BILL NUMBER: AB 2540 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Gatto
FEBRUARY 24, 2012
An act to amend Section 1656.1 of the Civil Code, and to add
Sections 7201.1 and 17137 to, and to add Chapter 3.8 (commencing with
Section 6301) to Part 1 of Division 2 of, the Revenue and Taxation
Code, relating to taxation, to take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 2540, as introduced, Gatto. Sales and use taxes: services:
income taxes: exclusion.
(1) The Sales and Use Tax Law imposes a tax on retailers measured
by the gross receipts from the sale of tangible personal property
sold at retail in this state, or on the storage, use, or other
consumption in this state of tangible personal property purchased
from a retailer for storage, use, or other consumption in this state.
The State Board of Equalization administers that law, the violation
of which is a crime.
This bill would expand the Sales and Use Tax Law to impose a tax
on the gross receipts from the sale in this state of, or the storage,
use, or other consumption in this state of, specified services, as
defined. This bill would require all taxes, interest, and penalties
imposed and all other amounts required to be paid to the state to be
remitted and deposited in the same manner as required by the Sales
and Use Tax Law.
By expanding the application of the Sales and Use Tax Law, the
violation of which is a crime, this bill imposes a state-mandated
local program.
(2) The Bradley-Burns Uniform Local Sales and Use Tax Law
authorizes counties and cities to impose local sales and use taxes in
conformity with the Sales and Use Tax Law.
This bill would additionally authorize counties and cities to
impose local sales and use tax on the gross receipts from the sale in
this state of, or the storage, use, or other consumption in this
state of, specified services, as provided.
(3) Under existing law, it is presumed that parties to a contract
for the sale of tangible personal property agree to the addition of
sales tax reimbursement to the sales price of goods sold at retail
under specified conditions. Existing law requires the State Board of
Equalization to prepare and make available a sales tax reimbursement
schedule, which specifies the amount of tax to be charged as to
specific sales prices.
This bill would extend that provision to a contract for the sale
of specified services.
(4) The Personal Income Tax Law imposes taxes based upon taxable
income. That law also allows specified credits, exemptions, and
exclusions, and imposes an alternative minimum tax with respect to
certain items of tax preferences.
This bill would, for taxable years beginning on or after January
1, 2012, exclude from taxable income under this law an amount equal
to 20% of the business income of a taxpayer, not to exceed $10,000,
as specified.
(5) This bill would include a change in state statute that would
result in a taxpayer paying a higher tax within the meaning of
Section 3 of Article XIII A of the California Constitution, and thus
would require for passage the approval of 2/3 of the membership of
each house of the Legislature.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
(6) This bill would take effect immediately as a tax levy.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1656.1 of the Civil Code is amended to read:
1656.1. (a) Whether a retailer may add sales tax reimbursement to
the sales price of the tangible personal property or specified
service sold at retail to a purchaser depends solely upon the
terms of the agreement of sale. It shall be presumed that the parties
agreed to the addition of sales tax reimbursement to the sales price
of tangible personal property or specified service sold
at retail to a purchaser if:
(1) The agreement of sale expressly provides for such addition of
sales tax reimbursement;
(2) Sales tax reimbursement is shown on the sales check or other
proof of sale; or
(3) The retailer posts in his or her premises in a location
visible to purchasers, or includes on a price tag or in an
advertisement or other printed material directed to purchasers, a
notice to the effect that reimbursement for sales tax will be added
to the sales price of all items or certain items, whichever is
applicable.
(b) It shall be presumed that the property or specified
service , the gross receipts from the sale of which is subject
to the sales tax, is sold at a price which includes tax reimbursement
if the retailer posts in his or her premises, or includes on a price
tag or in an advertisement (whichever is applicable) one of the
following notices:
(1) "All prices of taxable items include sales tax reimbursement
computed to the nearest mill."
(2) "The price of this item includes sales tax reimbursement
computed to the nearest mill."
