BILL NUMBER: AB 780	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Charles Calderon

                        FEBRUARY 17, 2011

   An act to add Section 6376.4 to the Revenue and Taxation Code,
relating to taxation.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 780, as introduced, Charles Calderon. Sales and use taxes:
exemption: fixed price contract.
   Existing law imposes a state sales and use tax on retailers and on
the storage, use, or other consumption of tangible personal property
in this state at the combined rate of 71/4% of the gross receipts
from the retail sale of tangible personal property in this state and
of the sales price of tangible personal property purchased from any
retailer for storage, use, or other consumption in this state.
   This bill would, for any increase or extension of counties and
cities also impose a sales and use tax at a combined rate of 1% the
sales and use tax rate on and after July 1, 2011, exclude from that
increased rate of tax, the gross receipts from certain sales and uses
of tangible personal property that are subject to a fixed price
pursuant to a contract entered into prior to the operative date of
the sales and use tax rate increase.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


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

  SECTION 1.  Section 6376.4 is added to the Revenue and Taxation
Code, to read:
   6376.4.  On and after July 1, 2011, from the operative date of an
act that increases or extends a sales and use tax rate, to the date
on which the taxes imposed by that act cease to be operative, there
is exempted from the taxes imposed by this part an amount equal to an
amount that is attributable to the rate of tax imposed with respect
to the following:
   (a) (1) The gross receipts from the sale of, and the storage, use,
or other consumption in this state of, the following:
   (A) Tangible personal property, if the seller is obligated to
furnish or the purchaser is obligated to purchase the property for a
fixed price pursuant to a contract entered into prior to the
operative date of the act that increased the sales and use tax rate.
   (B) Materials and fixtures obligated pursuant to an engineering
construction contract or a building construction contract entered
into for a fixed price prior to the operative date of the act that
increased the sales and use tax rate.
   (2) For purposes of this subdivision, tangible personal property
shall not be deemed obligated pursuant to a contract for any period
of time for which any party to the contract has the unconditional
right to terminate the contract upon notice, whether or not the right
is exercised.
   (b) A lease of tangible personal property that is a continuing
sale of the property for any period of time for which the lessor is
obligated to lease the property for an amount fixed by the lease
prior to the operative date of the act that increased the sales and
use tax rate. For purposes of this subdivision, the sale or lease of
tangible personal property shall be deemed not to be obligated
pursuant to a contract or lease for any period of time for which any
party to the contract or lease has the unconditional right to
terminate the contract or lease upon notice, whether or not that
right is exercised.
   (c) The possession of, or the exercise of, any right or power over
tangible personal property pursuant to a lease that is a continuing
purchase of the property for any period of time for which the lessee
is obligated to lease the property for an amount fixed by a lease
entered into prior to the operative date of the act that increased
the sales and use tax rate. For purposes of this subdivision, the
storage, use, or other consumption of, or possession of, or exercise
of any right or power over, tangible personal property shall be
deemed not to be obligated pursuant to a contract or lease for any
period of time for which any party to the contract or lease has the
unconditional right to terminate the contract or lease upon notice,
whether or not the right is exercised.