Every year, the Legislature introduces a number of bills that would affect the sales and use taxes; many of them would grant exemptions from the tax, others would expand or shrink the base. This year is no exception.

What is different this year is the importance of the sales and use taxes to counties. Counties have for decades received a penny of the sales tax generated in unincorporated areas, called the Bradley-Burns, and since the 1990s, counties have received a half-cent for 1991 Realignment and most of another half-cent for Proposition 172 public safety services. There’s another quarter-cent that funds county transportation activities (some counties have raised the self-help portion of the sales tax to increase this amount). But now counties also receive 1.0625 cents for 2011 Realignment.

Add all those pennies add up, and of the base sales tax rate of 7.5 percent, county shares account for as much as 3.3125, or just under 45 percent of the revenue, depending on where the sale takes place. 

With that in mind, CSAC will be keeping a close eye on proposed exemptions and other changes to sales tax law. Below is a list of the bills introduced this year on the subject. A few others are out there too, but are only spot bills to this point. If they are amended to include substantial changes, you’ll find them here.

Sales and Use Taxes

AB 143 (Holden) – Watch
As Amended on March 4, 2013

AB 143, by Assembly Member Chris Holden, would exempt from use taxes, but not sales taxes, purchases made by members of the military, reserve, and national guard who bought the items before the reporting date on their orders transferring them to California, which seems only fair. It does not include aircraft, vehicles, or vessels.

The Assembly Revenue and Taxation Committee will consider AB 143 at its hearing on April 1, 2013.

AB 479 (Donnelly) – Oppose Unless Amended
As Introduced on February 19, 2013

AB 479, by Assembly Member Tim Donnelly, would exempt from sales and use taxes textbooks sold to a student at a college or by someone whose primary purposes is selling textbooks to college students. “Textbook” includes any book directed or recommended by an instructor for use as a basis for a course. It does not include CDs or other electronic media. The bill does not except any of the local shares from the exemption. As with so many other tax exemptions affecting local revenue, if the state prioritizes the sorts of purchases contemplated in this bill, it should use state funds to do so or reimburse counties for their losses.

The Assembly Revenue and Taxation Committee will consider AB 479 at its hearing on April 1, 2013.

AB 718 (Melendez) – Oppose Unless Amended
As Introduced on February 21, 2013

AB 718, by Assembly Member Melissa Melendez, would make April 15 a sales tax holiday, though it would not apply to the use tax. The bill does except from the exemption the Bradley-Burns, but not any of the other shares that benefit counties. If the state prioritizes purchases made on this day as opposed to other days, it should use state funds to do so or reimburse counties for their losses.

The Assembly Revenue and Taxation Committee will consider AB 718 at its hearing on April 15, 2013, fittingly enough.

AB 575 (V. Manuel Pérez) – Pending
As Introduced on February 20, 2013

AB 575, by Assembly Member V. Manuel Pérez, would specifically extend sales and use taxes to include the sale of counterfeit and pirated material. Doing so would heap penalties on sellers who engage in these activities, making them liable for any sales tax they failed to collect or remit on the illegal merchandise, as well as penalties and interest.

The Assembly Revenue and Taxation Committee will consider AB 575 at its hearing on April 1, 2013.

AB 798 (Wagner) – Request for Comment
As Introduced on February 21, 2013

AB 798, by Assembly Member Don Wagner, would remove the section stating that anyone who makes sales two times or less per year period does not count as a retailer who has to collect sales tax. However, the bill expands the “occasional sale” exemption to include sales paid with something other than money (barter) worth less than $2,000, or, if worth more than $2,000, are fewer than twelve in any twelve-month period. This only applies to the sale of property a seller has or uses not in the course of the activities for which they’re required to hold a seller’s permit.

The Assembly Revenue and Taxation Committee will consider AB 798 at its hearing on April 1, 2013.

AB 799 (Wagner) – Request for Comment
As Introduced on February 21, 2013

AB 799, by Assembly Member Don Wagner, is just like AB 798, but without the barter aspect. In other words, sellers would be able to make as many sales under $2,000 as they like without charging sales tax, as long as they are sales of property they don’t have or use in their usual course of business, the business for which they are required to hold a seller’s permit. And they could make up to eleven sales per year of as much money as they like without charging sales tax.

The Assembly Revenue and Taxation Committee will consider AB 798 at its hearing on April 15, 2013.

AB 163 (Atkins) – Watch
As Introduced on January 23, 2013

AB 163, by Assembly Member Toni Atkins, would delete the 2014 sunset on the exemption for on-base thrift stores operated by military welfare societies. The bill is not currently set for hearing.

