Bill Text: CA SB530 | 2011-2012 | Regular Session | Amended
Bill Title: Taxation: direct broadcast satellite television service:
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2012-01-31 - Returned to Secretary of Senate pursuant to Joint Rule 56. [SB530 Detail]
Download: California-2011-SB530-Amended.html
BILL NUMBER: SB 530 AMENDED
BILL TEXT
AMENDED IN SENATE MAY 17, 2011
AMENDED IN SENATE MARCH 23, 2011
INTRODUCED BY Senator Wright
FEBRUARY 17, 2011
An act to add and repeal Part 14.5 (commencing with
Section 33001) to of Division 2 of the
Revenue and Taxation Code, relating to taxation, making an
appropriation therefor, and declaring the urgency thereof, to take
effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 530, as amended, Wright. Taxation: direct broadcast satellite
television service: tax.
Existing law imposes various taxes, including taxes on the
privilege of engaging in certain activities. The Fee Collection
Procedures Law, the violation of which is a crime, provides
procedures for the collection of certain fees and surcharges.
This bill would impose, until January 1, 2020, for the
privilege of selling direct broadcast satellite television service, a
tax on a direct broadcast satellite television service provider at
the rate of 6% of its gross revenues, as defined. The tax would be
administered by the State Board of Equalization and would be
collected pursuant to the procedures set forth in the Fee Collection
Procedures Law, as specified. The revenues from this tax would be
deposited in the Local Safety and Protection Account established in
the Transportation Tax Fund, a continuously appropriated fund ,
which is operative until July 1, 2011 . By depositing revenues
into a continuously appropriated fund, this bill would make an
appropriation. This bill would reestablish the Local Public
Safety Account in the Transportation Tax Fund on July 1, 2011. This
bill would additionally require the Legislative Analyst's Office to
conduct, and prepare a report on, the impact of the tax on
direct broadcast satellite television service providers, as
specified.
Because this bill would expand the application of the Fee
Collection Procedures Law, the violation of which is a crime, it
would impose a state-mandated local program.
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.
This bill would declare that it is to take effect immediately as
an urgency statute, but its operative date would depend on its
effective date.
Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Part 14.5 (commencing with Section 33001) is added to
Division 2 of the Revenue and Taxation Code, to read:
PART 14.5. SATELLITE VIDEO FUND FOR PUBLIC SAFETY TAX
CHAPTER 1. GENERAL PROVISIONS AND FINDINGS
33001. This part is known and may be cited as the Satellite Video
Fund for Public Safety Tax.
33002. The Legislature finds and declares all of the following:
(a) As a matter of statewide concern and for many reasons,
including those articulated herein, the Legislature hereby enacts a
new state tax on direct broadcast satellite (DBS) television service
providers. The purpose of this new tax is to provide funding to
support programs for local law enforcement and other public safety
services so that those programs can be maintained while funding for
similar programs has been reduced due to the combination of the
economic recession and the state's budgetary problems.
(b) DBS services use satellite and terrestrial technologies to
provide video programming to homes and businesses in California.
Companies that provide DBS services benefit from both state and local
infrastructure as well as state and local laws and policies that
facilitate the receipt of the satellite programming in homes and
businesses.
(c) DBS service providers maintain offices and other property
within some cities and counties in California. DBS providers have
employees and contractors throughout California which sell, install,
and maintain DBS service. In this way, DBS service providers operate
in a manner similar to other businesses throughout cities and
counties in California.
(d) As competition in the market for video services has evolved,
the tax and fee structure has not protected the revenue base, and
that lack of protection now threatens to undermine financial support
for public safety programs.
(e) Although DBS providers benefit from both state and local
infrastructure as well as state and local laws and policies that
facilitate the receipt of the satellite programming in homes and
businesses, DBS does not contribute to city and county general funds
which support law enforcement and other public safety services.
Moreover, DBS providers do not provide emergency alert services in
California communities.
(f) Cities and counties throughout California have been forced to
reduce law enforcement and public safety budgets because of the
nationwide economic downturn and the cuts that have been made to
programs and services in California.
