BILL ANALYSIS �
AB 43
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Date of Hearing: January 13, 2014
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Raul Bocanegra, Chair
AB 43 (Bocanegra) - As Amended: January 6, 2014
Majority vote. Fiscal committee.
SUBJECT : Sales and Use Tax Law: claim for refund: customer
refunds
SUMMARY : Authorizes a person to irrevocably assign to a
customer the right to receive a refund under the Sales and Use
Tax (SUT) Law, provided specified conditions are met.
Specifically, this bill authorizes a person (i.e., a retailer)
to make an irrevocable election to assign to a customer the
right to receive a SUT refund if all of the following conditions
are met:
1)The entire amount represents excess tax reimbursement that
must be paid by the person to a single customer under existing
law;
2)The refund amount is $50,000 or greater;
3)The irrevocable election to assign to the customer the amount
refunded is evidenced by a statement signed by the person and
the customer authorizing the named customer to receive the
amount refunded; and,
4)The signed statement is submitted to the State Board of
Equalization (BOE) in conjunction with the person's claim for
refund.
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
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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 generally be
remitted to the BOE.
3)Provides that any amount collected or paid in excess of what
is due under the SUT Law must be credited by the BOE against
any other amounts due from the person from whom the excess
amount was collected or by whom it was paid, and the balance
refunded, as specified.
4)Provides that, when an amount represented to a customer as SUT
reimbursement is computed upon an amount that is not taxable
or is in excess of the taxable amount and is actually paid by
the customer, the amount paid must be returned to the customer
upon notification by the BOE or by the customer that this
excess has been ascertained.
FISCAL EFFECT : Unknown. Committee staff believes any costs
will be minor and absorbable.
COMMENTS :
1)The author has provided the following statement in support of
this bill:
This commonsense measure would, under limited
circumstances, allow a retailer to assign its right to
receive a sales tax refund to a customer. To promote
administrative efficiency, such direct refunds would only
be allowed where the refund amount is $50,000 or more and
is made to a single customer. Issuing a refund directly to
a customer would shorten the refund process by
approximately two to three months, given that there would
be no additional processing to be performed by the
retailer. Thus, this bill will enable customers to receive
refunds in a more expeditious fashion. It will also ease
the workload of certain retailers, who will no longer be
required to issue refund checks themselves.
2)Proponents of this bill note the following:
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AB 43 would authorize a retailer to irrevocably assign to a
customer the right to receive a refund of excess sales tax
reimbursement, if the retailer and the customer signed the
irrevocable assignment and submitted it to the BOE with the
retailer's claim for refund. This, in turn, would allow
the BOE to directly refund the customer who paid the excess
tax. This is a common sense measure, which helps to
alleviate an administrative burden in receiving the
reimbursement of sales tax rightfully owed to the taxpayer.
3)Committee staff comments:
a) An overview of current law : Revenue and Taxation Code
Section 6901 currently requires the BOE to refund any
overpayment of use tax directly to the purchaser, even
though the retailer collected and remitted the tax. While
this statute allows the BOE to refund excess use tax
directly to a purchaser, the BOE may currently issue a
refund for excess sales tax reimbursement only to the
retailer that collected and reported the tax.
b) What would this bill do ? This bill authorizes a
retailer to irrevocably assign to a customer the right to
receive a refund of excess sales tax reimbursement,
provided certain conditions are met. Specifically, the
retailer and the customer would need to sign the
irrevocable assignment and submit it to the BOE with the
retailer's claim for refund. This, in turn, would allow
the BOE to directly refund the customer who paid the excess
tax.
AB 43
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REGISTERED SUPPORT / OPPOSITION :
Support
Board of Equalization
California Retailers Association
Ryan
Opposition
None on file
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098