(c) (1) The State Board of Equalization shall prepare and make
available for inspection and duplication or reproduction a sales tax
reimbursement schedule which shall be identical with the following
tables up to the amounts specified therein:
4 3/4 percent
Price Tax
.01- .10 .................................. .00
.11- .31 .................................. .01
.32- .52 .................................. .02
.53- .73 .................................. .03
.74- .94 .................................. .04
.95-1.15 .................................. .05
5 percent
Price Tax
.01- .09 .................................. .00
.10- .29 .................................. .01
.30- .49 .................................. .02
.50- .69 .................................. .03
.70- .89 .................................. .04
.90-1.09 .................................. .05
5 1/4 percent
Price Tax
.01- .09 .................................. .00
.10- .28 .................................. .01
.29- .47 .................................. .02
.48- .66 .................................. .03
.67- .85 .................................. .04
.86-1.04 .................................. .05
5 1/2 percent
Price Tax
.01- .09 .................................. .00
.10- .27 .................................. .01
.28- .45 .................................. .02
.46- .63 .................................. .03
.64- .81 .................................. .04
.82- .99 .................................. .05
1.00-1.18 ................................ .06
5 3/4 percent
Price Tax
.01- .08 .................................. .00
.09- .26 .................................. .01
.27- .43 .................................. .02
.44- .60 .................................. .03
.61- .78 .................................. .04
.79- .95 .................................. .05
.96-1.13 .................................. .06
6 percent
Price Tax
.01- .08 .................................. .00
.09- .24 .................................. .01
.25- .41 .................................. .02
.42- .58 .................................. .03
.59- .74 .................................. .04
.75- .91 .................................. .05
.92-1.08 .................................. .06
6 1/4 percent
Price Tax
.01- .07 .................................. .00
.08- .23 .................................. .01
.24- .39 .................................. .02
.40- .55 .................................. .03
.56- .71 .................................. .04
.72- .87 .................................. .05
.88-1.03 .................................. .06
6 1/2 percent
Price Tax
.01- .07 .................................. .00
.08- .23 .................................. .01
.24- .38 .................................. .02
.39- .53 .................................. .03
.54- .69 .................................. .04
.70- .84 .................................. .05
.85- .99 .................................. .06
1.00-1.15 ................................ .07
6 3/4 percent
Price Tax
.01- .07 .................................. .00
.08- .22 .................................. .01
.23- .3 7.................................. .02
.38- .5 1.................................. .03
.52- .66 .................................. .04
.67- .81 .................................. .05
.82- .96 .................................. .06
.97-1.11 .................................. .07
7 percent
Price Tax
.01- .07 .................................. .00
.08- .21 .................................. .01
.22- .35 .................................. .02
.36- .49 .................................. .03
.50- .64 .................................. .04
.65- .78 .................................. .05
.79- .92 .................................. .06
.93-1.07 .................................. .07
7 1/4 percent
Price Tax
.01- .06 .................................. .00
.07- .20 .................................. .01
.21- .34 .................................. .02
.35- .48 .................................. .03
.49- .62 .................................. .04
.63- .75 .................................. .05
.76- .89 .................................. .06
.90-1.03 .................................. .07
7 1/2 percent
Price Tax
.01- .06 .................................. .00
.07- .19 .................................. .01
.20- .33 .................................. .02
.34- .46 .................................. .03
.47- .59 .................................. .04
.60- .73 .................................. .05
.74- .86 .................................. .06
.87- .99 .................................. .07
1.00-1.13 ................................ .08
(2) Reimbursement on sales prices in excess of those shown in the
schedules may be computed by applying the applicable tax rate to the
sales price, rounded off to the nearest cent by eliminating any
fraction less than one-half cent and increasing any fraction of
one-half cent or over to the next higher cent.
(3) If sales tax reimbursement is added to the sales price of
tangible personal property or specified service sold at
retail, the retailer shall use a schedule provided by the board, or a
schedule approved by the board.
(d) The presumptions created by this section are rebuttable
presumptions.
(e) "Specified service" means a specified service as defined in
subdivision (b) of Section 6301 of the Revenue and Taxation Code.
SEC. 2. Chapter 3.8 (commencing with Section 6301) is added to
Part 1 of Division 2 of the Revenue and Taxation Code, to read:
CHAPTER 3.8. SERVICES
Article 1. General Provisions and Definitions
6301. (a) Except where the context otherwise requires, the
definitions given in Chapter 1 (commencing with Section 6001) govern
this chapter. For purposes of this chapter, the references to
tangible personal property in Chapter 1 (commencing with Section
6001) shall include a specified service.
