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AB-1218 Income taxes: disallowance of deductions: advertising: tobacco.(2011-2012)

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AB1218:v98#DOCUMENT

Amended  IN  Assembly  April 07, 2011

CALIFORNIA LEGISLATURE— 2011–2012 REGULAR SESSION

Assembly Bill
No. 1218


Introduced  by  Assembly Member Pan

February 18, 2011


An act to amend Section 6093 of the Revenue and Taxation Code, relating to taxation. An act to add Sections 17290 and 24430 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 1218, as amended, Pan. Sales and use tax. Income taxes: disallowance of deductions: advertising: tobacco.
The Personal Income Tax Law and Corporation Tax Law allow deductions for various expenditures in computing taxable or net income, including, with certain exceptions, all ordinary and necessary expenses paid or incurred during the taxable and income year in carrying on any trade or business.
This bill would provide under both laws that a deduction shall not be allowed for specified expenses paid or incurred to advertise, as defined, the sale, use, or consumption of cigarettes or other tobacco products.
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 XIII  A 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 would take effect immediately as a tax levy.

The Sales and Use Tax Law presumes that all gross receipts are subject to tax until the contrary is established. This law relieves a seller from liability for sales tax if the seller in good faith takes a resale certificate from a purchaser holding a seller’s permit, and the resale certificate is signed and completed as specified.

This bill would make nonsubstantive, technical changes to this provision.

Vote: MAJORITY2/3   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NO  

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


SECTION 1.

 Section 17290 is added to the Revenue and Taxation Code, to read:

17290.
 (a) Notwithstanding any other provision in this part to the contrary, a deduction shall not be allowed for any expenses paid or incurred by the taxpayer to advertise the sale, use, or other consumption of cigarettes or any other tobacco products.
(b) For purposes of this section:
(1) “Advertise” includes the use of a newspaper, magazine, or other publication, book, notice, circular, pamphlet, letter, handbill, tip sheet, poster, bill, sign, placard, card, label, tag, window display, store sign, or any other means or methods now or hereafter employed to sell or promote cigarettes or any other tobacco products.
(2) “Advertising” includes all cigarette and tobacco product advertising done by cigarette or tobacco products manufacturers, distributors, and retailers.
(3) “Cigarette” means a cigarette, as defined in Section 30003.
(4) “Tobacco products” means tobacco products, as defined in subdivision (b) of Section 30121.
(c) In cases where the advertising space is shared by several products, including cigarettes or other tobacco products, the cigarette or other tobacco product portion of the advertisement shall be prorated for disallowance of the deduction.
(d) This section shall not apply to advertising aimed at discouraging smoking or the use of cigarettes or other tobacco products.

SEC. 2.

 Section 24430 is added to the Revenue and Taxation Code, to read:

24430.
 (a) Notwithstanding Section 24343 or any other provision in this part to the contrary, in computing business income as defined in Section 25120, a deduction shall not be allowed for any expenses paid or incurred by the taxpayer to advertise the sale, use, or other consumption of cigarettes or any other products containing tobacco.
(b) For purposes of this section:
(1) “Advertise” includes the use of a newspaper, magazine, or other publication, book, notice, circular, pamphlet, letter, handbill, tip sheet, poster, bill, sign, placard, card, label, tag, window display, store sign, or any other means or methods now or hereafter employed to sell or promote cigarettes or any other products containing tobacco.
(2) “Advertising” includes all cigarette and tobacco product advertising done by cigarette or tobacco products manufacturers, distributors, and retailers.
(3) “Cigarette” means a cigarette, as defined in Section 30003.
(4) “Tobacco products” means tobacco products, as defined in subdivision (b) of Section 30121.
(c) In cases where the advertising space is shared by several products, including cigarettes or any other products containing tobacco, the tobacco portion of the advertisement shall be prorated for disallowance of the deduction.
(d) This section shall not apply to advertising aimed at discouraging smoking or the use of cigarettes or any other products containing tobacco.

SEC. 3.

 This act provides for a tax levy within the meaning of Article IV of the Constitution and shall go into immediate effect.
SECTION 1.Section 6093 of the Revenue and Taxation Code is amended to read:
6093.

The certificate shall be signed by and bear the name and address of the purchaser, indicate the number of the permit issued to the purchaser, and indicate the general character of the tangible personal property sold by the purchaser in the regular course of business. The certificate shall be substantially in such form as the board may prescribe.