Bill Text: CA AB365 | 2021-2022 | Regular Session | Amended

California Assembly Bill 365 (Prior Session Legislation)

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

Bill Title: Sales and use taxes: exemption: zero-emission and near-zero-emission drayage trucks.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2022-02-01 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB365 Detail]

Download: California-2021-AB365-Amended.html

Amended IN Assembly January 03, 2022

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill

No. 365

Introduced by Assembly Member O’Donnell

February 01, 2021

An act to ~~amend Sections 6011 and 6012~~ add and repeal Section 6356.1 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL'S DIGEST

AB 365, as amended, O’Donnell. Sales and use taxes: ~~exclusion:~~ exemption: zero-emission and near-zero-emission drayage trucks.

Existing sales and use tax laws impose taxes on retailers measured by 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, measured by sales price. The Sales and Use Tax Law ~~defines the terms “gross receipts” and “sales price.”~~ provides various exemptions from these taxes.

This bill would exclude from the terms “gross receipts” and “sales price” for purposes of the Sales and Use Tax Law the amount charged for the purchase of a new or used drayage truck that qualifies, on or after January 1, 2021, for certain emission reduction programs. would, on and after January 1, 2023, and before January 1, 2028, exempt from those taxes the gross receipts from the sale of a qualified drayage truck. The bill would define “qualified drayage truck” to mean a new or used drayage truck that meets the criteria of certain emission reduction programs.

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, and existing laws authorize districts, as specified, to impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which generally conforms to the Sales and Use Tax Law. Amendments to the Sales and Use Tax Law are automatically incorporated into the local tax laws.

This bill would specify that this ~~exclusion~~ exemption does not apply to local sales and use taxes or transactions and use taxes.

This bill would take effect immediately as a tax levy, but its operative date would depend on its effective date.

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

The Legislature finds and declares all of the following:

(a) In 2020, the State Air Resources Board adopted regulations to reduce greenhouse gas emissions from heavy-duty trucks and drayage trucks. These regulations include a first-in-the-world rule requiring truck manufacturers to transition from diesel trucks and vans to electric zero-emission trucks beginning in 2024 and requiring every new truck sold in California to be zero-emission by 2045. The State Air Resources Board approved the “Heavy-Duty Low NOx Omnibus Regulation,” which requires manufacturers of heavy-duty diesel trucks to comply with tougher emission standards, overhaul engine testing procedures, and further extend engine warranties to ensure that emissions of oxides of nitrogen are reduced to help California meet federal air quality standards and critical public health goals.

(b) Also in 2020, Governor Gavin Newsom issued Executive Order No. N-79-20, which, among other things, requires all drayage trucks in the state to be zero-emission by 2035 and sets a number of vehicle emissions goals for the state, including having 100 percent of heavy-duty vehicles in the state be zero-emission by 2045.

(c) There are an estimated ~~300,000~~ 30,000 drayage trucks that service California’s ports each year. Most of these are used trucks. Used drayage trucks cost around $50,000. New zero-emission trucks cost $350,000. Unless funding is provided to offset the cost of new and used zero-emission trucks, it will be nearly impossible for individuals and small businesses to comply with the new requirement. If funding is provided to offset the cost of new and used zero-emission trucks, the sales and use tax will be too high for people to afford since it will be based on the full price of the truck.

(d) Legislation is necessary to exclude zero-emission and near-zero-emission drayage trucks from the state portion of the sales and use tax so individuals will be able to afford these new and used trucks to be in compliance with state mandates to meet the state’s greenhouse gas emissions and public health goals.

(e) The state currently exempts the following items from certain state sales and use taxes:

(1) Zero-emission technology transit buses.

(2) Certain government purchases of public passenger transportation vehicles.

(3) Certain new or remanufactured trucks, truck tractors, semitrailers, or trailers that have an unladen weight of 6,000 pounds or more, or new or remanufactured trailer coaches or new or remanufactured auxiliary dollies, purchased from a dealer located outside this state for use without this state.

