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AB-1081 Sales and use taxes: exclusion: low-emission motor vehicle: trade-in.(2017-2018)

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Date Published: 04/24/2017 02:27 PM
AB1081:v97#DOCUMENT

Amended  IN  Assembly  April 24, 2017
Amended  IN  Assembly  March 30, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 1081


Introduced by Assembly Member Burke
(Coauthor: Assembly Member Gray)
(Coauthor: Senator Bradford)

February 16, 2017


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


LEGISLATIVE COUNSEL'S DIGEST


AB 1081, as amended, Burke. Sales and use taxes: exclusion: low-emission motor vehicle: trade-in.
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.”
This bill bill, before January 1, 2023, would exclude from the terms “gross receipts” and “sales price” the value of a motor vehicle traded in for a qualified motor vehicle, as defined, if the value of the trade-in motor vehicle is separately stated on the invoice or bill of sale or similar document provided to the purchaser.
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 shall would not apply to local sales and use taxes or taxes, transactions and use taxes. taxes, and specified state taxes from which revenues are deposited into the Local Public Safety Fund, the Local Revenue Fund, or the Local Revenue Fund 2011.
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) California is at the forefront of battling climate change, and a main pillar of the state’s climate strategy is reducing greenhouse gas emissions to 1990 levels.
(b) To help achieve this greenhouse gas emissions goal, the State Air Resources Board has required large vehicle manufacturers to produce a certain amount of zero-emission vehicles as a percentage of the overall number of vehicles the manufacturer makes for sale in the state. The present mandate is 15.4 percent of new vehicles delivered for sale by 2025.
(c) To reinforce this mandate, Governor Brown issued Executive Order B-16-2012, which set a long-term target of 1,500,000 zero-emission vehicles on the road by 2025, with the hope and expectation that the market for these vehicles will become mainstream and self-sustaining for individuals, businesses, and public fleets.
(d) The widespread adoption and purchase of zero-emission vehicles can help the environment and further the state’s goals by mitigating emissions and easing air pollution.
(e) To be effective in cutting emissions and cleaning up air pollution, zero-emission and partial-zero-emission vehicles must attract consumers who would otherwise choose a traditional gasoline-fueled car.
(f) The current market for zero-emission vehicles has excessive barriers, including the high relative purchase price associated with zero-emission vehicles, limited range capability, inadequate charging infrastructure, resale value, length of commute, and existing low gas prices.
(g) In 2015, California’s new car dealers sold over 2,000,000 new vehicles with a combined 3.1 percent of those sales comprising zero-emission vehicles and partial-zero-emission vehicles. That represents a drop in market share for these vehicles, which was 3.2 percent in 2014.
(h) Using 2015’s 2,000,000 new vehicle sales as an estimate of 2025 vehicle sales by covered manufacturers, the 15.4 percent mandate by the State Air Resources Board would require 308,000 zero-emission vehicles and partial-zero-emission vehicles be delivered for sale in the state that year. If the current 41.5 percent of new vehicle sales will continue to be made up of sport utility vehicles, pickups, and vans, over 25 percent of the remaining 1,201,000 passenger vehicles delivered for sale just nine years from now must be electric or plug-in electric vehicles.
(i) California has long focused on increasing disadvantaged communities’ access to environmentally friendly technologies and green transportation options to benefit the health of residents and to enhance air quality.
(j) Compared to gasoline-fueled vehicles, alternative-fueled vehicles reduce the country’s dependence on foreign oil and substantially lower consumers’ fuel costs.
(k) Automakers and new car dealers face numerous inherent market challenges when introducing and retailing the alternative-fueled vehicles required by the State Air Resources Board’s vehicle mandates, including complex incentives, uncertain policy support, purchase price disparity, lengthy sales transactions, low gasoline prices, poor after-sale electric vehicle infrastructure, and sophisticated, constantly changing technology.
(l) Incentives, such as rebates, tax credits, and high occupancy vehicle lane access for zero- and partial-emission vehicles, are crucial for continuing consumer interest in these vehicles, but greater investments are needed to significantly affect consumer buying behavior and the overall alternative-fueled vehicle marketplace, especially when it comes to economically disadvantaged communities.
(m) California has not tried sales tax incentives for the purchase or lease of alternative-fueled vehicles. However, sales tax incentives have been useful in other consumer products. California continues to be one of a few states that includes the value of a trade-in vehicle in the price of the vehicle, thus imposing tax measured by the full price of the vehicle purchased.
(n) Accordingly, it is the intent of the Legislature in enacting this act to provide a sales tax incentive that will help move customer demand of zero-emission vehicles and achieve the adoption of alternative-fueled vehicles to meet the state’s greenhouse gas emissions goals.

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 of the Internal Revenue Code for which the purchaser certifies that he or she is entitled to either a direct refund or credit against his or her 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 Before January 1, 2023, the value of a motor vehicle traded in for a qualified motor vehicle if the value of the trade-in motor vehicle is separately stated on the invoice or bill of sale or similar document provided to the purchaser.
(B) For purposes of this paragraph, “qualified motor vehicle” means a motor vehicle that meets either of the following:
(i) California’s super ultra-low emission vehicle (SULEV) standard for exhaust emissions and the federal inherently low-emission vehicle (ILEV) evaporative emission standard, as defined in Part 88 (commencing with Section 88.101-94) of Title 40 of the Code of Federal Regulations as that part read on January 1, 2017.
(ii) California’s enhanced advanced technology partial zero-emission vehicle (enhanced AT PZEV) standard or transitional zero-emission vehicle (TZEV) standard.
(C) (i)  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 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.
(ii) Notwithstanding subparagraph (A), the exclusion established by this paragraph shall not apply with respect to any tax levied pursuant to Section 6051.2 or 6201.2, any tax levied pursuant to Section 6051 or 6201 that is deposited into the State Treasury to the credit of the Local Revenue Fund 2011 pursuant to Section 6051.15 or 6201.15, or any tax levied pursuant to Section 35 of Article XIII of the California Constitution.

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 board may prescribe, a deduction may be taken if the retailer has purchased property for some other purpose than resale, has reimbursed his or her 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 his or her 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 of the Internal Revenue Code for which the purchaser certifies that he or she is entitled to either a direct refund or credit against his or her 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 board 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 Before January 1, 2023, the value of a motor vehicle traded in for a qualified motor vehicle if the value of the trade-in motor vehicle is separately stated on the invoice or bill of sale or similar document provided to the purchaser.
(B) For purposes of this paragraph, “qualified motor vehicle” means a motor vehicle that meets either of the following:
(i) California’s super ultra-low emission vehicle (SULEV) standard for exhaust emissions and the federal inherently low-emission vehicle (ILEV) evaporative emission standard, as defined in Part 88 (commencing with Section 88.101-94) of Title 40 of the Code of Federal Regulations as that part read on January 1, 2017.
(ii) California’s enhanced advanced technology partial zero-emission vehicle (enhanced AT PZEV) standard or transitional zero-emission vehicle (TZEV) standard.
(C) (i) 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 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.
(ii) Notwithstanding subparagraph (A), the exclusion established by this paragraph shall not apply with respect to any tax levied pursuant to Section 6051.2 or 6201.2, any tax levied pursuant to Section 6051 or 6201 that is deposited into the State Treasury to the credit of the Local Revenue Fund 2011 pursuant to Section 6051.15 or 6201.15, or any tax levied pursuant to Section 35 of Article XIII of the California Constitution.

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.