HomeMy WebLinkAboutAgenda Report - April 1, 1987 (88)TO THE CITY COUNCIL
FROM_ THE CITY MANAGER'S OFFICE
SUBJECT_
COUNCIII., COMMUNICATION
NO.
Review of AB 229 (Leonard) Which Bill Redefines "retailer engaged in business
in this state" to Include Out of State Retailers Who Are Advertising or Soliciting
by Nail or Electronic Melia to Consumers Located in the State of
Ca ifornia.
PREPARED BY: City Attorney
BACKQZ([ 1NTORMATION: A number of months. agb, concern was stated by
this City Council regarding the loss or le,%age
of sales tax due to cable television hcme
shopping channels, as well as other mail order advertisinq being mailed
to this State. At that time, you asked the City Manager to determine
whether there was any legislation being considered regarding this
particular area of concern.
Subsequent to that Council meeting, Assemblyman Phil Isenberg's office
was contacted, and it was determined that Assemb-Ly BREI 229 had been
introduced, and that the bill will be amended to include in the
definition of "retailer engaged in business in this state", those who are
engaged in sail -order sales or those who utilize electronic media to
solicit orders for tangible personal property. Once this bill goes into
effect it would require the retailer to collect from: the purchaser, the
sales tax that the State would set, and refund that amount to the State.
The monies then collected in the State fund would then be distributed the
city in proportion to each city's share of the total sales tax revenue.
The bill is presently in the Assembly Revenue and Taxation Committee and
scheduled to be heard on April 20, 1987. It has been recannended by the
League of California Cities that the cities send a letter in support of
AB 229 to the various members of the Assembly Ccimuttee.
C:2a7 tte
Ronald M. Stein
City Attorney
RMS:vc
cccab229
Ft3 1Cf 87054 1:15
0 �0J 4 RN 87 007029 FADE NO- 7
Ar.Edit7ENTS ':O ASSEMELY EIIL NO. 2:9
Amendment 1
On page line E, strike out omail cider"
strike cut line 9, and insert:
retailers located cut of this state who engage in mail
order sales or utilize electrcnic media collect tax frog
Amendment 2
on page 3, strike out lines 19 to �U, inclusive.
and insert:
Any retailer who, pursuant to a contract
with a br_oadcastEr ar Fublisher located in thi; state,
Solicits ceders for tangible F.ersonal Property by means of
advertising which is disseminated primarily tc consuccers
located in this state and only secondarily tc Lordering
juri sdictions-
Avendment 3
on page 3, LEtveen lines 3E and 39, insert:
(h) Any retailer who, pursuant to a contract
with a caLle television operator located inLthis states of
solicits cyders for tangible tcd oral Frog e Y
advertising which is tcansmittEd or distriLutFd over a
caL1E television system in this state_
Amendment 4
On page 4, line 33, strike out "the" and insert:
1 t:ese
SIESS!ON
Introduced by Assembly Member Leanard
' January 12, 1987
An act to amend SeCLions 6203, 6471, 64721, 6474, and 6477 of
the Revenue and Taxation Code, relating to taxation.
L.EGIS1-AT7vE COUNSEUS DIGEST
AB 229, as introduced, Leonard. Sales and use taxation.
( 1) Existing Sales and Use Tax L.aw requires every retailer
engaged in ',usiness in this state who makes sales of tangible
personal property for storage, use, or other consumption in
this state for which -se tax is owed to collect the use tax from
the purchaser, as specified, and to give to the purchaser a
receipt therefor. The phrase "retailtr engaged in business in
this state" is defined, for purposes of this duty of use tax
collection, to include specified retailers.
This bill would expand the definition of a "retailer engaged
in business in this state" thereby making additional retailers
subject to the duty of use tax collection.
(2) Under the Sales and Use Tax Law, returns generally
must be filed and the tax paid quarterly, on or before the last
day of the month following the quarterly period. However, if
the State Board of Equalization determines that the
taxpayer's taxable transactions average $17,000 or more per
month, monthly prepayments of tax must be made in a
A h prescribed manner.
This bill would instead make the prepayment of tax
applicable to any person whose estimated measure of tax
liability averages $50,000 or more per month. These
prepayment provisions would become operative as specified
only after the Department of Finance certifies to the
Legislature and the Executive Secretary of the State Board of
99 60
,i, p -�q
_.z_9
1 ' 1' arra
,'?!' .,?tion flh-at the p, 1,s rli'1 tC.)SCr2LyJ{'d :P. ) iZJ.i:� E'
r -i�n Tnc�C'tlf 13 1fi (�i the t_ Sil led Suites Cons�tii:L:C;.1.
V—e: majority. Appropriation: no. Fiscal committee: yes.
tats-�randatPd local program: no.
