Bill Text: CA AB147 | 2019-2020 | Regular Session | Amended
Bill Title: Use taxes: collection: retailer engaged in business in this state: marketplace facilitators.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Passed) 2019-04-25 - Chaptered by Secretary of State - Chapter 5, Statutes of 2019. [AB147 Detail]
Download: California-2019-AB147-Amended.html
Amended
IN
Assembly
February 14, 2019 |
Assembly Bill | No. 147 |
Introduced by Assembly Member Burke (Principal coauthor: Senator McGuire) |
December 14, 2018 |
LEGISLATIVE COUNSEL'S DIGEST
The Sales and Use Tax Law specifies that a retailer engaged in business in this state includes any retailer entering into agreements under which a person or persons in this state, for a commission or other consideration, directly or indirectly refer potential purchasers of tangible personal property to the retailer, whether by an Internet-based link or an Internet
Web site, or otherwise, provided that the retailer meets specified total cumulative sales thresholds, including that the retailer has, during the preceding 12 months, total cumulative sales in this state of tangible personal property in excess of $1,000,000.
This bill would reduce that threshold to $500,000. This bill would also define a retailer under the Sales and Use Tax Law to include every person who is registered with the department as a retailer for purposes of the Sales and Use Tax Law or who is a retailer engaged in business in this state as defined in that law and facilitates a retail sale by another seller that is not registered with the department and who 1) lists or advertises for sale, in any forum, tangible personal property owned by the seller that is subject to tax under the Sales and Use Tax Law, and 2) directly or indirectly through agreements or arrangements with third parties collects payment from the customer and transmits that payment to the
seller, regardless of whether compensation or other consideration is received in exchange for its services. The bill would provide that a person meeting that definition who facilitates a sale of tangible personal property for another seller that is not registered under the Sales and Use Tax Law is the retailer “selling” or “making a sale of” the tangible personal property for purposes of use tax collection.
Digest Key
Vote: 2/3 Appropriation: NO Fiscal Committee: YES Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
The Legislature hereby finds and declares all of the following:(a)“Retailer” includes:
(1)Every seller who makes any retail sale or sales of tangible personal property, and every person engaged in the business of making retail sales at auction of tangible personal property owned by the person or others.
(2)Every person engaged in the business of making sales for storage, use, or other consumption or in the business of making sales at auction of tangible personal property owned by the person or others for storage, use, or other consumption.
(3)Any person conducting a race meeting under Chapter 4 of Division 8 of the Business and Professions Code, with
respect to horses which are claimed during such meeting.
(4)(A)Every person who is registered with the department under Chapter 2 (commencing with Section 6051) or Chapter 3 (commencing with Section 6201) of this part or who is a retailer engaged in business in this state as defined in Section 6203 and facilitates a retail sale by another seller that is not registered with the department under Chapter 2 (commencing with Section 6051) or Chapter 3 (commencing with Section 6201) of this part and does both of the following:
(i)Lists or advertises for sale, in any forum, tangible personal property owned by the seller that is subject to tax under this part.
(ii)Directly or indirectly through agreements or arrangements with third parties collects payment from the customer and transmits that payment to the seller, regardless of whether the person facilitating the retail sale receives compensation or other consideration in exchange for its services.
(B)A person who is a retailer pursuant to this paragraph and facilitates a sale of tangible personal property for another seller that is not registered under Chapter 2 (commencing with Section 6051) or Chapter 3 (commencing with Section 6201) of this part is the retailer “selling” or “making a sale of” the tangible personal property for purposes of Chapter 3 (commencing with Section 6201).
(b)When
the department determines that it is necessary for the efficient administration of this part to regard any salesmen, representatives, peddlers, or canvassers as the agents of the dealers, distributors, supervisors, or employers under whom they operate or from whom they obtain the tangible personal property sold by them, irrespective of whether they are making sales on their own behalf or on behalf of the dealers, distributors, supervisors, or employers the department may so regard them and may regard the dealers, distributors, supervisors, or employers as retailers for purposes of this part.