(4) Diesel fuel consumed during the activities of a farming business or food processing, as specified.

(5) Farm equipment, machinery, and their parts sold to or purchased by specified persons engaged in the business of producing and harvesting agricultural products.

(6) Certain equipment used in manufacturing, research and development in biotechnology, and research and development in the physical, engineering, and life sciences.

(7) Electric power generation and distribution equipment when sold to or purchased by certain qualifying electric power generators or distributors for use primarily in electric power generation or production, or storage and distribution activities.

SEC. 2.Section 6011 of the Revenue and Taxation Code is amended to read:
6011.
(a)“Sales price” means the total amount for which tangible personal property is sold or leased or rented, as the case may be, valued in money, whether paid in money or otherwise, without any deduction on account of any of the following:
~~(1)The cost of the property sold.~~
~~(2)The cost of materials used, labor or service cost, interest charged, losses, or any other expenses.~~
~~(3)The cost of transportation of the property, except as excluded by other provisions of this section.~~
~~(b)The total amount for which the property is sold or leased or rented includes all of the following:~~
~~(1)Any services that are a part of the sale.~~
~~(2)Any amount for which credit is given to the purchaser by the seller.~~
~~(3)The amount of any tax imposed by the United States upon producers and importers of gasoline and the amount of any tax imposed pursuant to Part 2 (commencing with Section 7301) of this division.~~
~~(c)“Sales price” does not include any of the following:~~
~~(1)Cash discounts allowed and taken on sales.~~
(2)The amount charged for property returned by customers when that entire amount is refunded either in cash or credit, but this exclusion shall not apply in any instance when the customer, in order to obtain the refund, is required to purchase other property at a price greater than the amount charged for the property that is returned. For the purpose of this section, refund or credit of the entire amount shall be deemed to be given when the purchase price less rehandling and restocking costs are refunded or credited to the customer. The amount withheld for rehandling and restocking costs may be a percentage of the sales price determined by the average cost of rehandling and restocking returned merchandise during the previous accounting cycle.
~~(3)The amount charged for labor or services rendered in installing or applying the property sold.~~
(4)(A)The amount of any tax (not including, however, any manufacturers’ or importers’ excise tax, except as provided in subparagraph (B)) imposed by the United States upon or with respect to retail sales whether imposed upon the retailer or the consumer.
(B)The amount of manufacturers’ or importers’ excise tax imposed pursuant to Section 4081 or 4091 of the Internal Revenue Code for which the purchaser certifies that the purchaser is entitled to either a direct refund or credit against the purchaser’s income tax for the federal excise tax paid or for which the purchaser issues a certificate pursuant to Section 6245.5.
(5)The amount of any tax imposed by any city, county, city and county, or rapid transit district within the State of California upon or with respect to retail sales of tangible personal property, measured by a stated percentage of sales price or gross receipts, whether imposed upon the retailer or the consumer.
(6)The amount of any tax imposed by any city, county, city and county, or rapid transit district within the State of California with respect to the storage, use, or other consumption in that city, county, city and county, or rapid transit district of tangible personal property measured by a stated percentage of sales price or purchase price, whether the tax is imposed upon the retailer or the consumer.
(7)Separately stated charges for transportation from the retailer’s place of business or other point from which shipment is made directly to the purchaser, but the exclusion shall not exceed a reasonable charge for transportation by facilities of the retailer or the cost to the retailer of transportation by other than facilities of the retailer. However, if the transportation is by facilities of the retailer, or the property is sold for a delivered price, this exclusion shall be applicable solely with respect to transportation which occurs after the purchase of the property is made.
(8)Charges for transporting landfill from an excavation site to a site specified by the purchaser, either if the charge is separately stated and does not exceed a reasonable charge or if the entire consideration consists of payment for transportation.
(9)The amount of any motor vehicle, mobilehome, or commercial coach fee or tax imposed by and paid the State of California that has been added to or is measured by a stated percentage of the sales or purchase price of a motor vehicle, mobilehome, or commercial coach.
(10)(A)The amount charged for intangible personal property transferred with tangible personal property in any technology transfer agreement, if the technology transfer agreement separately states a reasonable price for the tangible personal property.
(B)If the technology transfer agreement does not separately state a price for the tangible personal property, and the tangible personal property or like tangible personal property has been previously sold or leased, or offered for sale or lease, to third parties at a separate price, the price at which the tangible personal property was sold, leased, or offered to third parties shall be used to establish the retail fair market value of the tangible personal property subject to tax. The remaining amount charged under the technology transfer agreement is for the intangible personal property transferred.