Tie people of the Katc of California do enact as follows:
i SEE i ION 1. The Legislature finds and declares that
aliforriia retailers are subject to unfair competition and
3 are at a competitive disadvantage because interstate mail
4 orw-r retailers are not presently required to collect use
tax :nom their California customers. The Legislature
6 further finds and declares that fair and equitable
7 administration of the Sales and Use Tax Law and effective
8collection, of existing tax liability requires that mail order
9 retailers located outside this state collect tax from
111 California consumers.
11 SEG 2. The Legislature also finds and declares that
12 the prepayment threshold for the collection of tax under
13 the Sales and Use Tax law has not been increased since
14 1966, thereby causing a hardship to California's small
15 businesses, and that the threshold for this tax prepayment
16 should be adjuster! to reflect the increase in the
17 Consumer Price Index since 1966.
18 SEC. 3. Section 6203 of the Revenue and Taxation
19 Code is amended to read:
20 6203. Except as provided by Sections 6292 and 6293,
1 every retailer engaged in business in this state and
LL making sales of tangible personal property for storage,
23 use, or other consumption in this state, not exempted
24 under Chapter 3.5 (commencing with Section 6271) or
25 Chapter 4 (commencing with Section 6351), shall, at the
26 time of making the sales oa-, if the storage, use, or other
27 consumption of the tangible personal property is not then
28 taxable hereunder, at the time the storage, use, or other
29 consumption becomes taxable, collect the tax from the
30 purchaser and give to the purchaser a receipt therefor in
31 the manner and form prescribed by the board.
32 As respects leases constituting sales of tangible personal
33 property, the tax shall be collected from the lessee at the
99 90
I time aanr-�unts are paid by the lessee under the lease.
2 "Retailer engaged in business in this state" as used in
3 this and the preceding section means and includes an,,, of
4 the following:
5 (a) Any retailer maintaining, occupying, or using.
6 permanently or temporarily, direaly or indirectly, or
7 through a subsidiary. or agent, by whatever nag -:e called,
8 an office, place of distribution, sales or sample room or
9 place, warehouse or storage place, or other place of
19 business.
11 (b) Any retailer having any representative, agent,
12 salesman, canvasser, or solicitor operating in this state
13 under the authority of the retailer or its subsidiary for the
14 purpose of selling, delivering, or the taking of orders for
15 any tangible personal property.
16 (c) As respects a lease, any retailer deriving rentals
17 from a lease of tangible perscnal property situated in this
18 state.
19 (d) Any retailer soliciting orders for tangible personal
20 property by means of advertising which is broadcast
21 from, printed at, or distributed from, a location in this
22 state if the advertising is intended to be disseminated to
23 consumers located in this state and is only, secondarily
24 disseminated to bordering iurisdictions.
25 (e) Any retailer soliciting orders for tangible personal
26 property by mail if the solicitations are subst�uitial and
27 recurring and if the retailer benefits from any bi-.nking,
28 financing, debt collection, telecommunication, or
29 marketing activities occurring in this state or benefits
34 from the location in this state of authorized installation,
31 servicing, or repair facilities.
32 (f) Any retailer owned or controlled by the same
33 interests which own or control any retailer engaged in
=A 34 business in the same or a similar line of business in this
35 state.
36 (g) Any retailer having a franchisee or licensee
37 operating under its trade name if the franchisee or
38 licensee is required to collect the tax under this section.
39 SEC. 4. Section 6471 of the Revenue and Taxation
40 Code is amended to read:
rs[eZ9
1
3
G
FG
V
c
11
12
13
14
15
16
1.7
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
6471. (a) Upon written notification by the board, any 'a
Person «hose estimated measure of tax liability under -
this part averages �e�e" fifty thousand dollars
r _- ', $50,000) or more per month. as determined by
the board, shall, without regard to the measure of tax iji
a�=}' one =vont, make prepayments as prescribed in this
7 St ction.
(1) In the: first, third, and. fourth calendar quarters, thy-
person shall prepay not less than 90 percent of the
0 arnount of state and local tax liability for each of the first
h o monthly periods of each quarterly period.
(2) In the second calendar quarter, the person shall
prepay a first prepayment of 95 percent of the amount of
state and local tax liability for the first monthly period of
each quarterly period and a second prepayment of either
Of the following:
(A) Ninety-five percent of the amount of state and
local tax liability for the second mont-hly period of the
quarterly period, plus 95 percent of the amount of shite
and local tax liability for the first 15 days of the third
monthly period of the quarterly Period.
(B) '-Ninety-five percent of the amount of state acrd
]real tax liability for the second monthly period of the
quarterly period, plus 50 percent of 95 percent of the
amount of the liability for the second monthly period of
the qu=arterly period.
(bj Persons engaged in their present business during
all of the corresponding quarterly period of the
preceding year, or persons who are successors to a
business which was in operation during all of that
quarterly period, may satisfy the above monthly
prepayment requirements for the first, third, and fourth
calendar quarters by payment of an amount equal to
one-third of the measure of tax liability reported on the
return or returns filed for that quarterly period of the
preceding year multiplied by the state and local tax rate
in effect during the month for which the prepayment is
mage.
The persons may satisfy their prepayment
requirements for the second calendar quarter by making
99 150
I a first prepayment of an amount equal to one-third of the
2 measure of tax liability reported, and a second
3 prepa, ---nent of an amount equal to one-half of the
4 measure of tax liability reported, on the return or returns
5 filed for that quarterly period of the preceding year
o multiplied by the state and local tax rate in effect during
7 the month fo. which the prepayment is made -
8 Prepayments shall be made during the quarterly
9 periods designated by the board and during each
10 succeeding quarterlyp, nods until further notified in
11 writing by the board.
12 SEC. 5. Section 6472 of the Revenue and Taxation
13 Code is amended to read:
14 6472. For purposes of Section 647-1.6 647I,
15 prepayment shall be accompanied by a report of the
16 amount of the prepayment in a f -�-m prescribed by the
17 board and shall be made to the board as follows:
18 (a) in the first, third, and fourth calendar quarters, on
19 or before the 24th day next fallowing the end of each of
20 the first two monthly periods of each quarterly period.
