BILL ANALYSIS �
AB 289
Page 1
ASSEMBLY THIRD READING
AB 289 (Cedillo)
As Amended May 24, 2011
Majority vote. Tax levy
REVENUE & TAXATION 8-0 APPROPRIATIONS 17-0
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|Ayes:|Perea, Donnelly, Beall, |Ayes:|Fuentes, Harkey, |
| |Charles Calderon, | |Blumenfield, Bradford, |
| |Fuentes, Gordon, Harkey, | |Charles Calderon, Campos, |
| |Nestande | |Davis, Donnelly, Gatto, |
| | | |Hall, Hill, Lara, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
| | | | |
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SUMMARY : Extends the sunset date for the current sales and use
tax (SUT) exemption for retail items sold by thrift stores
operated by nonprofit organizations to assist individuals with
human immunodeficiency virus (HIV) or acquired immune deficiency
syndrome (AIDS). Specifically, this bill :
1)Extends the current sunset date from January 1, 2012, to
January 1, 2019.
2)Provides that, notwithstanding existing law, the state shall
not reimburse any local agency for any SUT revenues lost as a
result of this bill.
3)Takes immediate effect as a tax levy.
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.
2)Imposes a complementary use tax on the storage, use, or other
consumption in this state of TPP purchased from any retailer.
The use tax is imposed on the purchaser, and unless the
purchaser pays the use tax to a retailer registered to collect
the California use tax, the purchaser remains liable for the
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tax, unless the use is exempted. The use tax is set at the
same rate as the state's sales tax and must be remitted to the
State Board of Equalization (BOE).
3)Provides a SUT exemption for used pieces of clothing,
household items, or other retail items sold by specified
thrift stores operated by a "nonprofit organization." To
qualify for the exemption, the thrift store's purpose must be
to generate revenue for the funding of medical, hospice, or
social services for chronically ill individuals, and at least
75% of the thrift store's net income must be so used.
4)Defines a "nonprofit organization," for purposes of the
exemption, as a nonprofit organization that provides medical,
hospice, or social services to individuals with a chronic,
life-threatening illness, as defined in Health and Safety Code
(H&SC) Section 1568.01(c). H&SC Section 1568.01(c), in turn,
defines a chronic, life-threatening illness as HIV disease or
AIDS.
FISCAL EFFECT : The BOE estimates that this bill would result in
annual state and local revenue losses of approximately $1
million.
COMMENTS : The author has provided the following statement in
support of this bill:
Current law provides an exemption to the Sales and �Use]
Tax Law for retail
items sold by thrift stores operated by non-profit
organizations, which raise funds for services to HIV or
AIDS patients. This exemption will be repealed on January
1, 2012.
The BOE notes the following in its staff analysis of this bill:
1)Provisions would not be problematic to administer . "Since the
BOE is already administering the sales and use tax exemption
for thrift stores that benefit individuals with HIV or AIDS,
extending the sunset date would not pose a problem."
2)Related legislation . "At the January 27, 2011 BOE Legislative
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Committee meeting, the committee voted to sponsor legislation
to extend the sunset date on the sales and use tax exemption
for thrift stores that benefit individuals with HIV or AIDS,
from January 1, 2012 to January 1, 2017."
Assembly Revenue and Taxation Committee Staff Comments:
1)The BOE notes that there are currently three nonprofit
organizations operating thrift stores that qualify for this
exemption. These organizations hold seller's permits, file
tax returns, and claim exempt sales pursuant to existing law.
2)The current SUT exemption was established by AB 3187
(Martinez), Chapter 781, Statutes of 1996. As originally
enacted, the exemption provisions included a sunset date of
January 1, 2002. In 2001, the author introduced legislation
(AB 180, Chapter 383) to delete permanently the exemption's
sunset date. Prior to enactment, however, AB 180 was amended
in the Senate to instead extend the sunset date to January 1,
2007. In 2006, the author again introduced legislation (SB
1341, Chapter 373) to delete the sunset date outright. The
bill was subsequently amended to delay the sunset date to the
current date of January 1, 2012.
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098
FN: 0000945