(C)If the technology transfer agreement does not separately state a price for the tangible personal property, and the tangible personal property or like tangible personal property has not been previously sold or leased, or offered for sale or lease, to third parties at a separate price, the retail fair market value shall be equal to 200 percent of the cost of materials and labor used to produce the tangible personal property subject to tax. The remaining amount charged under the technology transfer agreement is for the intangible personal property transferred.
(D)For purposes of this paragraph, “technology transfer agreement” means any agreement under which a person who holds a patent or copyright interest assigns or licenses to another person the right to make and sell a product or to use a process that is subject to the patent or copyright interest.
~~(11)The amount of any tax imposed upon diesel fuel pursuant to Part 31 (commencing with Section 60001).~~
(12)(A)The amount of tax imposed by any Indian tribe within the State of California with respect to a retail sale of tangible personal property measured by a stated percentage of the sales or purchase price, whether the tax is imposed upon the retailer or the consumer.
~~(B)The exclusion authorized by subparagraph (A) shall only apply to those retailers who are in substantial compliance with this part.~~
~~(13)(A)The amount charged for the purchase of a new or used drayage truck that qualifies, on or after January 1, 2021, for any of the following:~~
~~(i)The California Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project funded by the Air Quality Improvement Program established pursuant to Section 44274 of the Health and Safety Code.~~
~~(ii)The Carl Moyer Memorial Air Quality Standards Attainment Program (Chapter 9 (commencing with Section 44275) of Part 5 of Division 26 of the Health and Safety Code).~~
~~(iii)The Volkswagen Environmental Mitigation Trust for California pursuant to Section 39614 of the Health and Safety Code.~~
(B)Notwithstanding any provision of the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200)) or the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251)), the exclusion established by this paragraph does not apply with respect to any tax levied by a county, city, or district pursuant to, or in accordance with, either of those laws.
SEC. 3.Section 6012 of the Revenue and Taxation Code is amended to read:
6012.
(a)“Gross receipts” mean the total amount of the sale or lease or rental price, as the case may be, of the retail sales of retailers, valued in money, whether received in money or otherwise, without any deduction on account of any of the following:
(1)The cost of the property sold. However, in accordance with any rules and regulations as the department may prescribe, a deduction may be taken if the retailer has purchased property for some other purpose than resale, has reimbursed its vendor for tax which the vendor is required to pay to the state or has paid the use tax with respect to the property, and has resold the property prior to making any use of the property other than retention, demonstration, or display while holding it for sale in the regular course of business. If that deduction is taken by the retailer, no refund or credit will be allowed to its vendor with respect to the sale of the property.
~~(2)The cost of the materials used, labor or service cost, interest paid, losses, or any other expense.~~
~~(3)The cost of transportation of the property, except as excluded by other provisions of this section.~~
~~(4)The amount of any tax imposed by the United States upon producers and importers of gasoline and the amount of any tax imposed pursuant to Part 2 (commencing with Section 7301) of this division.~~
~~(b)The total amount of the sale or lease or rental price includes all of the following:~~
~~(1)Any services that are a part of the sale.~~
~~(2)All receipts, cash, credits, and property of any kind.~~
~~(3)Any amount for which credit is allowed by the seller to the purchaser.~~
~~(c)“Gross receipts” do not include any of the following:~~
~~(1)Cash discounts allowed and taken on sales.~~
(2)Sale price of property returned by customers when that entire amount is refunded either in cash or credit, but this exclusion shall not apply in any instance when the customer, in order to obtain the refund, is required to purchase other property at a price greater than the amount charged for the property that is returned. For the purpose of this section, refund or credit of the entire amount shall be deemed to be given when the purchase price less rehandling and restocking costs are refunded or credited to the customer. The amount withheld for rehandling and restocking costs may be a percentage of the sales price determined by the average cost of rehandling and restocking returned merchandise during the previous accounting cycle.
~~(3)The price received for labor or services used in installing or applying the property sold.~~
(4)(A)The amount of any tax (not including, however, any manufacturers’ or importers’ excise tax, except as provided in subparagraph (B)) imposed by the United States upon or with respect to retail sales whether imposed upon the retailer or the consumer.