(b) For purposes of this chapter, "specified service" means:
(1) Astrology, tarot, and palm reading.
(2) Carpet cleaning.
(3) Access to the facilities of a country club, including access
through the imposition of a charge.
(4) Massage.
(5) The provision of personal, private lessons on any topic.
(6) Personal shopping.
(7) Shoe repair.
(8) Shoe shining.
(9) Pool maintenance.
(10) Party planning.
(11) Access to the facilities of a billiard parlor through the
imposition of a charge.
(12) Access to the facilities of a ski resort through the
imposition of a charge.
(13) Access to theater productions through the purchase of a
ticket or membership fees or dues.
(14) Limousine rental.
(15) Marina services.
(16) Access to storage facilities, not including storage
facilities used for the storage of food, through the imposition of a
charge.
(17) Furniture repair.
(18) Watch repair.
(19) Cosmetic surgery.
(20) Support activities for metal mining.
(21) Boat repair.
(22) Charter bus services for travel within the state.
(23) High net worth estate planning.
(24) Spa services provided to pets.
(25) Access to private, telephonic chat lines through the
imposition of a charge to callers.
(26) Private aircraft pilot services for travel within the state.
(27) Pet grooming where the buyer is charged fifty dollars ($50)
or more for the grooming.
6302. (a) For purposes of this part, the place of the sale or
purchase of a specified service is the place where the act
constituting the sale or purchase of the specified service occurs.
(b) If the seller delivers the specified service at the seller's
place of business, the place where the act constituting the sale or
purchase of the service occurs shall be deemed to be at the seller's
place of business.
(c) If paragraph (b) does not apply, the place where the act
constituting the sale or purchase occurs shall be deemed to be the
address of the purchaser as indicated by the seller's business
records, if the records are maintained in the ordinary course of the
seller's business and if the seller uses that address in good faith.
(d) If paragraphs (b) and (c) do not apply, the place where the
act constituting the sale or purchase occurs shall be deemed to be
the address indicated on the purchaser's payment instrument, if the
seller uses that address in good faith.
Article 2. Imposition and Collection of Tax
6305. In addition to the taxes imposed by this part, for the
privilege of selling specified services at retail a tax is hereby
imposed upon all retailers at a rate of 7.5 percent of the gross
receipts of any retailer from the sale of all specified services sold
at retail in this state on or after January 1, 2013.
6306. In addition to the taxes imposed by this part, an excise
tax is hereby imposed on the storage, use, or other consumption in
this state of specified services purchased from any retailer on or
after January 1, 2013, for storage, use, or other consumption in this
state at a rate of 7.5 percent of the sales price of the specified
services.
6307. (a) Section 6055, regarding worthless and charged off
accounts, shall apply to this chapter. Except where the context
otherwise requires, for purposes of this chapter, the references in
that section to tangible personal property shall include a specified
service.
(b) Section 6203.5, regarding worthless and charged off accounts,
shall apply to this chapter. Except where the context otherwise
requires, for purposes of this chapter, the references in that
section to tangible personal property shall include a specified
service.
6308. (a) Section 6204, regarding retailer debt, shall apply to
this chapter. Except where the context otherwise requires, for
purposes of this chapter, the references in that section to tangible
personal property shall include a specified service.
(b) Section 6205, regarding advertising that tax will be assumed,
shall apply to this chapter. Except where the context otherwise
requires, for purposes of this chapter, the references in that
section to tangible personal property shall include a specified
service.
(c) Section 6206, regarding separate statement of price and tax,
shall apply to this chapter. Except where the context otherwise
requires, for purposes of this chapter, the references in that
section to tangible personal property shall include a specified
service.
Article 3. Permits and Registration, Prescriptions, and Resale
Certificates
6310. (a) Except where the context otherwise requires, Article 2
(commencing with Section 6066) of Chapter 2, regarding permits, shall
apply to this chapter. For purposes of this chapter, the references
to tangible personal property in Article 2 (commencing with Section
6066) of Chapter 2 shall include a specified service.
(b) Except where the context otherwise requires, Article 2
(commencing with Section 6225) of Chapter 3, regarding registration,
shall apply to this chapter. For purposes of this chapter, the
references to tangible personal property in Article 2 (commencing
with Section 6225) of Chapter 3 shall include a specified service.