(c)Notwithstanding subdivision (b), a newspaper carrier is not a retailer and the retailer is the publisher or distributor for whom the carrier delivers the newspapers. The publisher or distributor is responsible for the tax measured by the price charged to the customer by the carrier.
SEC. 2.
Chapter 1.7 (commencing with Section 6040) is added to Part 1 of Division 2 of the Revenue and Taxation Code, to read:CHAPTER 1.7. Marketplace Facilitator Act
Article 1. General Provisions and Definitions
6040.
This chapter shall be known as and referred to as the Marketplace Facilitator Act.6041.
For purposes of this part, the following definitions shall apply:Article 2. Registration and Collection
6042.
A marketplace facilitator shall be considered the seller and retailer for each sale facilitated through its marketplace for purposes of determining whether the marketplace facilitator is required to register with the department under Chapter 2 (commencing with section 6051) or Chapter 3 (commencing with Section 6201), in addition to each sale for which the marketplace facilitator is the seller or retailer or both under Chapter 1 (commencing with Section 6001).6043.
A marketplace facilitator that is registered with the department or required to register with the department under Chapter 2 (commencing with Section 6051) or Chapter 3 (commencing with Section 6201) and that facilitates a retail sale of tangible personal property by a marketplace seller is the retailer selling or making the sale of the tangible personal property sold through its marketplace for purposes of this part.6044.
For purposes of determining the cumulative sales price from the sale of tangible personal property for delivery in this state pursuant to Section 6203:6044.5.
(a) If the department determines that a marketplace facilitator was the retailer selling or making a sale of tangible personal property for purposes of this part and that a marketplace seller reported and paid tax to the department with regard to that sale, then the tax shall be credited against the marketplace facilitator’s liability with regard to that sale and the remainder may be refunded to the marketplace seller.6045.
A marketplace seller shall register with the department under Chapter 2 (commencing with Section 6051) or Chapter 3 (commending with Section 6201), as required, for retail sales made on its own behalf and not facilitated through a registered marketplace facilitator.Article 3. Marketplace Facilitator Relief
6046.
If the marketplace facilitator demonstrates to the satisfaction of the department that the marketplace facilitator has made a reasonable effort to obtain accurate information from an unrelated marketplace seller about a retail sale and that the failure to remit the correct amount of tax imposed under this part was due to incorrect information provided to the marketplace facilitator by the unrelated marketplace seller, then the marketplace facilitator shall be relieved of liability for the tax for that retail sale. This section does not apply with regard to a retail sale for which the marketplace facilitator is the retailer selling or making the sale of the tangible personal property on its own behalf or if the marketplace facilitator and marketplace seller are related. Where a marketplace facilitator is relieved of liability for the tax on a retail sale under this section, the marketplace seller is the retailer for that retail sale.6047.
(a) A marketplace facilitator shall be relieved of the tax on retail sales facilitated through its marketplace as provided in subdivision (c) if the marketplace facilitator demonstrates to the satisfaction of the department all of the following:6048.
A class action may not be brought against a marketplace facilitator on behalf of purchasers arising from or in any way related to an overpayment of sales or use tax collected before January 1, 2023, by the marketplace facilitator, regardless of whether such action is characterized as a tax refund claim. Nothing in this section shall affect a purchaser's right to seek a refund from the department pursuant to Article 1 (commencing with Section 6901) of Chapter 7.Article 4. Operative Date
6049.5.
(a) This chapter shall become operative on October 1, 2019.SEC. 3.
Section 6203 of the Revenue and Taxation Code, as added by Section 3 of Chapter 313 of the Statutes of 2011, is amended to read:6203.