21 (b) In the second calendar quarter as follows:
2 (1) The first prepayment on or before the 24th day
23 next following the end of the first monthly period of each
24 quarterly period.
25 (2) The second prepayment cii or before the 23rd day
26 of the third monthly period of each quarterly period for
2.7 the second monthly period and the first 15 days of the
28 third monthly period of each quarterly period.
29 SEC. 6. Section 6474 of the Revenue and Taxation
30 Code is amended to read:
31 6474. In determining whether a person's estimated
32 measure of tax liability averages sewe--�ees Fifty thousand
33 dollars {$+4;809} ($550,1100) or more per month for
34 purposes of Section 64;4.5 6471, the board may consider
35 tax returns filed pursuant to this part as well as any
36 information in the board's possession or which may come
37 into its possession.
38 SEC. 7. Section 6477 of the Revenue and Taxation
39 Code is amended to read:
40 6477. Any person required to make a prepayment
AR 229 —6-
1
.61 pursuant to Section 6471 er SeeCee 64*14 who fails to
2 make a prepayment before the last day of the monthly
3 period following the quarterly period ii� which the
4 prepayment became due and who files a timely return
5 and payrlent for the quarterly period in which the
6 prepayment became due shall also pay a penalty of 6
7 percent of the amount equal to 90 percent or 95 percent
3 of the tax liability, as prescribed is ase aeetiew, by that
9 section, for each of the periods during that quarterly
10 period for which a required prepayment was not made.
11 SEC. 8. Sections 4 to 7, inclusive, of this act shall
12 become operative only if the Department of Finance
13 certifies to the Legislature and to the Executive
14 Secretary of the State Board of Equalization that
15 subdivisions (d) , (e) , (f) , and (g) of Section 6203 of the
16 Revenue and'taxation Code, as added by this act, are
17 legally enforceable under the United States Constitution,
18 in which case those sections of this act shall become
19 operative t� xrthe date of thatt day of the ° cecalendar rtification.
anon, quarter
20 commencing
CALIFORNIA LEGISLATt—I9'-98 %1 FGULgR SESSION
:., ASSEMBLY BILL No. 221"'
Introduced by Assembly ?Member Leonard
January 12, 1987
An act to arnend Sections 6203, 6471, 6472, 6474, and X77 of
the Revenue and Taxation Code, rolating to taxation.
I.EGISL#k'MrE COUNSVUS DIGEST
AB 229, as introduced, Leonard. Sales and use taxation.
(1) Existing Sales and Use Tax Law requires every retailer
engaged in business in this state who makes sales of tangible
personal property for storage, use, or other consumption in
this state for which me tax is owed to collect the use tax from
the purchaser, as specified, and to give to the purchaser a
receipt therefor. The phrase "retailer engaged in business in
this state" is defined, for purposes of this duty of use tax
collection, to include specified retailers.
This bill would expand the definition of a "retailer engaged
in business in this state" thereby malting additional retailers
subject to the duty of use tax collection.
(2) Under the Sales and Use Tax Law, returns generally
must be filed and the tax paid quarterly, on or before the last
day of the month following the quarterly period. However, If
the State Board of Equalization determines that the
taxpayer's taxable transactions average $17,000 or more per
month, monthly prepayments of tax must be made in a
prescribed manner.
This bill would instead make the prepayment of tax
applicable to any person whose estimated measure of tax
liability averages $50,000 or more per month. These
prepayment provisions would become operative as specified
only after the Department of Finance certifies to the
Legislature and the Executive Secretary of the State Board of
99 60
Equalizatio�� that the provisions described in (1) above are
I egally enforceable under the United States Constitution.
Vote: me-jority. Appropriation: no. Fiscal committee: ves.
State -inundated local program: no,
The people of the State of California do enact as folloccs.
1 SES: f i (�' l . The Legislature finds and declares that
2 Califorma retailers are subject to unfair competition and
3 are at a ;competitive disadvantage because interstate mail
4 order retailers are not presently required to collect use
5 tax from their California customers. The Legislature
6 further finds and declares that fair and equitable
administration of the Sales and Use Tax Law and effective
S collection of existing,- , liability requires that mail order
5 retailers located outside this state collect tax from
10 California consumers.
1 I SEC. 2. The Legislature also finds and declares that
12 the prepayment threshold for the collection of tax under
13 the Sales and Use Tax law has not been increased since
14 1966, thereby causing a hardship to California's small:. „
15 businesses. and that the threshold for this tax prepayment
16 should be adjusted to reflect the increase in the
17 Consumer Price Index since 1966.
18 SEC. 3. Section 6203 of the Revenue and Taxation
19 Code is amended to read:?
20 6203. Except as provided by Sections 6292 and 6293,
21 every retailer engaged in business in this state and
22 making sales of tangible personal property for storage,
23 use, or other consumption in this state, not exempted
24 under Chapter 3.5 (commencing with Section 6271) or
25 Chapter 4 (commencing with Section 6351), shall, at the
26 time of making the sales or, if the storage, use, or other
27 consumption of the tangible personal property is not then
28 taxable hereunder, at the time the storage, use, or other
29 consumption becomes taxable, collect the tax from the
30 purchaser and give to the purchaser a receipt therefor in
31 the manner and form prescribed by the board.
