BILL NUMBER: SB 530 AMENDED
BILL TEXT
AMENDED IN SENATE MARCH 23, 2011
INTRODUCED BY Senator Wright
FEBRUARY 17, 2011
An act to add Part 14.5 (commencing with Section 33001) to
Division 2 of the Revenue and Taxation Code, relating to taxation,
making an appropriation therefor, and declaring the urgency thereof,
to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 530, as amended, Wright. Taxation: direct broadcast satellite
television service: tax.
Existing law imposes various taxes, including taxes on the
privilege of engaging in certain activities. The Fee Collection
Procedures Law, the violation of which is a crime, provides
procedures for the collection of certain fees and surcharges.
This bill would impose, for the privilege of selling
video direct broadcast satellite television
service, a tax on a direct broadcast satellite television service
provider at the rate of 6% of its gross revenues, as defined. The tax
would be administered by the State Board of Equalization and would
be collected pursuant to the procedures set forth in the Fee
Collection Procedures Law, as specified. The revenues from this tax
would be deposited in the Local Safety and Protection Account
established in the Transportation Tax Fund, a continuously
appropriated fund. By depositing revenues into a continuously
appropriated fund, this bill would make an appropriation.
Because this bill would expand the application of the Fee
Collection Procedures Law, the violation of which is a crime, it
would impose a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
This bill would declare that it is to take effect immediately as
an urgency statute, but its operative date would depend on its
effective date.
Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Part 14.5 (commencing with Section 33001) is added to
Division 2 of the Revenue and Taxation Code, to read:
PART 14.5. SATELLITE VIDEO FUND FOR PUBLIC SAFETY TAX
CHAPTER 1. GENERAL PROVISIONS AND FINDINGS
33001. This part is known and may be cited as the Satellite Video
Fund for Public Safety Tax.
33002. The Legislature finds and declares all of the following:
(a) As a matter of statewide concern and for many reasons,
including those articulated herein, the Legislature hereby enacts a
new state tax on direct broadcast satellite (DBS) television service
providers. The purpose of this new tax is to provide funding to
support programs for local law enforcement and other public safety
services so that those programs can be maintained while funding for
similar programs has been reduced due to the combination of the
economic recession and the state's budgetary problems.
(b) DBS services use satellite and terrestrial technologies to
provide video programming to homes and businesses in California.
Companies that provide DBS services benefit from both state and local
infrastructure as well as state and local laws and policies that
facilitate the receipt of the satellite programming in homes and
businesses.
(c) DBS service providers maintain offices and other property
within some cities and counties in California. DBS providers have
employees and contractors throughout California which sell, install,
and maintain DBS service. In this way, DBS service providers operate
in a manner similar to other businesses throughout cities and
counties in California.
(d) As competition in the market for video services has evolved,
the tax and fee structure has not protected the revenue base, and
that lack of protection now threatens to undermine financial support
for public safety programs.
(e) Although DBS providers benefit from both state and local
infrastructure as well as state and local laws and policies that
facilitate the receipt of the satellite programming in homes and
businesses, DBS does not contribute to city and county general funds
which support law enforcement and other public safety services.
Moreover, DBS providers do not provide emergency alert services in
California communities.
(f) Cities and counties throughout California have been forced to
reduce law enforcement and public safety budgets because of the
nationwide economic downturn and the cuts that have been made to
programs and services in California.
(g) Some video products, services, providers, subscribers, and
customers have taxes and fees that generate revenue to fund local
public safety programs such as: (1) purchasers and renters of DVDs
who pay sales taxes; (2) cable television, open-video system, and
video service providers who pay state or local franchise fees; and
(3) cable and other non-DBS video subscribers who pay local utility
user taxes, some of which must be spent on public safety programs
according to ordinances passed in local communities.
(h) However, DBS providers make little, if any, money available to
support local public safety programs.
(i) The Legislature finds that the disparity in the tax and fee
burdens on video products, services, and providers has a harmful
impact on public safety to the extent that, when customers migrate to
DBS service, various revenue bases diminish, and there are less
financial resources available for state and local public safety
programs.
(j) Congress anticipated that the Legislature would enact a state
DBS tax framework consistent with California's particular
circumstances when it passed Section 602 of the Telecommunications
Act of 1996, which authorized states to tax direct-to-home satellite
service. Although Section 602 preempts locally imposed and
administered taxes and fees on direct-to-home satellite services, it
permits states to allocate revenue from state taxes to local
governments.
