BILL ANALYSIS �
AB 843
Page 1
Date of Hearing: January 9, 2012
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Henry T. Perea, Chair
AB 843 (Calderon) - As Amended: January 4, 2012
Majority vote. Fiscal committee.
SUBJECT : State Board of Equalization: non-monetized bullion
and numismatic coins: adjustment date
SUMMARY : Makes a technical change to the Sales and Use Tax
(SUT) Law sponsored by the State Board of Equalization (BOE).
Specifically, this bill changes, from September 1 to October 1,
the date by which the BOE must annually adjust the monetary
value threshold for sales of monetized bullion, non-monetized
gold or silver bullion, and numismatic coins (collectively,
Precious Metals) to be considered "bulk" sales qualifying for a
statutory exemption.
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
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
BOE.
3)Provides a SUT exemption for the sale or purchase "in bulk" of
Precious Metals, when substantially equivalent to transactions
in securities or commodities through a national securities or
commodities exchange.
4)Provides that a sale "in bulk" shall be deemed to have
occurred if the amount of Precious Metals sold in the
transaction totals $1,000 or more (or its present day
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equivalent adjusted for inflation). The BOE is required by
law to adjust the "bulk sale threshold" annually by September
1.
FISCAL EFFECT : Committee staff estimates that this bill will
not impact state revenues.
COMMENTS :
1)The author notes the following in support of this bill:
AB 843 changes the date from September 1 to October 1 by
which the BOE must determine the bulk sale threshold. This
change will give BOE staff sufficient time to obtain the
June �California Consumer Price Index], prepare the
necessary calculation, and place the item on the BOE
meeting agenda.
2)Committee Staff Comments:
a) Revenue and Taxation Code Section 6355 : Revenue and
Taxation Code (R&TC) Section 6355 provides a SUT exemption
for the sale or purchase "in bulk" of Precious Metals.
R&TC Section 6355 further provides that a sale "in bulk"
shall be deemed to have occurred if the amount sold in the
transaction totals $1,000 or more (or its present day
equivalent adjusted for inflation). The BOE is required to
adjust the $1,000 "bulk sale threshold" each year.
Specifically, on or before September 1 of each year, the
BOE must multiply the current bulk sale threshold by the
inflation factor adjustment determined by the Franchise Tax
Board pursuant to R&TC Section 17041(h). When the result
of this calculation is $500 greater than the existing
threshold, the threshold is adjusted and rounded to the
nearest $500 increment. To explain this adjustment system,
BOE staff provide the following example:
�I]f the bulk sale threshold amount is currently
$1500, and multiplying this amount by the inflation
factor adjustment results in a new threshold of $1700,
the bulk sale threshold does not become operative
since it does not exceed the $500 increment (it must
equal or exceed $2,000 to become operative). The next
year, the $1,700 threshold must be multiplied by the
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inflation factor adjustment to determine the new
threshold.
b) The Inflation Factor Adjustment : BOE reports that the
inflation factor adjustment is based on a comparison of the
California Consumer Price Index (CCPI) published by the
Department of Industrial Relations for June of each year.
Once the calculation is made by BOE staff, the issue is
placed on the BOE's consent agenda for the August BOE
meeting, so that the new threshold can be officially
adopted. The CCPI for June, however, is generally not
available until late August of each year. Since items
placed on the BOE meeting agenda are subject to public
notice, this calculation must be done by staff by the end
of July. Since the CCPI is generally not available, staff
has been required to track down "preliminary numbers" to
perform its statutorily mandated calculation. The BOE
reports that it is often difficult to obtain the
preliminary numbers in a timely manner to have this item
placed on the BOE's August agenda.
c) This Proposal : BOE notes, "This proposal would change
the date from September 1 to October 1 of each year by
which the BOE must determine the bulk sale threshold.
Changing the date from September 1 to October 1 will allow
staff sufficient time to obtain the June CCPI, prepare the
necessary calculation, and place the item on the BOE
meeting agenda. An October 1 date will still provide for
adequate lead time in amending Regulation 1599 and
notifying the public in the event the calculation results
in a new operative threshold."
REGISTERED SUPPORT / OPPOSITION :
Support
Board of Equalization (sponsor)
Opposition
None on file
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098
AB 843
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