BILL NUMBER: SB 421 AMENDED
BILL TEXT
AMENDED IN SENATE MARCH 22, 2011
INTRODUCED BY Senator Correa
FEBRUARY 16, 2011
An act to amend Section 6010 6591.5
of the Revenue and Taxation Code, relating to taxation.
LEGISLATIVE COUNSEL'S DIGEST
SB 421, as amended, Correa. Sales and use taxes: purchase
interest .
Existing law provides that interest is paid by taxpayers and
feepayers with respect to underpayments of various taxes, surcharges,
and fees at the modified adjusted rate, as defined by reference to a
specified federal statute, and that interest is paid to taxpayers
and feepayers with respect to overpayments of various taxes,
surcharges, and fees as determined in accordance with a specified
federal statute, which requires that the rate paid on overpayments be
based on the rate of 13-week treasury bills, as specified.
This bill would delete the requirement that interest on
overpayments be based on the rate of 13-week treasury bills and would
instead require that interest on both underpayments and overpayments
be determined in accordance with the specified federal statute, as
modified.
The Sales and Use Tax Law imposes a use tax 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. That law specifies that a "purchase" means and includes,
among other things, a transaction whereby the possession of tangible
personal property is transferred, but the seller retains the title to
the property as security for the payment of the price.
This bill would make technical, nonsubstantive changes to this
definition of purchase.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 6591.5 of the Revenue and
Taxation Code is amended to read:
6591.5. (a) (1)
For interest required to be paid to the state upon underpayments of
tax to the state, "modified "Modified adjusted
rate per annum" means the adjusted annual rate established pursuant
to subdivision (c), plus three percentage points.
(2) For interest required to be paid by the state upon
overpayments of tax, "modified adjusted rate per annum" means the
adjusted annual rate established pursuant to subdivision (d).
(b) "Modified adjusted rate per month, or fraction thereof" means
the modified adjusted rate per annum divided by 12.
(c) The rate established for interest to be paid upon
underpayments of tax shall be determined in accordance with
the provisions of Section 6621 of the Internal Revenue Code
which establish the underpayment rate , except that
the :
(1) The overpayment rate specified in Section 6621(a)(1) of the
Internal Revenue Code shall be modified to be equal to the
underpayment rate determined under Section 6621(a)(2) of the Internal
Revenue Code.
(2) The determination specified
in Section 6621(b) of the Internal Revenue Code shall be modified to
be determined semiannually as follows:
(1)
(A) The rate for January shall apply for the
following July 1 to December 31, inclusive.
(2)
(B) The rate for July shall apply for the
following January 1 to June 30, inclusive.
(d) (1) Except as provided in paragraph (2), the rate established
for interest to be paid by the state upon overpayments of tax shall
be equal to the bond equivalent rate of 13-week treasury bills
auctioned, rounded to the nearest full percent (or if a multiple of
one-half of 1 percent, the rate shall be increased to the next
highest full percent), as follows:
(A) The bond equivalent rate of 13-week treasury bills established
at the first auction held during the month of January shall apply
for the following July 1 to December 31, inclusive.
(B) The bond equivalent rate of 13-week treasury bills established
at the first auction held during the month of July shall apply for
the following January 1 to June 30, inclusive.
(2) For the period July 1, 1991, through June 30, 1992, the rate
to be paid by the state upon overpayments of tax shall be equal to
the bond equivalent rate of 13-week treasury bills established at the
auction held on July 1, 1991, rounded to the nearest full percent
(or if a multiple of one-half of 1 percent, the rate shall be
increased to the next highest full percent).
(e)
(d) For purposes of this part, and any other
provision of law referencing this method of computation, in
computing the amount of any interest required to be paid by the state
or by the taxpayer, or any other amount determined by reference to
that amount of interest, that interest and that amount shall be
computed as simple interest, not compound interest.
SECTION 1. Section 6010 of the Revenue and
Taxation Code is amended to read:
6010. "Purchase" means and includes:
(a) Any transfer of title or possession, exchange, or barter,
conditional or otherwise, in any manner or by any means whatsoever,
of tangible personal property for a consideration. "Transfer of
possession" includes only transactions found by the board to be in
lieu of a transfer of title, exchange, or barter.
(b) When performed outside this state or when the customer gives a
resale certificate pursuant to Article 3 (commencing with Section
6091) of Chapter 2, the producing, fabricating, processing, printing,
or imprinting of tangible personal property for a consideration for
consumers who furnish either directly or indirectly the materials
used in the producing, fabricating, processing, printing, or
imprinting.
(c) A transaction whereby the possession of property is
transferred, but the seller retains the title as security for the
payment of the price.
(d) A transfer for a consideration of tangible personal property
that has been produced, fabricated, or printed to the special order
of the customer, or of any publication.
(e) Any lease of tangible personal property in any manner or by
any means whatsoever, for consideration, except a lease of:
(1) Motion pictures or animated motion pictures, including
television, films, and tapes.
(2) Linen supplies and similar articles when an essential part of
the lease agreement is the furnishing of the recurring service of
laundering or cleaning the articles.
(3) Household furnishings with a lease of the living quarters in
which they are to be used.
(4) Mobile transportation equipment for use in transportation of
persons or property as defined in Section 6023.
(5) Tangible personal property leased in substantially the same
form as acquired by the lessor or leased in substantially the same
form as acquired by a transferor, as to which the lessor or
transferor has paid sales tax reimbursement or has paid use tax
measured by the purchase price of the property. For purposes of this
paragraph, "transferor" shall mean the following:
(A) A person from whom the lessor acquired the property in a
transaction described in subdivision (b) of Section 6006.5.
(B) A decedent from whom the lessor acquired the property by will
or the laws of succession.
(6) A mobilehome, as defined in Sections 18008 and 18211 of the
Health and Safety Code, other than a mobilehome originally sold new
prior to July 1, 1980, and not subject to local property taxation.
(7) Paragraphs (1) and (5) and Section 6094.1 do not apply to
rentals or leases of video cassettes, video tapes, and video discs
for private use under which the lessee or renter does not obtain or
acquire the right to license, broadcast, exhibit, or reproduce the
video cassette, video tape, or video disc.