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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