32 As respects leases constituting sales of tangible personal
33 property, the tax shall be collected from the lessee at the
3 AB 229
I
time amounts are paid by the lessee under the lease.
2
"Retailer engaged in business in this state" as used in
3
this and the preceding section means and includes any of
4
the following:
5
(a) Any retailer maintaining, occupying, or using,
6
permanently or temporarily, directly or indirectly, or
7
through a subsidiary, or agent, by whate� er zzame called,
8
an office, place of distribution, sales or sample room or
9
place, warehouse or storage place, or other place of
10
business.
11
(b) Any retailer having any representative. agent,
12
salesman, canvasser, or solicitor operating in this state
13
under the authority of the retailer or its subsidiary for the
14
purpose of selling, delivering, or the taxing of orders for
15
any tangible personal property.
16
(c) As respects a lease, any retailer deriving rentals
17
from a lease of tangible personal property situated in this
18
state.
19
(d) Any retailer soliciting orders for tangible personal
20
property by• rnears of advertis *,ig which is broadcast
21
from, printer' at, or distribut:'d ,iom, a location in this
22
state if the advertising is intended to be disseminated to
23
consumers located in this state and is only secondarily
24
disseminated to bordering jurisdictions.
25
(e) Any retailer soliciting orders for tangible personal
26
property by mail if the solicitations are substantial and
27
recurring and if the retailer benefits from any banking,
28
financing, debt collection, telecommunication, or
29
marketing activities occurring in this state or benefits
30
from the location in this state of authorized installation,
31
servicing, or repair facilities.
32
(f) Any retailer owned or controlled by the same
33
interests which own or control any retailer engaged in
x
34
business in the same or a similar line of business in this
35
state.
36
(g) Any retailer ha ming a franchisee or licenser
37
operating under its trade name if the franchisee or
38
licensee is required t -o collect the tax under this secticn.
39
SEC. 4. Section 6471 of the Revenue and Taxation
40
Code is amended to read:
99 150
«# f 1. 3 pOIi ,'c'rittz:I-1 notlficatlQrt by the t)Qarc�, 3i;y
t
C11Person
whose estimated measure of tax liability- under
""�= fifty thousand dollars
3
4
this part averages :tet
�+.� t 50.00(}) or more per month, as determined E}:
5
the board, shall, without regard }o the measure of tax in
6
any one month make prepayments as prescribed in this
7
&
section.
l ;) In the first, .hird, and fourth calendar quarters, the
.
9
10
person shall prepay not less than 90 percent of the
amount of state and local tax liability for each of the first
11
t,%i:u monthly periods of each quarterly period.
12
(2) In she second calendar quarter, the person shall
13
p:epay a first prepayment of 93 percent of the amount of
14
state and local tax liability for the first monthly period of
15
each quarterly period and a second prepayment of either
16
of the following:
17
(A) Ninety-five percent of the amount of state and
18
local ti -.x liability for the second monthly period of the
19
quarterly period, plus 95 percent of the amount of state
20
and local tax liability for the first 15 days of the third
,3
21
Monthly period of the quarterly period.
22
(B) Ninety-five percent of the amount of state and
23
local tax liability for the second monthly period of the
24
quarterly period, puts 54 percent of 95 percent of the
25
amount of the liability for the second monthly period of
26
the quarterly period.
27
(b) Persons engaged in their present business during
28
all of the corresponding quarterly period of the
29
preceding year, or persons who are successors to a
30
business which was it operation during all of that
31
quarterly period, :nay satisfy the above monthly
32
33
prepayment requirements for the first, third, and fourth
calendar quarters by payment of an amount equal to
liability reported on the
34
one-third of the measure , of tax
35
return or returns filed for that quarterly period of the
36
preceding year multiplied by the state and local tax rate
37
in effect during the month for which the prepayment is
38
made.
39
The persons may satisfy their prepayment
40
requirements for the second calendar quarter by making
--
99 150
-5-- AR`�9
1 a first prepayment of an amount equal to one-third of the
2 measure of tax liability reported, and a second
3 prepayment of an amount equal to one-half of the
4 measure of tax liability reported, on the return or returns
5 filed for that quarterly period of the preceding year
6 multiplied by the state and local tax rate in effect during
7 the month for which the prepayment is made.
8 Prepayments shall be made during the quarterly
9 periods designated by the board and during each
10 succeeding quarterly periods until further notified in
11 writing by the board.
12 SEC. 5. Section 6472 of the Revenue and Taxation
13 Code is amended to read:
14 6472. For purposes of Section 6,11-6 6471,
15 prepayment shall be accompanied by a report of the
16 amount of the prepayment in a form prescribed by the
17 board and shall be made to the board as follows:
18 (a) In the first, third, and fourth calendar quarters, on
19 or before the 24th day next following the end of each of
20 the first two monthly periods of each quarterly period.
21 (b) In the second calendar quarter as follows:
22 (1) The first prepayment on or before the 24th day
23 next follo%v ng the end of the first monthly period of each
24 quarterly period.
25 (2) The second prepayment on or before the 23rd day
26 of the third monthly period of each quarterly period for
27 the second monthly period and the first 15 days of the
28 third monthly period of each quarterly period.