(g) Some video products, services, providers, subscribers, and
customers have taxes and fees that generate revenue to fund local
public safety programs such as: (1) purchasers and renters of DVDs
who pay sales taxes; (2) cable television, open-video system, and
video service providers who pay state or local franchise fees; and
(3) cable and other non-DBS video subscribers who pay local utility
user taxes, some of which must be spent on public safety programs
according to ordinances passed in local communities.
(h) However, DBS providers make little, if any, money available to
support local public safety programs.
(i) The Legislature finds that the disparity in the tax and fee
burdens on video products, services, and providers has a harmful
impact on public safety to the extent that, when customers migrate to
DBS service, various revenue bases diminish, and there are less
financial resources available for state and local public safety
programs.
(j) Congress anticipated that the Legislature would enact a state
DBS tax framework consistent with California's particular
circumstances when it passed Section 602 of the Telecommunications
Act of 1996, which authorized states to tax direct-to-home satellite
service. Although Section 602 preempts locally imposed and
administered taxes and fees on direct-to-home satellite services, it
permits states to allocate revenue from state taxes to local
governments.
(k) To preserve the tax base for local public safety programs and
comply with the provisions of Section 602 of the Telecommunications
Act of 1996, the Legislature creates this part to be administered by
the State Board of Equalization, with revenues to be transferred to
the Local Safety and Protection Account for continuous allocation to
the programs designated in subdivision (b) of Section 10752.2.
CHAPTER 2. DEFINITIONS
33003. For purposes of this part:
(a) "Direct broadcast satellite television service" and "DBS
service" means television programming transmitted or broadcasted by
satellite directly to the subscriber's premises.
(b) "DBS service provider" or "DBS provider" means any person that
sells DBS service.
(c) (1) "Gross revenues" means all revenue of the DBS service
provider, as determined in accordance with generally accepted
accounting principles, that is derived from the sale of DBS service
in this state, including all of the following:
(A) All charges billed to subscribers in this state for any and
all DBS service, including all revenue related to programming
provided to the subscriber, equipment rentals, late fees, and
insufficient fund fees.
(B) Compensation received by the DBS service provider that is
derived from the DBS service provider's operation with respect to
commissions that are paid to the DBS service provider as compensation
for promotion or exhibition of any products or services on the
provider's network, such as a "home shopping" or similar channel,
subject to subparagraph (D) of paragraph (2).
(C) A pro rata portion of all revenue derived by the DBS service
provider or its affiliates pursuant to compensation arrangements for
advertising derived from DBS service in this state, subject to
subparagraph (A) of paragraph (2). The allocation shall be based on
the number of subscribers in this state divided by the total number
of subscribers in relation to the relevant regional or national
compensation arrangement.
(2) "Gross revenue" does not include any of the following:
(A) Amounts not actually received by the DBS service provider,
even if billed, such as bad debt; refunds, rebates, or discounts to
subscribers or other third parties; or revenue imputed from the
provision of DBS services for free or at reduced rates to any person
as required or allowed by law, including, but not limited to, the
provision of these services to public institutions, public schools,
governmental agencies, or employees except that foregone revenue
chosen not to be received in exchange for trades, barters, services,
or other items of value shall be included in gross revenue.
(B) Revenues received by any affiliate or any other person in
exchange for supplying goods or services used by the DBS service
provider to provide DBS services. However, revenue received by an
affiliate of the DBS service provider from the affiliate's provision
of DBS service shall be included in gross revenue as follows:
(i) To the extent that treating the revenue as revenue of the
affiliate, instead of revenue of the DBS provider, would have the
effect of evading the payment of taxes that would otherwise be paid
to the state under this part.
(ii) The revenue is not otherwise subject to the tax to be paid to
the state under this part.
(C) Revenue derived from services other than DBS service,
including, but not limited to, revenue derived from Internet access
service, telecommunications services, and information services.
