Bill Text: CA AB2060 | 2009-2010 | Regular Session | Amended

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

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Bill Title: Public contracts: fixed price contracts: sales and use

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Vetoed) 2010-09-30 - Vetoed by Governor. [AB2060 Detail]

Download: California-2009-AB2060-Amended.html

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BILL NUMBER: AB 2060	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MAY 18, 2010

INTRODUCED BY   Assembly Member Charles Calderon

                        FEBRUARY 18, 2010

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


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2060, 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 combined rate of 81/4% 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 that is
stored, used, or otherwise consumed in this state.
   This bill would, for any increase in the state sales and use tax
rate  that occurs  on  and   or 
after the  operative   effective  date of
this bill, exclude from that increased rate of tax, the sale of, and
the storage, use or other consumption in this state of, tangible
personal property that is subject to a fixed price contract 
under specified circumstances  entered into prior to the
operative date of the state sales and use tax rate increase, as
provided.
   This bill would take effect immediately as a tax levy.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: 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.   (a)    On and after the operative date
of an increase in the sales and use tax rate, to the date on which
that increase in tax rate ceases to be operative, there is exempted
from the taxes imposed by this part an amount equal to an amount that
is attributable to the increased rate of tax imposed with respect to
the following: 
   (a) (1) 
    (1)     (A)    The gross
receipts from the sale of, and the storage, use,  or other
consumption in this state of, the following: 
    (A)     Tangible
personal property, if the seller is obligated to   or
other consumption in this state of, tangible personal property if the
seller is obligated to  furnish  a government entity with
the property  or the  purchaser  
government entity  is obligated to purchase the property for a
fixed price pursuant to a contract entered into prior to the
operative date of the increase in the sales and use tax rate. 
   (B) For purposes of this paragraph, 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)     Materials

    (2)     (A)     The gross
receipts from the sale of, and the storage, use, or other
consumption in this state of, materials  and fixtures obligated
pursuant to a construction contract entered into for a fixed price
prior to the operative date of the increase in the sales and use tax
rate.  For purposes of this subparagraph, "fixed price" means
the prices or price specified in the construction contract is a lump
sum price or a stated unit price or a guaranteed maximum price, and
the construction contract does not authorize an increase in price due
to an increase in the rate of sales and use taxes. For purposes of
this subparagraph, "guaranteed maximum price" means that the price
specified in the construction contract is for actual costs plus a
fixed fee, but subject to a maximum price.   and
fixtures obligated pursuant to a construction contract entered into
for a fixed price prior to the operative date of the increase in the
sales and use tax rate. For purposes of this subparagraph, "fixed
price" means the prices or price specified in the construction
contract is a lump sum price or a stated unit price or a guaranteed
maximum price, and the construction contract does not authorize an
increase in price due to an increase in the rate of sales and use
taxes. For purposes of this subparagraph, "guaranteed maximum price"
means that the price specified in the construction contract is for
actual costs plus a fixed fee, but subject to a maximum price.
 
   (2) 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) This paragraph shall apply only to construction contracts in
which a government entity is a party to the construction contract or
where a qualified contractor is obligated to sell or furnish the
materials and fixtures.  
   (C) For purposes of this paragraph:  
   (i) "Fixed price" means the prices or price specified in the
construction contract is a lump sum price or a stated unit price or a
guaranteed maximum price, and the construction contract does not
authorize an increase in price due to an increase in the rate of
sales and use taxes.  
   (ii) "Guaranteed maximum price" means that the price specified in
the construction contract is for actual costs plus a fixed fee, but
subject to a maximum price.  
   (iii) "Qualified contractor" means a construction contractor with
no more than one million dollars ($1,000,000) in gross receipts from
business operations and no more than two hundred fifty thousand
dollars ($250,000) in taxable income in the prior taxable year. 

   (iv) 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) 
    (3)     (A)    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 increase in 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. 
 rate. 
    (B) This paragraph shall apply only to leases of tangible
personal property to a government entity. 
    (C) For purposes of this paragraph, 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) 
    (4)     (A)    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 increase in 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. 
   (B) This paragraph shall apply only to leases of tangible personal
property to a government entity.  
   (b) For purposes of this section, "government entity" means the
United States, the State of California, or any city, county, or city
and county, community college district, school district, county
superintendent of schools, or special district in this state. 

   (c) This section shall apply only to increases in the sales and
use tax rate that occur on or after the effective date of the act
adding this section. 
  SEC. 2.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.