29 SEC. 6. Section 6474 of the Revenue and Taxation
30 Code is amended to read:
31 6474. In determining whether a person's estimated
32 measure of tax liability averages 9e%,entee fifty thousand
33 dollars ($169) ($50,000) or more per month for
34 purposes of Section 671.5 6471, the board may consider
35 tax returns filed pursuant to this part as well as any
36 information in the board's possession or which may come
37 into its possession.
38 SEC. 7. Section 6477 of the Revenue and Taxation
39 Code is amended to read:
40 6477. Any person required to make a prepayment
99 190
AB 229 — 6 —
1 pursuani to Sec'on 6471 or Seetien 6471.6 who fails to
2 make a prepayment In --fore the last day of the monthly
3 period following the quarterly period in which the
4 prepayment became due and who files a timely return
5 and payment for the quarterly period in which the
6 prepayment became due shall also pay a penalty of 6
7 percent of the amount equal to 90 percent or 95 percent
8 of the tax liability, as prescribed ift these seetiees by that
9 section, for each of the periods during that quarterly
10 period for which a required prepayment was not made.
11 SEC. 8. Sections 4 to 1, inclusive, of this act shall
12 become operative only if the Department of Finance
13 certifies to the Legislature and to the Executive
14 Secretary of the State Board of Equalization that
15 subdivisions (d), (e), (f), and (g) of Section 6203 of the
16 Revenue and Taxation Code, as added by this act, are
17 legally enforceable under the United States Constitution,
18 in which case those sections of this act shall become
19 operative on the first day of the second calendar quarter
20 commencing after the date of that certification.
CALIFORNIA LEGISLATE -I- REGULIR SESSION
ASSEMBLY
No. 229
Introduced by Assembly ?Member Leonard
January 12, 1987
An act to amend Sections 6203, 6471, 6472, 6474, and 6477 of
the Revenue and Taxation Code, relating to taxation.
LEGISLATIVE COUNSEL: S DIGEST
AB 229, as introduced, Leonard. Sales and use taxation.
(1) Existing Sales and Use Tax Law requires every retailer
engaged in business in this state who makes sales of tangible
Personal property use taxfor storage,
owedTor other to collect the use tax from
in
this state for which
the purchaser, as specified, and to give to the purchaser a
receipt therefor. The phrase "retailer engaged in business in
this state" is defined, for purposes of this duty of use tax
collection, to include specified retailers.
This bill would expand the definition of a "retailer engaged
in business in this state" thereby making additional retailers
subject to the duty of use tax collection:
(2) Under the Sales and Use Tax Law, returns generally
crust be filed and the tax paid quarterly, on or before the last
day of the month following the quarterly period. However, if
the State Board of Equalization determines that the
taxpayer's taxable transactions average $172000 or more per
month, monthly prepayments of tax must be made in a
prescribed manner.
This bill would instead make the prepayment of tax
applicable to any person whose estimated measure of tan
liability averages $50,000 or more per month. 'These
prepayment provisions .woe�d of Financeecome rative as certifies specified
1 the
only after the Departm
Legislature a. -id the Executive Secretary of the State Board of
to
99 60
�j
%�:1' Pi.. F '-- ^:C; R'j1't C�i?S l.AescSiVel.3 tri F 11 )o�'i' are
c+ ,c) -i -11th ib
..
!(-gaiiv
enforceahie under Lhe united States tiii:
'Vote:
majorit-y. Appropriation: no. Fiscal committee: yes.
State-T-nandated local program: no.
?h people of the State of California do enact as folio=mss:
1
SECTION 1. The Legislature finds and declares that
2
California retailers are subject to unfair competition and
3
are at a competitive disadvantage because interstate mail
4
order retai'ers are not presently required to collect use
5
tax from their California customers. The Legislature
6
further finds and declares that fair and equitable
7
administration of the Sales and Use Tax Law and effective
8
collection of existing tax liability requires that mail order
9
retailers located outside this state collect tax from
10
California consumers.
11
SEC. 2. The Legislature also finds and declares that
12
the prepayment threshold for the collection of tax under
13
the Sales and Use Tax law has not been increased since
14
1966, thereby causing a h {rdship to California's small
15
businesses, and that the threshold for this tax prepayment
16
should be adjusted to reflect the increase in the
17
Consumer Price index since 1966.
18
SEC. 3. Section 6203 of the Revenue and Taxation.
_.
19
Code is amended to read:
20
6203. Except as provided by Sections 6292 and 6293,
21
every retailer engaged in business in this state and
22
making sales of tangible personal property for storage,
23
use, or other consumption in this state, not exempted
24
under Chapter 3.5 (commencing with Section 6271) or
25
Chapter 4 ( commencing with Section 6351) , shail, at the
26
time of making the sales or, if the storage, use, or other
27
consumption of the tangible personal property is not then
28
taxable hereunder, at the time the storage, use, or other
29
consumption becomes taxable, collect the tax from the
30
purchaser and give to the purchaser a receipt therefor in
31
the manner and form prescribed by the board.
32
As respects leases constituting sales of tangible personal
33
property, the tax shall be collected from the lessee at the
— 3 -- A B 22`,9
4 1 time a=mounts are paid by the lessee under the lease.
2 "Retailer engaged in business in this state" as used in
3 this and the preceding section means and includes any of
4 the following:
5 (a) Any retailer maintaining, occupying, or using,
6 permanently or temporarily, directly or indirectly, or
7 through a subsidiary, or agent, Dy whatever name called,
8 an office, pace of distribution, sales or sample roorrl or
9 place, warehouse or storage place, or other place of
10 business.