(D) Revenue paid by subscribers to "home shopping" or similar
networks directly from the sale of merchandise through any home
shopping channel offered as part of the DBS services. However,
commissions or other compensation paid to the DBS service provider by
"home shopping" or similar networks for the promotion or exhibition
of products or services shall be included in gross revenue.
(E) Revenue from the sale of DBS services for resale in which the
reseller is required to collect the tax under this part from the
reseller's subscribers.
(F) Amounts billed to, and collected from, subscribers to recover
any tax, fee, or surcharge imposed by any governmental entity on the
DBS service provider, including, but not limited to, sales and use
taxes, gross receipts taxes, excise taxes, utility users taxes,
public service taxes, communication taxes, and any other fee not
imposed by this section.
(G) Revenue from the sale of capital assets or surplus equipment
not used by the purchaser to receive DBS services from the seller of
those assets or surplus equipment.
(H) Revenue from directory or Internet advertising revenue,
including, but not limited to, yellow pages, white pages, banner
advertisement, and electronic publishing.
(I) Revenue received as reimbursement by programmers of specific,
identifiable marketing costs incurred by the DBS service provider for
the introduction of new programming.
(J) Security deposits received from subscribers of a DBS service
provider, excluding security deposits applied to the outstanding
balance of a subscriber's account and thereby taken into revenue.
(3) For purposes of determining gross revenue under this part, the
DBS service provider shall use the same method of determining
revenues under generally accepted accounting principles as that which
the DBS service provider uses in determining revenues for the
purpose of reporting to national and state regulatory agencies.
(d) "Subscriber" means any person, firm, partnership, corporation,
limited liability company, or other entity paying to receive video
service in this state.
CHAPTER 3. IMPOSITION OF TAX
33004. (a) For the privilege of selling DBS service to a
subscriber in this state, a tax is hereby imposed on DBS service
providers at the rate of 6 percent of its gross revenues.
(b) For purposes of this part, in the case of a DBS service that
may be bundled or integrated functionally with other services,
capabilities, or applications, the tax herein shall be applied to the
gross revenue received by the DBS provider. Where the DBS service
provider or any affiliate bundles, integrates, ties, or combines DBS
services with other products or services creating a bundled package,
so that subscribers pay a single fee for more than one class of
service or receive a discount on DBS services, gross revenues shall
be determined based on an equal allocation of the package discount,
that is, the total price of the individual classes of service at
advertised rates compared to the package price, among all classes of
service comprising the package. The DBS service provider's offering
of a bundled package shall not be deemed a promotional activity. If
the DBS service provider does not offer any component of the bundled
package separately, the DBS service provider shall declare a stated
retail value for each component based on reasonable comparable prices
for the product or service for the purpose of determining the tax
based on the package discount.
CHAPTER 4. COLLECTION AND ADMINISTRATION
33006. The taxes imposed by this part are due and payable to the
state quarterly on or before the last day of the month next
succeeding each calendar quarter.
33007. All amounts required to be paid to the state pursuant to
this part shall be paid in the form of remittances payable to the
board.
33008. On or before the last day of the month following each
calendar quarter, a return for the preceding quarterly period shall
be filed with the board in a form prescribed by the board.
33009. The board shall collect the tax pursuant to the Fee
Collection Procedures Law (Part 30 (commencing with Section 55001))
to the extent these provisions are not inconsistent with this part.
For purposes of administration of the tax pursuant to this part,
references in the Fee Collection Procedures Law to "feepayer" and
"fee" shall include "taxpayer" and "tax."
CHAPTER 5. DISPOSITION OF PROCEEDS
33010. (a) All revenues, less refunds,
derived under this part shall be deposited into
in the General Fund and transferred to the Local Safety
and Protection Account established in the Transportation Tax Fund by
Section 10752.2.
(b) (1) The Local Public Safety and Protection Account is hereby
reestablished in the Transportation Tax Fund on July 1, 2011.
Notwithstanding Section 13340 of the Government Code, all moneys in
the account are hereby continuously appropriated, without regard to
fiscal year, to the Controller for allocation pursuant to Sections
29553, 30061, and 30070 of the Government Code, Section 13821 of the
Penal Code, and Sections 18220 and 18220.1 of the Welfare and
Institutions Code.
