandated local program:  yes
  no  .


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 6007.7 is added to the Revenue and Taxation
Code, to read:
   6007.7.  (a)  (1)    A contractor that
fabricates, manufactures, processes, or produces  materials
that he or she furnishes and installs in the performance of a paving
construction contract shall be deemed the retailer of those
materials. The gross receipts from the retail sale of the materials
shall be included in the measure of the taxes imposed by this part.
  any aggregate-based materials that the contractor
permanently incorporates into a construction project, shall be deemed
the   retailer of those materials.  
   (2) This subdivision shall not apply to the reuse or recycling in
a construction project of any aggregate-based materials that
originate from the site of the construction project, nor to the use
of fill dirt or sand materials that are transported to the
construction site, that are not purchased by the contractor, and that
are not crushed, blended, or processed.  
   (3) The gross receipts from the deemed retail sale of the
aggregate-based materials shall be included in the measure of the
taxes imposed by this part. 
   (b) For purposes of this section,  a "paving construction
contract" means a construction contract to erect, construct, alter,
or repair streets, highways, sidewalks, driveways, curbs, gutters,
parking lots, or other similar structures.  
"aggregate-based materials" means rock, sand, asphalt, or concrete.

   (c) For purposes of this section, the gross receipts from the 
retail  sale of the materials shall be as follows:
   (1) The price at which the contractor sells similar materials in
similar quantities ready for installation to other contractors.
   (2) If the contractor does not sell similar materials in similar
quantities ready for installation to other contractors, the price
shall be deemed to be the amount stated in the price lists, bid
sheets, or other records of the contractor. 
   (d) This section shall apply to all contracts awarded on or after
April 1, 2011. 
  SEC. 2.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.