GSBE Weekly Update 05/23/2018
SB 993 Sales and use taxes: service tax: qualified business
Existing sales and use tax laws impose a tax on retailers measured by the 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. This bill would reduce the rate of tax imposed by the Sales and Use Tax Law incrementally every calendar year beginning on January 1, 2020, until January 1, 2022, at which time the rate would be reduced by a total of 2%.
This bill would require the Director of Finance to estimate the amount of net revenue that will be derived for specified calendar years as a result of the changes made by this bill and would require the rate of tax imposed by the Sales and Use Tax Law to be reduced or increased by a specified percentage amount for specified calendar years depending on the amount of the estimated revenue gains or losses. 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, beginning on and after January 1, 2020, would impose a tax on the receipt of a benefit in this state of a service that is purchased by a qualified business from any retailer, as measured by a percentage of the sales price for the service. This bill would incrementally increase the rate of the tax every calendar year until January 1, 2022, at which time the rate would be 3%. This bill would require every seller and retailer engaged in business in this state, as specified, and making sales of services whose benefit is received in this state, to, at the time of making the sales or if the receipt of the benefit is not then taxable hereunder at the time the receipt of the services becomes taxable, determine whether the purchaser is a qualified business, collect the tax from the qualified business purchasing the service, and give the qualified business a receipt, as specified.
This bill would require those sellers and retailers to register with the California Department of Tax and Fee Administration. This bill would make any person that violates specified provisions relating to the collection of the tax, the advertisement of the tax, and the separate statement of price and tax guilty of a misdemeanor. By creating a new crime, this bill would impose a state-mandated local program. This bill would require all amounts to be paid to the California Department of Tax and Fee Administration, and would require the department to transmit those amounts, less refunds, to the Treasurer to be deposited into the General Fund. This bill would provide for the administration and collection of this tax pursuant to procedures set forth in the Fee Collection Procedures Law. By expanding the application of the Fee Collection Procedures Law, the violation of which is a crime, this bill imposes 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 include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIIIA of the California Constitution, and thus would require for passage the approval of 2/3 of the membership of each house of the Legislature.
This bill contains other related provisions.