Bill Text: CA AB1523 | 2009-2010 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Sales and use taxes: exemption: fixed price contract.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2010-02-02 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB1523 Detail]

Download: California-2009-AB1523-Amended.html

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BILL NUMBER: AB 1523	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MAY 5, 2009

INTRODUCED BY   Assembly Member Charles Calderon

                        FEBRUARY 27, 2009

   An act to add  Section 6376.3   Sections
6376.3 and 6376.4  to the Revenue and Taxation Code, relating to
taxation, to take effect immediately, tax levy.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1523, as amended, Charles Calderon. Sales and use taxes:
exemption: fixed price contract.
   Existing law imposes a state sales and use tax on retailers and on
the storage, use, or other consumption of tangible personal property
in this state at the rate of 61/4% of the gross receipts from the
retail sale of tangible personal property in this state and of the
sales price of tangible personal property purchased from any retailer
for storage, use, or other consumption in this state.
   This bill would, during the period of a 1% sales and use tax
increase above the rate of 61/4%, exclude from that 1% rate of tax,
the gross receipts from certain sales and uses of tangible personal
property that are subject to a fixed price pursuant to a contract
entered into prior to the operative date of the sales and use tax
increase. 
   Counties and cities are authorized to impose local sales and use
taxes in conformity with state sales and use taxes. Exemptions from
state sales and use taxes enacted by the Legislature are incorporated
into the local taxes.  
   Section 2230 of the Revenue and Taxation Code provides that the
state will reimburse counties and cities for revenue losses caused by
the enactment of sales and use tax exemptions.  
   This bill would provide that, notwithstanding Section 2230 of the
Revenue and Taxation Code, no appropriation is made and the state
shall not reimburse local agencies for sales and use tax revenues
lost by them pursuant to this bill.  
   This bill would also, for any increase in the sales and use tax
rate on and after January 1, 2010, exclude from that increased rate
of tax, the gross receipts from certain sales and uses of tangible
personal property that are subject to a fixed price pursuant to a
contract entered into prior to the operative date of the sales and
use tax increase.  
   This bill would make certain legislative findings and declarations
that a fixed price contract exemption serves a statewide public
purpose. 
   This bill would take effect immediately as a tax levy.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program:  yes   no  .


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 6376.3 is added to the Revenue and Taxation
Code, to read:
   6376.3.  From the operative date of the act adding Sections 6051.7
and 6201.7, to the date on which the taxes imposed by Sections
6051.7 and 6201.7 cease to be operative, there is exempted from the
taxes imposed by this part an amount equal to an amount that is
attributable to a 1 percent rate of tax with respect to the
following:
   (a) The gross receipts from the sale of, and the storage, use, or
other consumption in this state of, the following:
   (1) Tangible personal property, if the seller is obligated to
furnish or the purchaser is obligated to purchase the property for a
fixed price pursuant to a contract entered into prior to the
operative date of the act adding Sections 6051.7 and 6201.7.
   (2) Materials and fixtures obligated pursuant to an engineering
construction contract or a building construction contract entered
into for a fixed price prior to the operative date of the act adding
Sections 6051.7 and 6201.7.
   For purposes of this subdivision, tangible personal property shall
not be deemed obligated pursuant to a contract for any period of
time for which any party to the contract has the right to terminate
the contract upon notice, whether or not the right is exercised.
   (b) A lease of tangible personal property that is a continuing
sale of the property for any period of time for which the lessor is
obligated to lease the property for an amount fixed by the lease
prior to the operative date of the act adding Sections 6051.7 and
6201.7. For purposes of this subdivision, the sale or lease of
tangible personal property shall be deemed not to be obligated
pursuant to a contract or lease for any period of time for which any
party to the contract or lease has the unconditional right to
terminate the contract or lease upon notice, whether or not that
right is exercised.
   (c) The possession of, or the exercise of, any right or power over
tangible personal property pursuant to a lease that is a continuing
purchase of the property for any period of time for which the lessee
is obligated to lease the property for an amount fixed by a lease
entered into prior to the operative date of the act adding Sections
6051.7 and 6201.7. For purposes of this subdivision, the storage,
use, or other consumption of, or possession of, or exercise of any
right or power over, tangible personal property shall be deemed not
to be obligated pursuant to a contract or lease for any period of
time for which any party to the contract or lease has the
unconditional right to terminate the contract or lease upon notice,
whether or not the right is exercised.
   SEC. 2.    Section 6376.4 is added to the  
Revenue and Taxation Code   , to read:  
   6376.4.  On and after January 1, 2010, from the operative date of
an act that increases the sales and use tax rate, to the date on
which the taxes imposed by that act ceases to be operative, there are
exempted from the taxes imposed by this part an amount equal to an
amount that is attributable to the rate of tax imposed with respect
to the following:
   (a) The gross receipts from the sale of, and the storage, use, or
other consumption in this state of, the following:
   (1) Tangible personal property, if the seller is obligated to
furnish or the purchaser is obligated to purchase the property for a
fixed price pursuant to a contract entered into prior to July 1,
1993.
   (2) Materials and fixtures obligated pursuant to an engineering
construction contract or a building construction contract entered
into for a fixed price prior to the operative date of the act that
increased the sales and use tax rate.
   For purposes of this subdivision, tangible personal property shall
not be deemed obligated pursuant to a contract for any period of
time for which any party to the contract has the right to terminate
the contract upon notice, whether or not the right is exercised.
   (b) A lease of tangible personal property that is a continuing
sale of the property for any period of time for which the lessor is
obligated to lease the property for an amount fixed by the lease
prior to the operative date of the act that increased the sales and
use tax rate. For purposes of this subdivision, the sale or lease of
tangible personal property shall be deemed not to be obligated
pursuant to a contract or lease for any period of time for which any
party to the contract or lease has the unconditional right to
terminate the contract or lease upon notice, whether or not that
right is exercised.
   (c) The possession of, or the exercise of, any right or power over
tangible personal property pursuant to a lease that is a continuing
purchase of the property for any period of time for which the lessee
is obligated to lease the property for an amount fixed by a lease
entered into prior to the operative date of the act that increased
the sales and use tax rate. For purposes of this subdivision, the
storage, use, or other consumption of, or possession of, or exercise
of any right or power over, tangible personal property shall be
deemed not to be obligated pursuant to a contract or lease for any
period of time for which any party to the contract or lease has the
unconditional right to terminate the contract or lease upon notice,
whether or not the right is exercised. 
   SEC. 3.    The Legislature finds and declares that
Section 1 of this act fulfills a statewide public purpose because of
the following:  
   This act provides necessary relief to the retailers or contractors
who entered into a fixed price contract or a fixed price lease
agreement prior to the operative date of the 1 percent sales and use
tax increase above the rate of 6.25 percent. A fixed price contract
exemption would protect the business expectations of parties who
enter into fixed price contracts and protect them from an unplanned
increase in the tax rate.  
  SEC. 2.   
   Notwithstanding Section 2230 of the Revenue and Taxation Code, no
appropriation is made by this act and the state shall not reimburse
any local agency for any sales and use tax revenues lost by it under
this act. 
   SEC. 3.   SEC. 4.   This act provides
for a tax levy within the meaning of Article IV of the Constitution
and shall go into immediate effect.