BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 43 HEARING: 6/25/14
AUTHOR: Bocanegra FISCAL: Yes
VERSION: 1/6/14 TAX LEVY: No
CONSULTANT: Bouaziz
SALES & USE TAXES: CLAIM FOR REFUND: CUSTOMER REFUNDS
Authorizes a person to irrevocably assign to a customer the
right to receive a refund under the Sales and Use Tax.
Background and Existing Law
State law imposes a sales tax on retailers for the
privilege of selling tangible personal property, absent a
specific exemption. The tax is based upon the retailer's
gross receipts from sales in this state. The law provides
that any amount collected or paid in excess of what is due
under the sales tax law must be credited by the Board of
Equalization (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.
When a sales and use tax is imposed on a customer, but is
an amount that is either not taxable or is in excess of the
taxable amount, the amount paid must be returned to the
customer by the retailer upon notification by the BOE or
the customer. The customer cannot obtain the refund
directly from the BOE.
Proposed Law
Assembly Bill 43 authorizes a person to irrevocably assign
a customer the right to receive a refund under the sales
and use tax law. A retailer may make an irrevocable
election to assign a customer the right to receive the
refund if all of the following conditions are met:
The amount is in excess of the actual tax owed,
pursuant to existing law.
The irrevocable election to assign to the customer
the amount refunded is provided by a statement signed
AB 43 -- 01/06/14 -- Page 2
by the customer authorizing the named customer to
receive a refund.
The signed statement is submitted to the BOE in
conjunction with the person's claim for refund.
The amount to be refunded is $50,000 or greater.
State Revenue Impact
BOE estimates that the revenue impact is indeterminable.
Comments
1. Purpose of the bill . According to the author, "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. Second time around . Last year an identical bill, AB
1412 (Bocanegra, 2013), was heard and amended in this
Committee. The author and the Committee agreed to add
language that prohibited contingency fees from being paid
or charged in connection with the election, assignment, or
claim for refund. The Committee may wish to consider
including intent language that reflects and addresses the
concerns raised in Committee last year in relation to
contingency fees.
Assembly Actions
Assembly Revenue & Taxation 9-0
Assembly Appropriations 16-0
Assembly Floor 78-0
AB 43 -- 01/06/14 -- Page 3
Support and Opposition (06/19/14)
Support : Board of Equalization; Board of Equalization,
Chairman Jerome Horton; California Retailers Association;
California Society of CPAs; California Taxpayers
Association; Ryan.
Opposition : California Department of Finance.