11 (b) Any retailer having any representative, agent,
12 salesman, canvasser, or solicitor operating in this state
13 under the authority of the retailer or its-ubsidiary for the
14 purpose of selling, delivering, or the taking of orders for
15 any tangible personal property.
16 (c) As respects a leas=. any retailer deriving ng rentals
17 from a lease of tangible personal property situated in this
18 state.
19 (d) Any retailer soliciting orders for tangible personal
20 property by means o.` advertising which is broadcast
21 from, printed at, or distributed from, a location in this
22 state if the advertising is intended to be disseminated to
23 consumers located in this state and is only secondarily
24 disseminated tc bordering jurisdictions.
25 (e) Ai3y retailer soliciting orders for tangible personal
26 property 4f' mail if the solicitations are substantial and
27 recurring and if the retailer benefits from any banking,
28 financing, debt collection, telecommunication, or
29 :marketing activities occurring in this state or benefits
30 from the location in this state of authorized installation,
31 servicing, or repair facilities.
32 (f) Any retailer owned or controlled by the same
33 interests which own or control any retailer engaged in
t 34 business in the same or a similar line of business in this
35 state.
36 (g) Any retailer having a franchisee or licensee
37 operating under its trade name if the franchisee of
38 licensee is required to collect the tax under this section.
39 SEC. 4. Section 6471 of the Revenue and Taxation
40 Code is amended to read:
99 130
AB 22:9 --4-
1 6471. (a Upon written notification by the board, any
perso.: �k hose estimated rneasure of tax liability under
3 this part averages se= en Rft-v thousand dollars
4 f (S50.000') or more per month, as determined by
5 the board, shalt, without regard to the measure of tax tri
6 anxr one Tnonth maks: prepayments as prescribed int this
Set tioil.
8 ( I ) In the first, third, and fourth calendar quarters, the
9 Berson shall prepay not less than 90 percent of the
10 amount of state and local tax liability for each of the first
11 two monthly periods of each quarterly period.
12 (2) In the second calendar quarter, the person shall
13 prepay a first prepayment of 95 percent of the amount of
14
state and local tai liability for the first monthly period of
15 each quarterly period and a second prepayment of either
16 of the following:
17 (A) 'Ninety-five percent of the amount of state and
18 local tax liability for the second monthly period of the
19 quarterly period, plus 95 percent of the amount of state
20 and local tax liability for the first 15 days of the third
21 monthly period of the quarterly period.
22 (I3) ?ninety-five percent of the amount of state and
23 local tax liability for the second monthly period of the
24 quarterly period, plus 50 percent of 95 percent of the
25 amount of the liability for the second monthly period of
26 the quarterly period.
27 (b) Persons engaged in their present business during
28 all of the corresponding quarterly period of the
29 preceding year, or persons who are successors to a
30 business which was in operation during all of that
31 quarterly period, may satisfy the above monthly
32 prepayment requirements for the first, third, and fourth
33 calendar quarters by payment of an amount equal to
34 one-third of the measure of tax liability reported on the
35 return or returns filed for that quarterly period of the
36 preceding year multiplied by the state and local tax rate
37 in effect during the month for which the prepayment is
38 made.
39 The persons may satisfy their prepayment
40 requirements for the second calendar quarter by making
99 150
" 1 a first prepayment of an amount equal to one-third oft e
2 measure of tax liability reported, and a second
3 prepayment of an amount equal to one-half of the
4 measure of tax liability reported, on the return or returns
5 filed for that quarterly period of the preceding year
6 multiplied by the state and local tax rate in effect during
7 the month for which the prepayment is made.
8 Prepayments shall be made during the quarterly
9 periods designated by the board and during each
10 succeeding quarterly periods until further notified in
11 writing by the board.
12 SEC. 5. Section 6472 of the Revenue and Taxation
13 Code is amended to read:
14 6472. For purposes of Seetion 6474-4 6471,
15 prepayment shall be accompanied by a report of the
16 amount of the prepayment in a form prescribed by the
17 board and shall be made to the board as follows:
18 (a) In the first, third, and fourth calendar quarters, on
19 or before the 24th day next following the end of each of
20 the first two monthly periods of each quarterly period.
21 (b) In the second calendar quarter as follows:
22 (1) The first prepayment on or before the 24th day
23 next following the end of the first monthly period of each
24 quarterly period.
`15 (2) The second prepayment on or before the 23rd day
26 of the third monthly period of each quarterly period for
27 the second monthly period and the first 15 days of the
28 third monthly period of each quarterly period.
29 SEC. 6. Section 6474 of the Revenue and Taxation
30 Code is amended to read:
31 6474. In determining whether a person's estimated
32 measure of tax liability averages seyenteeft fifty thousand
33 dollars {*W;89G� ($50,000) or more per month for
34 purposes of Section 6474.6 6471, the board may consider
35 tax returns filed pursuant to this part as well as any
36 information in the board's possession or which may come
37 into its possession.
38 SEC. 7. Section 6477 of the Revenue and Taxation
39 Code is amended to read:
40 6477. Any person required to make a prepayment
40
99 190
AB 229 i b
I pursuant to Section 6471 or Seetieft
� 6474-45, who fails to
2 make a
prepayment before th.. Iast day of the monthly
3 period following the quarterly period in which the
4 prepayment became due and who files a tirriely return
5 and payment for the quarterly period in which the
6 prepayment became due shall also pay a penalty of 6
percent of the amount equal to 90 percent or 95 percent
8 of the tax liability, as prescribed is 4tese
by
9 section, for each of the periods duringthat
q ar that
terl
10 period for which a requird prepaymet was of made.