(B)The amount of manufacturers’ or importers’ excise tax imposed pursuant to Section 4081 or 4091 of the Internal Revenue Code for which the purchaser certifies that the purchaser is entitled to either a direct refund or credit against the purchaser’s income tax for the federal excise tax paid or for which the purchaser issues a certificate pursuant to Section 6245.5.
(5)The amount of any tax imposed by any city, county, city and county, or rapid transit district within the State of California upon or with respect to retail sales of tangible personal property measured by a stated percentage of sales price or gross receipts whether imposed upon the retailer or the consumer.
(6)The amount of any tax imposed by any city, county, city and county, or rapid transit district within the State of California with respect to the storage, use, or other consumption in that city, county, city and county, or rapid transit district of tangible personal property measured by a stated percentage of sales price or purchase price, whether the tax is imposed upon the retailer or the consumer.
(7)Separately stated charges for transportation from the retailer’s place of business or other point from which shipment is made directly to the purchaser, but the exclusion shall not exceed a reasonable charge for transportation by facilities of the retailer or the cost to the retailer of transportation by other than facilities of the retailer. However, if the transportation is by facilities of the retailer, or the property is sold for a delivered price, this exclusion shall be applicable solely with respect to transportation which occurs after the sale of the property is made to the purchaser.
(8)Charges for transporting landfill from an excavation site to a site specified by the purchaser, either if the charge is separately stated and does not exceed a reasonable charge or if the entire consideration consists of payment for transportation.
(9)The amount of any motor vehicle, mobilehome, or commercial coach fee or tax imposed by and paid to the State of California that has been added to or is measured by a stated percentage of the sales or purchase price of a motor vehicle, mobilehome, or commercial coach.
(10)(A)The amount charged for intangible personal property transferred with tangible personal property in any technology transfer agreement, if the technology transfer agreement separately states a reasonable price for the tangible personal property.
(B)If the technology transfer agreement does not separately state a price for the tangible personal property, and the tangible personal property or like tangible personal property has been previously sold or leased, or offered for sale or lease, to third parties at a separate price, the price at which the tangible personal property was sold, leased, or offered to third parties shall be used to establish the retail fair market value of the tangible personal property subject to tax. The remaining amount charged under the technology transfer agreement is for the intangible personal property transferred.
(C)If the technology transfer agreement does not separately state a price for the tangible personal property, and the tangible personal property or like tangible personal property has not been previously sold or leased, or offered for sale or lease, to third parties at a separate price, the retail fair market value shall be equal to 200 percent of the cost of materials and labor used to produce the tangible personal property subject to tax. The remaining amount charged under the technology transfer agreement is for the intangible personal property transferred.
(D)For purposes of this paragraph, “technology transfer agreement” means any agreement under which a person who holds a patent or copyright interest assigns or licenses to another person the right to make and sell a product or to use a process that is subject to the patent or copyright interest.
~~(11)The amount of any tax imposed upon diesel fuel pursuant to Part 31 (commencing with Section 60001).~~
(12)(A)The amount of tax imposed by any Indian tribe within the State of California with respect to a retail sale of tangible personal property measured by a stated percentage of the sales or purchase price, whether the tax is imposed upon the retailer or the consumer.
~~(B)The exclusion authorized by subparagraph (A) shall only apply to those retailers who are in substantial compliance with this part.~~
For purposes of the sales tax, if the retailers establish to the satisfaction of the department that the sales tax has been added to the total amount of the sale price and has not been absorbed by them, the total amount of the sale price shall be deemed to be the amount received exclusive of the tax imposed. Section 1656.1 of the Civil Code shall apply in determining whether or not the retailers have absorbed the sales tax.
~~(13)(A)The amount charged for the purchase of a new or used drayage truck that qualifies, on or after January 1, 2021, for any of the following:~~
~~(i)The California Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project funded by the Air Quality Improvement Program established pursuant to Section 44274 of the Health and Safety Code.~~
~~(ii)The Carl Moyer Memorial Air Quality Standards Attainment Program (Chapter 9 (commencing with Section 44275) of Part 5 of Division 26 of the Health and Safety Code).~~
~~(iii)The Volkswagen Environmental Mitigation Trust for California pursuant to Section 39614 of the Health and Safety Code.~~
(B)Notwithstanding any provision of the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200)) or the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251)), the exclusion established by this paragraph does not apply with respect to any tax levied by a county, city, or district pursuant to, or in accordance with, either of those laws.