(a) Except as provided by Sections 6292 and 6293, every retailer engaged in business in this state and making sales of tangible personal property for storage, use, or other consumption in this state, not exempted under Chapter 3.5 (commencing with Section 6271) or Chapter 4 (commencing with Section 6351), shall, at the time of making the sales or, if the storage, use, or other consumption of the tangible personal property is not then taxable hereunder, at the time the storage, use, or other consumption becomes taxable, collect the tax from the purchaser and give to the purchaser a receipt therefor in the manner and form prescribed by the department.(4)Any retailer that is a member of a commonly controlled group, as defined in Section 25105, and is a member of a combined reporting group, as defined in paragraph (3) of subdivision (b) of Section 25106.5 of Title 18 of
the California Code of Regulations, that includes another member of the retailer’s commonly controlled
group that, pursuant to an agreement with or in cooperation with the retailer, performs services in this state in connection with tangible personal property to be sold by the retailer, including, but not limited to, design and development of tangible personal property sold by the retailer, or the solicitation of sales of tangible personal property on behalf of the retailer.
(5)
(6)(A)Any retailer entering into an agreement or agreements under which a person or persons in this state, for a commission or other
consideration, directly or indirectly refer potential purchasers of tangible personal property to the retailer, whether by an Internet-based link or an Internet Web site, or otherwise, provided that both of the following conditions are met:
(i)The total cumulative sales price from all of the retailer’s sales, within the preceding 12 months, of tangible personal property to purchasers in this state that are referred pursuant to all of those agreements with a person or persons in this state, is in excess of ten thousand dollars ($10,000).
(ii)The retailer, within the preceding 12 months, has total cumulative sales of tangible personal property to purchasers in this state in excess of five hundred thousand dollars ($500,000).
(B)An agreement under which a retailer purchases advertisements from a person or persons in this state, to be delivered on television, radio, in print, on the Internet, or by any other medium, is not an agreement described in subparagraph (A), unless the advertisement revenue paid to the person or persons in this state consists of commissions or other consideration that is based upon sales of tangible personal property.
(C)Notwithstanding subparagraph (B), an agreement under which a retailer engages a person in this state to place an advertisement on an Internet Web site operated by that person, or operated by another person in this state, is not an agreement described in subparagraph (A), unless the person entering the agreement with the retailer also directly or indirectly solicits potential customers in this state through use of
flyers, newsletters, telephone calls, electronic mail, blogs, microblogs, social networking sites, or other means of direct or indirect solicitation specifically targeted at potential customers in this state.
(D)For purposes of this paragraph, “retailer” includes an entity affiliated with a retailer within the meaning of Section 1504 of the Internal Revenue Code.
(E)This paragraph shall not apply if the retailer can demonstrate that the person in this state with whom the retailer has an agreement did not engage in referrals in the state on behalf of the retailer that would satisfy the requirements of the commerce clause of the United States Constitution.
SEC. 4.
Section 6203 is added to the Revenue and Taxation Code, to read:6203.
(a) Except as provided by Sections 6292 and 6293, every retailer engaged in business in this state and making sales of tangible personal property for storage, use, or other consumption in this state, not exempted under Chapter 3.5 (commencing with Section 6271) or Chapter 4 (commencing with Section 6351), shall, at the time of making the sales or, if the storage, use, or other consumption of the tangible personal property is not then taxable hereunder, at the time the storage, use, or other consumption becomes taxable, collect the tax from the purchaser and give to the purchaser a receipt therefor in the manner and form prescribed by the department.SEC. 5.
Section 6203.1 is added to the Revenue and Taxation Code, to read:6203.1.
(a) The department, in its discretion, may relieve a retailer engaged in business in this state that meets the requirements of subdivision (b) of the following:SEC. 4.SEC. 6.
Section 7262 of the Revenue and Taxation Code is amended to read:7262.
The use tax portion of any transactions and use tax ordinance adopted under this part shall impose a complementary tax upon the storage, use, or other consumption in the district of tangible personal property purchased from any retailer for storage, use, or other consumption in the district. The tax shall be at a rate of one-eighth of 1 percent, or a multiple thereof, of the sales price of the property whose storage, use, or other consumption is subject to the tax, and the ordinance shall include provisions in substance as follows:Chapter 3.5