(2) Paragraph (1) continues the existence of the Local Public
Safety and Protection Account established in the Transportation Tax
Fund by Section 10752.5, which is inoperative on July 1, 2011.
(c) (1) In 2012 and each calendar year thereafter, the Director of
Finance shall, no later than January 10 and upon the enactment of
the Budget Act during the calendar year, make a written determination
of whether any of the moneys derived from taxes collected pursuant
to Section 33004 are being allocated by the state for any purpose not
authorized by subdivision (b), and shall immediately submit his or
her written determination to all of the following:
(A) The board.
(B) The Joint Legislative Budget Committee.
(C) The Senate Committee on Appropriations and the Assembly
Committee on Appropriations.
(D) The Assembly Committee on Revenue and Taxation and the Senate
Committee on Governance and Finance.
(2) If the Director of Finance determines that any moneys derived
from taxes collected pursuant to Section 33004 are being allocated by
the state for a purpose not authorized by subdivision (b), the board
shall, upon receipt of the written determination, immediately cease
collection of the taxes imposed by Section 33004, and shall resume
collection of those taxes only upon his or her receipt of a written
determination provided under paragraph (1) that the moneys derived
from taxes collected pursuant to Section 33004 are being allocated by
the state only for a purpose authorized by.
CHAPTER 6. MISCELLANEOUS
33012. The provisions of this part are not severable and, should
a court hold in a final nonappealable order that any provision herein
is unconstitutional or is otherwise invalid, the whole part shall be
null and void.
33013. This part shall remain in effect only until January 1,
2020, and as of that date is repealed.
SEC. 2. (a) The Legislative Analyst's Office, in
collaboration with the board, shall conduct a study, on or before
December 31, 2018, to assess and evaluate the impact of the tax
imposed by Part 14.5 (commencing with Section 33001) of Division 2 of
the Revenue and Taxation Code). The Legislative Analyst's Office
shall report the results of the study to the Assembly Committee on
Revenue and Taxation and the Senate Committee on Governance and
Finance.
(b) The Legislative Analyst's Office shall establish an advisory
committee regarding the study comprised as follows:
(1) At least three industry representatives, including one
representative from the cable industry and one representative from
the satellite industry.
(2) At least one representative from academia who is an expert in
this field.
(3) At least two representatives from the relevant policy
committees of the Legislature.
(4) One representative from the Federal Communications Commission,
if possible.
(5) One representative from the California Public Utilities
Commission.
(6) Any other representatives deemed appropriate by the
Legislative Analyst's Office.
(c) (1) The Legislative Analyst's Office shall consult with the
chairs and vice chairs of the appropriate legislative committees
regarding key questions for the study.
(2) The Legislative Analyst's Office shall design a study that is
responsive and uses the best available practices for evaluation. The
study shall address, but not be limited to, the following concerns:
(A) The impact of the tax in a competitive marketplace for the
transmissions of news, information, and entertainment content by
satellite, broadband, cable, over the air, or any successor
technology affected by the tax.
(B) The impact of the tax on equity and access to the consumer to
digital media or successor technologies.
(C) An assessment of the impact of the tax and how changes to the
tax structure would impact programs impacted by the tax.
(D) The implication of the tax on successor technologies including
hardware, software, modes of transmission, or related technologies.
(d) Notwithstanding any other provision, any costs related to the
study shall be allocated to the Legislative Analyst's Office and the
board from revenues deposited into the Local Safety and Protection
Account pursuant to Section 33010 of the Revenue and Taxation Code.
SEC. 2. SEC. 3. 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. 3. SEC. 4. The provisions of
Section 1 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.
SEC. 4. SEC. 5. This act is an
urgency statute necessary for the immediate preservation of the
public peace, health, or safety within the meaning of Article IV of
the Constitution and shall go into immediate effect. The facts
constituting the necessity are:
In order to provide funding to support and maintain public safety
services that have been reduced due to the economic recession and
state's budgetary problems, it is necessary that this act 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.