(k) To preserve the tax base for local public safety programs and
comply with the provisions of Section 602 of the
Telecommunication Telecommunications Act of
1996, the Legislature creates this part to be administered by the
State Board of Equalization, with revenues to be transferred to the
Local Safety and Protection Account for continuous allocation to the
programs designated in subdivision (b) of Section 10752.2.
CHAPTER 2. DEFINITIONS
33003. For purposes of this part:
(a) "Cable service" means cable service as defined in subdivision
(c) of Section 5830 of the Public Utilities Code.
(b)
(a) "Direct broadcast satellite television service" and
"DBS service" means television programming transmitted or
broadcasted by satellite directly to the subscriber's premises.
(c)
(b) "DBS service provider" or "DBS provider" means any
person that sells DBS service.
(d)
(c) (1) "Gross revenues" means all revenue of the DBS
service provider, as determined in accordance with generally accepted
accounting principles, that is derived from the DBS service
provider's provision of video sale of DBS
service in this state, including all of the following:
(A) All charges billed to subscribers in this state for
any and all video service provided by the DBS service
provider DBS service , including all revenue
related to programming provided to the subscriber, equipment rentals,
late fees, and insufficient fund fees.
(B) Compensation received by the DBS service provider that is
derived from the DBS service provider's operation with respect to
commissions that are paid to the DBS service provider as compensation
for promotion or exhibition of any products or services on the
provider's network, such as a "home shopping" or similar channel,
subject to subparagraph (D) of paragraph (2).
(C) A pro rata portion of all revenue derived by the DBS service
provider or its affiliates pursuant to compensation arrangements for
advertising derived from the operation of the provider's
video service within the DBS service in this
state, subject to subparagraph (A) of paragraph (2). The allocation
shall be based on the number of subscribers in this state divided by
the total number of subscribers in relation to the relevant regional
or national compensation arrangement.
(2) "Gross revenue" does not include any of the following:
(A) Amounts not actually received, by the DBS service
provider, even if billed, such as bad debt; refunds, rebates,
or discounts to subscribers or other third parties; or revenue
imputed from the provision of DBS services for free or at reduced
rates to any person as required or allowed by law, including, but not
limited to, the provision of these services to public institutions,
public schools, governmental agencies, or employees except that
foregone revenue chosen not to be received in exchange for trades,
barters, services, or other items of value shall be included in gross
revenue.
(B) Revenues received by any affiliate or any other person in
exchange for supplying goods or services used by the DBS service
provider to provide video DBS services.
However, revenue received by an affiliate of the DBS service
provider from the affiliate's provision of video
DBS service shall be included in gross revenue as follows:
(i) To the extent that treating the revenue as revenue of the
affiliate, instead of revenue of the video
DBS provider, would have the effect of evading the payment of
taxes that would otherwise be paid to the state under this part.
(ii) The revenue is not otherwise subject to the tax to be paid to
the state under this part.
(C) Revenue derived from services classified as nonvideo
services under federal law other than DBS service
, including, but not limited to, revenue derived from
Internet access service, telecommunications services ,
and information services, other than video services,
and any other revenues attributed by the DBS service provider to
nonvideo services in accordance with Federal Communications
Commission rules, regulations, standards, or orders.
services.
(D) Revenue paid by subscribers to "home shopping" or similar
networks directly from the sale of merchandise through any home
shopping channel offered as part of the video
DBS services. However, commissions or other compensation paid
to the DBS service provider by "home shopping" or similar networks
for the promotion or exhibition of products or services shall be
included in gross revenue.
(E) Revenue from the sale of video DBS
services for resale in which the reseller is required to
collect the tax under this part from the reseller's subscribers.
(F) Amounts billed to, and collected from, subscribers to recover
any tax, fee, or surcharge imposed by any governmental entity on the
video DBS service provider, including,
but not limited to, sales and use taxes, gross receipts taxes, excise
taxes, utility users taxes, public service taxes, communication
taxes, and any other fee not imposed by this section.
(G) Revenue from the sale of capital assets or surplus equipment
not used by the purchaser to receive DBS services from the seller of
those assets or surplus equipment.
(H) Revenue from directory or Internet advertising revenue,
including, but not limited to, yellow pages, white pages, banner
advertisement, and electronic publishing.
(I) Revenue received as reimbursement by programmers of specific,
identifiable marketing costs incurred by the DBS service provider for
the introduction of new programming.