SEC. 2.

Section 6356.1 is added to the Revenue and Taxation Code, to read:

6356.1.
(a) On and after January 1, 2023, there are exempted from the taxes imposed by this part the gross receipts from the sale of a qualified drayage truck.
(b) As used in this section, “qualified drayage truck” means a new or used drayage truck that meets, on or after January 1, 2021, the criteria of any of the following:
(1) The California Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project funded by the Air Quality Improvement Program established pursuant to Section 44274 of the Health and Safety Code.
(2) The Carl Moyer Memorial Air Quality Standards Attainment Program (Chapter 9 (commencing with Section 44275) of Part 5 of Division 26 of the Health and Safety Code).
(3) The Volkswagen Environmental Mitigation Trust for California pursuant to Section 39614 of the Health and Safety Code.
(c) Notwithstanding any provision of the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200)) or the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251)), the exemption established by this section shall not apply with respect to any tax levied by a county, city, or district pursuant to, or in accordance with, either of those laws.
(d) This section shall become inoperative on January 1, 2028, and as of that date is repealed.

SEC. 4.SEC. 3.

(a) It is the intent of the Legislature to apply the requirements of Section 41 of the Revenue and Taxation Code to this act.

(b) With respect to ~~paragraph (13) of subdivision (c) of Sections 6011 and 6012~~ Section 6356.1 of the Revenue and Taxation Code, as ~~amended~~ added by this act, the Legislature finds and declares as follows:

(1) The goal of ~~paragraph (13) of subdivision (c) of Sections 6011 and 6012~~ Section 6356.1 of the Revenue and Taxation Code, as ~~amended~~ added by this act, is to help achieve California’s greenhouse gas reduction goals and the goal of having 100 percent of drayage trucks in California be zero-emission by 2035, consistent with Executive Order No. N-79-20, and also incentivize the purchase of new and used zero-emission and near-zero-emission drayage ~~trucks.~~ trucks as soon as possible.

(2) The performance indicators related to this act are as follows:

(A) The annual number of zero-emission and near-zero-emission drayage trucks purchased.

(B) The annual number of purchased drayage trucks that are not zero-emission or near-zero-emission drayage trucks.

(c) To measure the goals set forth in paragraph (1) of subdivision (b), the California Department of Tax and Fee Administration shall measure how many Californians used the sales and use tax ~~exclusion set forth in paragraph (13) of subdivision (c) of Sections 6011 and 6012~~ exemption set forth in Section 6356.1 of the Revenue and Taxation Code, as ~~amended~~ added by this act, and report to the Legislature ~~biannually~~ annually on its findings beginning on and after January 1, ~~2022.~~ 2024. The reports shall be submitted in compliance with Section 9795 of the Government Code.

SEC. 5.SEC. 4.

This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. However, the provisions of this act shall become operative on the first day of the first calendar quarter commencing more than 90 days after the effective date of this act.