11 SEC. 8. Sections 4 to 7, inclusive, of this act shall
12 become operative only if the Department of Finance
13 certifies to the Legislature and to the Executive
14 Secretary of the State Board of Eq
15 subdivisions (d), (e), (�Equalization that
th
I6 Revenue and Taxation Code, s added of this0act, aree
17 legally enforceable under the United States Constitution,
18 in which case those sections of this act shall become
19 operative on the first day of the second calendar quarter
20 commencing after the date of that certification.
U
LI,_
-i:i:4..-. R---L-LU .`E-S'SION
ASSEMBLY
BILI.
No.
229
Introduced by Assembly Member ]Leonard
January 12, 1957
An act to amend Sections 6203, 6471, 6472, 6474, and 6477 of
the Revenge and Taxation Code, relating to taxation.
LEGISLk'nVE COUNSEL'S DiGE5r
AB 229, as introduced, Leonard. Sales and use taxation.
(1) Existing Sales and Use Tax 1�3-,v requires every retailer
engaged in business in this state who makes sales of `angible
personal property for storage, use, or other consun ,ption in
this stat, for which use tax is owed to collect the use tax frons
the purchaser, as specified, and to give to the purchaser a
receipt therefor. The phrase "retailer engaged in business in
this state" is defined, for purposes of this duty of use tax
collection, to include specified retailers.
This bill would expand the definition of a "retailer engaged
in business in this state" thereby making additional retailers
subject to t1he duty of use tax collection.
(2) Under the Sales and Use Tax Law, returns generally
must be filed and the tax paid quarterly, on or before the last
day of the month following the quarterly period. Huwever, if
the State Board of Equalization determines that the
taxpayer's taxable transactions average $17,000 or more per
month, monthly prepayments of tax must be made in a
prescribed manner.
This bill would instead make the prepayment of' tax
applicable to any person whose estimated measure of tax
liability averages $50,000 or more per month. These
prepayment provisions would become operative as specified
only after the Department of Finance certifies to the
Legislature and the Executive Secretary of the State Board of
99 60
AB 229
Equalization that the provisions described in (I) above are
legally enforceable under the United States Constitution.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State -mandated local program: no.
The people of the State of Crdifornia do enact as follows:
I
SECTION 1. The Legislature finds and declares that
2
California retailers are subject to unfair competition and
3
are at a competitive disadvantage because interstate mail
4
order retailers are not presently required to collect use
5
tax from their California customers. The Legislature
6
further finds and declares that fair and equitable
7
administration of the Sales and Use Tax Law and effective
8
collection of existing tax liability requires that mail order
9
retailers located outside this state collect tax from
10
California consumers.
11
SEC. 2. The Legislature also finds and declares that
12
the prepayment threshold for the collection of tax under
13
the Sales and Use Tax law has not been increased since
14
1966, thereby causing a hardship to California's small
15
businesses, and that the threshold for this tax prepayment
16
should be adjusted to -effect the increase in the
17
Consumer Price Index since 1966.
18
SEC. 3. Section 6203 of the Revenue and Taxation
19
Code is amended to read:
20
6203. Except as provided by Sections 6292 and 6293,
21
every retailer engaged in business in this state and
22
making sales of tangible personal property for storage,
23
use, or other consumption in this state, not exempted
24
under Chapter 3.5 (commencing with Section 6271) or
25
Chapter 4 (commencing with Section 6351), shall, at the
26
time of making the sales or, if the storage, use, or other
97
consumption of the tangible personal property is not then
28
taxable hereunder, at the time the storage, use, or other
29
consumption becomes taxable, collect the tax from the
30
purchaser and give to the purchaser a receipt therefor in
31
the manner and form prescribed by the board.
32
As respects leases constituting sales of tangible personal
33
property, the tax shall be collected from the lessee at the
99 90
— s — AB 229
1 time amounts are paid by the lessee under the lease.
2 "Retailer engaged in busirieEs in this state" as used in
3 this and the preceding section means and includes any of
4 the following:
5 (a) Any retailer maintaining. occupying, Or Lisirig,
6 permanently or ternporarily, directly or indirectly, or
7 through a subsidiar v or agent, by whatever name called,
8 an office, place of distribution, sales or sample room or
9 place, warehouse or storage place, or other place. of
10 business.
11 (b) Any retailer having any representative, agent.
12 salesman, canvasser, or solicitor operating in this state.
13 under the authority of the retailer or its subsidiary for the
14 purpose of selling, delivering, or the taking of orders for
15 any tangible personal property.
16 (c) As respects a lease, any retailer deriving rentals
17 from a lease of tangible personal property situated in this
18 state.
19 (d) Any retailer soliciting orders for tangible personal
20 property by means of advertising which is broadcast
21 from, printed at, or distributed from., a location in this
22 state if the advertising is intended to be disseminated to
23 consumers located in this state and is only secondarih
24 disseminated to bordering jurisdictions.