(J) Security deposits received from subscribers of a DBS service
provider, excluding security deposits applied to the outstanding
balance of a subscriber's account and thereby taken into revenue.
(3) For purposes of determining gross revenue under this part, the
DBS service provider shall use the same method of determining
revenues under generally accepted accounting principles as that which
the DBS service provider uses in determining revenues for the
purpose of reporting to national and state regulatory agencies.
(e) "Local franchise" means a franchise that is issued pursuant to
Section 53066 of the Government Code including an initial
authorization, or renewal thereof, including a renewal of an
authorization, issued by a city or county, whether such authorization
is designated as a franchise, permit, license, resolution, contract,
certificate, agreement, ordinance, or otherwise, which authorizes
the construction or operation of a cable system.
(f) "Open-video system" (OVS) means open-video system as defined
in subdivision (m) of Section 5830 of the Public Utilities Code.
(g) "State franchise" means state franchise as defined in
subdivision (p) of Section 5830 of the Public Utilities Code.
(h)
(d) "Subscriber" means any person, firm, partnership,
corporation, limited liability company, or other entity paying to
receive video service in this state.
(i) "Video service" means video service offered by any
direct-to-home satellite service provider.
(j) "Video service provider" means an entity providing video
service including a provider of cable service subject to a local
franchise, a provider of video service subject to a local franchise,
a provider of video service subject to a state franchise, or a
provider of direct broadcast satellite television service and OVS
operator providing video service.
CHAPTER 3. IMPOSITION OF TAX
33004. (a) For the privilege of selling video service
DBS service to a subscriber in this state, a tax
is hereby imposed on DBS service providers at the rate of 6 percent
of its gross revenues.
(b) For purposes of this part, in the case of a video
DBS service that may be bundled or integrated
functionally with other services, capabilities, or applications, the
tax herein shall be applied to the gross revenue received by the DBS
provider. Where the DBS service provider or any affiliate bundles,
integrates, ties, or combines video DBS
services with nonvideo other products or
services creating a bundled package, so that subscribers pay a
single fee for more than one class of service or receive a discount
on video DBS services, gross revenues
shall be determined based on an equal allocation of the package
discount, that is, the total price of the individual classes of
service at advertised rates compared to the package price, among all
classes of service comprising the package. The DBS service provider's
offering of a bundled package shall not be deemed a promotional
activity. If the DBS service provider does not offer any component of
the bundled package separately, the DBS service provider shall
declare a stated retail value for each component based on reasonable
comparable prices for the product or service for the purpose of
determining the tax based on the package discount.
CHAPTER 4. COLLECTION AND ADMINISTRATION
33006. The taxes imposed by this part are due and payable to the
state quarterly on or before the last day of the month next
succeeding each calendar quarter.
33007. All amounts required to be paid to the state pursuant to
this part shall be paid in the form of remittances payable to the
board.
33008. On or before the last day of the month following each
calendar quarter, a return for the preceding quarterly period shall
be filed with the board in a form prescribed by the board.
33009. The board shall collect the tax pursuant to the Fee
Collection Procedures Law (Part 30 (commencing with Section 55001))
to the extent these provisions are not inconsistent with this part.
For purposes of administration of the tax pursuant to this part,
references in the Fee Collection Procedures Law to "feepayer" and
"fee" shall include "taxpayer" and "tax."
CHAPTER 5. DISPOSITION OF PROCEEDS
33010. All revenues, less refunds, derived under this part shall
be deposited into the Local Safety and Protection Account established
in the Transportation Tax Fund by Section 10752.2.
CHAPTER 6. MISCELLANEOUS
33012. The provisions of this part are not severable and, should
a court hold in a final nonappealable order that any provision herein
is unconstitutional or is otherwise invalid, the whole part shall be
null and void.
SEC. 2. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
SEC. 3. The provisions of Section 1 of this act shall become
operative on the first day of the first calendar quarter commencing
more than 90 days after the effective date of this act.
SEC. 4. The This act is an urgency
statute necessary for the immediate preservation of the public peace,
health, or safety within the meaning to of
Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
In order to provide funding to support and maintain public safety
services that have been reduced due to the economic recession and
state's budgetary problems, it is necessary that this act go into
immediate effect. However, the provisions of this act shall become
operative on the first day of the first calendar quarter commencing
more than 90 days after the effective date of this act.