6311. (a) Except where the context otherwise requires, Article 3
(commencing with Section 6091) of Chapter 2, regarding presumptions
and resale certificates, shall apply to this chapter. For purposes of
this chapter, the references to tangible personal property in
Article 3 (commencing with Section 6091) of Chapter 2 shall include a
specified service.
(b) Except where the context otherwise requires, Article 3
(commencing with Section 6241) of Chapter 3, regarding presumptions
and resale certificates, shall apply to this chapter. For purposes of
this chapter, the references to tangible personal property in
Article 3 (commencing with Section 6241) of Chapter 3 shall include a
specified service.
Article 4. Exemptions
6315. Except where the context otherwise requires, Chapter 4
(commencing with Section 6351), regarding exemptions, shall apply to
this chapter. For purposes of this chapter, any references to
tangible personal property in Chapter 4 (commencing with Section
6351) shall include a specified service.
Article 5. Determinations
6320. Except where the context otherwise requires, Chapter 5
(commencing with Section 6451), regarding determinations, shall apply
to this chapter. For purposes of this chapter, any references to
tangible personal property in Chapter 5 (commencing with Section
6451) shall include a specified service.
Article 6. Collection of Tax
6325. Except where the context otherwise requires, Chapter 6
(commencing with Section 6701), regarding collection of tax, shall
apply to this chapter. For purposes of this chapter, any references
to tangible personal property in Chapter 6 (commencing with Section
6701) shall include a specified service.
Article 7. Overpayments and Refunds
6330. Except where the context otherwise requires, Chapter 7
(commencing with Section 6901), regarding determinations, shall apply
to this chapter. For purposes of this chapter, any references to
tangible personal property in Chapter 7 (commencing with Section
6901) shall include a specified service.
Article 8. Administration
6335. Except where the context otherwise requires, Chapter 8
(commencing with Section 7051), regarding administration, shall apply
to this chapter. For purposes of this chapter, any references to
tangible personal property in Chapter 8 (commencing with Section
7051) shall include a specified service.
Article 9. Disposition of Proceeds
6340. All fees, taxes, interest, and penalties imposed and all
amounts of tax required to be paid to the state under this chapter
shall be remitted and deposited in the same manner as required by
Section 7101.
Article 10. Violations
6345. Chapter 10 (commencing with Section 7152), regarding
violations, shall apply to this chapter. For purposes of this
chapter, any references to tangible personal property in Chapter 10
(commencing with Section 7152) shall include a specified service.
Article 11. Res Judicata
6348. Chapter 11 (commencing with Section 7176), regarding res
judicata, shall apply to this chapter. For purposes of this chapter,
any references to tangible personal property in Chapter 11
(commencing with Section 7176) shall include a specified service.
SEC. 3. Section 7201.1 is added to the Revenue and Taxation Code,
to read:
7201.1. (a) Any county and any city may adopt a sales and use tax
ordinance on the sale of, or the storage, use, or other consumption
of, specified services, in compliance with the provisions of this
part, with such changes as required for references to tangible
personal property to include specified services.
(b) "Specified services" means a specified service as defined in
subdivision (b) of Section 6301.
SEC. 4. Section 17137 is added to the Revenue and Taxation Code,
to read:
17137. (a) For taxable years beginning on or after January 1,
2012, gross income shall not include an amount equal to 20 percent of
the business income of a taxpayer.
(b) For purposes of this section:
(1) "Business income of a taxpayer" means income from a trade or
business, whether conducted by the taxpayer or by a pass-thru entity
in which the taxpayer is a partner or shareholder.
(2) "Pass-thru entity" means a partnership or an "S" corporation.
(c) In the case of a pass-thru entity, the amount of business
income under this section attributable to a partner or shareholder
shall be treated as a "separately stated item" within the meaning of
Sections 702 and 1366 of the Internal Revenue Code, respectively.
(d) The maximum amount that may be excluded from the gross income
of any taxpayer pursuant to this section for any taxable year is ten
thousand dollars ($10,000).
(e) In the case of a husband and wife who file separate returns
(including spouses and registered domestic partners), the exclusion
under this section may be taken by either or equally divided between
them, and the limitation under subdivision (d) shall be an aggregate
ten thousand dollars ($10,000) for both returns.
SEC. 5. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
SEC. 6. This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.