AB 486 (Mullin) – Pending
As Introduced on February 19, 2013

AB 486, by Assembly Member Kevin Mullin, would exempt property bought for use in the manufacturing process or a manufacturer’s research and development. The bill excepts the Bradley-Burns portion of the sales tax, but not the other portions that benefit counties. It is not currently set for hearing.

AB 1077 (Muratsuchi) – Oppose Unless Amended
As Introduced on February 22, 2013

AB 1077, by Assembly Member Al Murastsuchi, would exempt the incremental price difference between an alternative fuel vehicle and a comparable regular fuel vehicle until 2022. Importantly, it also reduces the Vehicle License Fee by the incremental cost. VLF entirely benefits counties as part of 2011 Realignment. The bill excepts the Bradley-Burns portion of the sales tax, but not the other portions that benefit counties. It is not currently set for hearing.

AB 1326 (Gorell) – Oppose Unless Amended
As Introduced on February 22, 2013

AB 1326, by Assembly Member Jeff Gorell, would exempt, until 2024, property used to manufacture unmanned aerial vehicles. The bill also provides income and corporation taxes credits for wages paid, declining every two years. The bill does not except any portion of the sales tax that benefit counties. It is not currently set for hearing.

SB 19 (Knight) – Oppose Unless Amended
As Introduced on December 3, 2012

SB 19, by Senator Steve Knight, would exempt property used to construct, reconstruct, or improve facilities for launching or manufacturing equipment used to renovate, rehabilitate, or reconstruct commercial space launch sites. Property capable of space flight, property used aboard space vehicles, and fuel for space flight are already exempt. The bill does not except any portion of the sales tax that benefit counties. It is not currently set for hearing.

SB 235 (Wyland) – Pending
As Introduced on February 12, 2013

SB 235, by Senator Mark Wyland, would exempt property used primarily for manufacturing or for a manufacturer’s research and development. The bill not only excepts the Bradley-Burns and 2011 Realignment from its provisions, it also excepts 1991 Realignment, the triple-flip, Proposition 172, and even the quarter-cent raised by Proposition 30. It is not currently set for hearing.

SB 412 (Knight) – Pending
As Introduced on February 20, 2013

SB 412, by Senator Steve Knight, would exempt property used to manufacture aerospace products or related research and development or maintenance and repair of that property. Like SB 235, the bill not only excepts the Bradley-Burns and 2011 Realignment from its provisions, it also excepts 1991 Realignment, the triple-flip, Proposition 172, and the quarter-cent raised by Proposition 30. It is not currently set for hearing.

SB 732 (Berryhill) – Oppose Unless Amended
As Introduced on February 22, 2013

SB 732, by Senator Tom Berryhill, would subtract the value of a trade-in vehicle from the purchase price of a new vehicle, including a motorcycle, for the purposes of calculating the sales tax. The bill does not except any portion of the sales tax that benefit counties. It is not currently set for hearing.

AB 781 (Bocanegra) – Support
As Introduced on February 21, 2013

AB 781, by Assembly Member Raul Bocanegra, would create a felony for selling, buying, installing, or possessing software that falsifies electronic cash register data. Such software is designed so that the retailer charges the customer the sales tax and then keeps it, by hiding true sales amounts. The bill is not currently set for hearing.

AB 919 (Williams) – Watch
As Introduced on February 22, 2013

AB 919, by Assembly Member Das Williams, would repay itinerate vendors who are veterans and did not collect sales tax from their customers between 2002 and 2010 but were made to pay the amount they should have charged plus interest and penalties. The veterans relied on an incorrect, but reasonable, interpretation of state law when not charging sales tax. The bill is not currently set for hearing.

AB 1049 (Harkey) – Request for Comment
As Introduced on February 22, 2013

AB 1049, by Assembly Member Diane Harkey, would change the way interest on tax overpayments is determined to match the way interest on underpayments is determined. The bill amends a section of sales tax law that many other taxes and fees include by reference. It would appear to make it profitable, in some cases, for taxpayers to indefinitely delay paying their taxes. The bill is not currently set for hearing.

AB 1203 (Gorell) – Watch
As Introduced on February 22, 2013

AB 1203, by Assembly Member Jeff Gorell, would disallow penalty and interest charges for sales, use, income, and corporation taxes unpaid because the taxpayer relied on a statute the courts later struck down as unconstitutional. The taxpayer would have to pay within 60 days of a new notice. The bill is not currently set for hearing.

SB 323 (Lara) – Watch
As Introduced on February 19, 2013

SB 323, by Senator Ricardo Lara, would remove exemption of sales, use, and corporation taxes for public charity youth organizations that discriminate on the basis of gender identity, race, sexual orientation, nationality, religion, or religious affiliation. The bill is not currently set for hearing.