25 (e) Any retailer soliciting orders for tangible personal
26 property by mail if the solicitations are .substantial and
27 recurring and if the retailer benefits from any banking,
28 financing, debt collection, telecommunication, or
29 marketing activities occurring in this state or benefits
30 from the location in this state of authorized installation,
31 servicing, or repair facilities.
32 (f) Any retailer owned or controlled by the same
33 interests which own or control any retailer engaged in
.. 34 business in the same or a similar line of business in this
35 state.
36 (g) Any retailer having a franchisee or licensee
37 operating under its trade name if the franchisee or
38 licensee is required to collect the tax under this section.
39 SEC. 4. Section 6471 of the Revenue and Taxation
40 Code is amended to read:
1�4 130
13 229
i 6471. (a) t.`pon written notification by the board; any
person Whose est.iir atec4 measure of tax liability under
3 this part averages-e-ef4e fifty thousand dollars
} fes, .�5(? C�f]Ci or inore. per �ncnth, as determined b�
5 the board, shall, «-ithout regard to the measure of tax in
6 an-,, one month rna`.Ke prepayments as prescribed in this
i section -
8 i I j In the first, third, and fourth calendar quarters, the
9 person shall prepay not less than 90 percent of the
1i) amount of state and local tax liability for each of the first
1 twc; monthly periods of each quarterly
p rio person S.
12 (2) in the second calendar quarter, P
13 prepay a first prepayment of 95 percent of the a*nount of
14 state and local tax liability for the f est monthly period of
y period and a second prepayment of either
15 each quarterl
16 of the following:
17 (A) 'ninety-five percent of the amoLint of state and
18 local tax liability for the second monthly period of the
19 quarterly period, phis 95 percent of the amount of state
20 and local tax liability for the first 15 days of the third
21 monthly period of the quarterly period -
22 (B) Ninety-five percent of the arnount of state and
23 local tax liability for the second monthly period of the
24 quarterly period, plus 5o percent of- 95 percent of the
25 amount of the liability for the second monthly period of
26 the quarterly period.
27 (b) persons engaged in their
present businoeessQ uring
28 all' of the corresponding qrvho are period
to a
f the
29 preceding year, or personsration during all of that
30 business which was in ope
31 quarterly period, may satisfy the above monthly
32 prepayment requirements for the first, third, and fourth
33 calendar quarters by payment of an amount equal to
34 one-third of the measure of tax liability reported on the
35 return or returns filed for that quarterly period of the
36 preceding year multiplied by the state and local tax rate
37 in effect during the month for which the prepayment is
;38 made. satisf their prepayment
39 The persons may Y
40 requirements for the second calendar quarter by making
— S — AB`229
1 a first prepayment of an amount equal to one-third of the
2 measure of tax liability reported, and a second
3 prepayment of an amount equal to one-half of the
4 measure of tax liability reported, on the return or returns
5 filed for that quarterly period of the preceding year
6 multiplied by the state and local tax rate in effect during
7 the month for which the r: epayment is made.
8 Prepayments shall oe made during the quarterly
9 periods designated by the board and during each
10 succeeding quarterly periods until further notified in
11 writing by the board.
12 SEC. 5. Section 6472 of the Revenue and Taxation
13 Code is amended to read:
14 6472. For purposes of Section 647:6 6471,
15 prepayment shall be accompanied by a report of the
16 amount of the prepayment in a form prescribed by the
17 board and shall be made to the board as follows:
18 (a) In the first, third, and fourth calendar quarters, on
19 or before the 24th day next following the end of each of
20 the first two monthly periods of each quarterly period.
21 (b) In the second calendar quarter as follows:
22 (1) The first prepayment on or before the 24th day
23 next following the end of the first monthly period of each
24 quarterly period.
25 (2) The second prepayment on or before the 23rd day
26 of the third monthly period of each quarterly period for
27 the second monthly period and the first 15 days of the
28 third monthly ywriod of each quarterly period.
29 SEC. 6. Sect;,on 6474 of the Revenue and Taxation
30 Code is amend A to read:
31 6474. In determining whether a person's estimated
32 measure of tax liability averages seN-ente_ft Fifty thousand
33 dollars ($17,") ($50,000) or more per month for
34 purposes of Section 64744 6471, the board may consider
35 tax returns filed pursuant to this part as well as any
36 information in the board's possession or which may come
37 into its possession.
38 SEC. 7. Section 6477 of the Revenue and Taxation
39 Code is amended to read:
40 6477. Any person required to make a prepayment
99 190
AB 229
—6-
1 pursuant to Section 6471 er Seet
2 make a prepayment before ails to
the last daily -A thwho
monthly `
3 period following the quarterly period in which the
4 prepayment became due and who riles a timely return
5 and payment for the quarterly, period in which the
6 prepayment became due shall also pay a penalty of 6
7 percent of the amount equal to 90 percent or 95 percent
8 of the tax liability, as prescribed in t}e,,4e geetiefIs by. that
9 section, for each of the periods during that quarterly
10 period for which a required prepayment was not made.
11 SEC. 8. Sections 4 to 7, inclusive, of th& act shall
12 become operative only if the Department of Finance
13 certifies to the Legislature and to the
14 Secretary of the State Board of Equalization
15 subdivisions (d), (e), (f), and uan 620 n that
16 Reven se and Taxation Code, s added by thissaact, are
17 legally enforceable under the United States Constitution,
18 in which case those sections of this act shall become
19 operative on the first day of the second calendar quarter
20 commencing after the date of that certification.
101
99 2M
t