BILL ANALYSIS �
AB 2031
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CONCURRENCE IN SENATE AMENDMENTS
AB 2031 (Dahle)
As Amended August 14, 2014
Majority vote
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|ASSEMBLY: |72-1 |(May 19, 2014) |SENATE: |34-0 |(August 19, |
| | | | | |2014) |
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Original Committee Reference: REV. & TAX.
SUMMARY : Relieves small retailers from liability to collect the
Lumber Products Assessment (LPA) and to report to the State
Board of Equalization (BOE), as provided.
The Senate amendments resolve chaptering out issues with SB 861
(Budget and Fiscal Review Committee), Chapter 35, Statutes of
2014, that codified the recent BOE retailer reimbursement
regulations approved on September 10, 2013.
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)Imposes an LPA at the rate of 1% on a purchaser of lumber
products and engineered wood products to be collected by the
retailer at the time of sale. Applies to sales occurring on
or after January 1, 2013.
4)Defines a "retailer" by reference to Revenue and Taxation Code
Section 6015 as:
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a) Every seller who makes any retail sale or sales of
tangible personal property, and every person engaged in the
business of making retail sales at auction of tangible
personal property owned by the person or others.
b) Every person engaged in the business of making sales for
storage, use, or other consumption or in the business of
making sales at auction of tangible personal property owned
by the person or others for storage, use, or other
consumption.
c) Any person conducting a race meeting under Chapter 4 of
Division 8 of the Business and Professions Code, with
respect to horses which are claimed during such meeting.
5)Provides that the LPA is due and payable to the BOE quarterly
on or before the last day of the month next succeeding each
quarterly period and requires a retailer to file a return with
the BOE on or before the last day of the month following each
quarterly period, as prescribed by the BOE.
6)Does not provide any type of exemption from the collection of
the LPA for otherwise qualified retailers that have few or no
sales of lumber products or engineering wood. These retailers
must file zero or small dollar returns.
AS PASSED BY THE ASSEMBLY , this bill:
1)Excluded from the definition of a "retailer" a retailer with
de minimis sales of qualified lumber products and engineered
wood products of less than $25,000 during the previous
calendar year.
2)Required retailers with de minimis sales to notify their
customers who purchase qualified lumber or engineered wood
products of their obligation to remit the LPA directly to the
BOE.
3)Clarified that the references to "feepayer" under the Fee
Collection Procedures Law shall include a person required to
pay the LPA, which includes the retailer.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
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COMMENTS :
The LPA Program. In 2012, the Legislature established a new
assessment on the sales of lumber products and engineered wood
products at a rate of 1% of gross receipts, on or after January
1, 2013 [AB 1492 (Budget Committee), Chapter 289, Statutes of
2012]. The LPA was one of the provisions in AB 1492 that were
proposed by the timber industry and incorporated by the Governor
in the May Revise to reform wildfire liability damages, extend
the life of Timber Harvest Plans (THP), and fund the timber
harvest review.
The LPA is imposed on a purchaser of a lumber product or an
engineered wood product for the storage, use, or other
consumption in California. While the legal incident of this
assessment fee is placed on the purchaser, the retailers are the
ones required to collect the LPA at the time of sale, itemizing
the amount of the LPA on the sales receipts. The law allows a
retailer to be reimbursed for the costs of setting up the
collection system from the assessment amounts collected by the
retailer.
It was estimated that AB 1492 will generate $30 million
annually. As of April 11, 2013, the BOE collected a total of
$31,943 in LPAs. The revenues are expected to fund timber
harvest review, offset $15.5 million in General Fund
expenditures, offset timber harvest permitting fees to lower the
timber operator's cost of preparing a THP, pay for related
administrative costs, and fund forest restoration projects in
the state. Funds are available, upon appropriation, for
administrative costs, and for purposes relating to the
regulatory activities of the Department of Forestry and Fire
Protection, and other state and local agencies involved in the
management of forest lands. Funds may also be available for
certain grants to state and local public agencies for fire
protection, fire suppression and restoration activities.
LPA Collections. Under existing law, all retailers who sell, or
may sell, lumber products or engineered wood products are
required to register with the BOE and report the LPA on those
sales, regardless of the sales amount. The LPA amount must be
separately stated on the sales receipt as a charge separate
from, and not included in, any other fee, charge, or other
amount paid by the purchaser. According to the BOE staff,
during 2013 calendar year, about 29,640 businesses, with
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approximately 39,609 retail locations, were registered with the
BOE as retailers required to collect the LPA. However, over
33,000 of these accounts have been closed by the BOE because
those retailers filed zero returns and/or were not making
qualified sales of wood products. According to the BOE staff,
retailers that reported zero sales of lumber products during
2013 calendar year will be de-registered by the BOE.
Technical Amendments. SB 861, which was signed into law by the
Governor on June 20, 2014, amended Public Resources Code Section
4629.5, among other provisions. This bill, as passed by the
Assembly, amended the same section, as it read prior to the
passage of SB 861. Thus, this bill had to be revised by the
Legislative Counsel's Office in order to include the last
amended version of that section.
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098
FN: 0004903