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AB-43 Taxation: prison contracts: goods and services.(2017-2018)

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Date Published: 05/10/2017 09:00 PM
AB43:v96#DOCUMENT

Amended  IN  Assembly  May 10, 2017
Amended  IN  Assembly  May 02, 2017
Amended  IN  Assembly  April 17, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 43


Introduced by Assembly Member Thurmond

December 05, 2016


An act to add Part 28 (commencing with Section 53001) to 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


AB 43, as amended, Thurmond. Taxation: prison contracts: goods and services.
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, for the privilege of contracting with a state prison, the Department of Corrections and Rehabilitation, or the Department of General Services to provide a state prison with goods, services, or both, would impose a tax on specified taxpayers vendors, as defined, at the rate equal to 10% of the final contract price price, as defined, for contracts entered into on or after January 1, 2018. The bill would require all amounts paid, less refunds, to be deposited into the State Incarceration Prevention Fund, which this bill would establish in the State Treasury, and would continuously appropriate those moneys to the State Department of Education for preschool and after school programs for the purposes of providing services to prevent people from being incarcerated and providing early intervention programs, less the amount needed to reimburse the State Board of Equalization and the Attorney General for costs incurred in administering these provisions. The bill would prohibit this tax from being passed through to the state by way of higher prices for the goods or services in the contract, and would require the taxpayer a vendor to certify under penalty of perjury that this tax was not passed through to the state. The bill would require the taxpayer a vendor to pay a penalty if it fails to comply with these provisions. The bill would require the Attorney General to enforce this prohibition and would authorize the Attorney General to monitor and investigate taxpayers to ensure that they are not passing this tax through to the state, and monitor and, if necessary, investigate any instance where a vendor has passed or attempted to pass the tax through to the state. The bill would require the State Board of Equalization to administer assess and collect the tax imposed by this part pursuant to the Fee Collection Procedures Law. Law and would provide an appeals process for a person from whom the state incarceration prevention tax is determined to be due, as provided.
By expanding the application of the Fee Collection Procedures Law, the violation of which is a crime, and by expanding the scope of the crime of perjury, 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 declare that it is to take effect immediately as an urgency statute.
Vote: 2/3   Appropriation: YES   Fiscal Committee: YES   Local Program: YES  

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


SECTION 1.

 Part 28 (commencing with Section 53001) is added to Division 2 of the Revenue and Taxation Code, to read:

PART 28. State Incarceration Prevention Tax

CHAPTER  1. General Provisions

53001.
 For the purposes of this part, the following terms shall have the following meanings:
(a) “Department” means a state prison, the Department of Corrections and Rehabilitation, or the Department of General Services.
(b) “Final contract price” means a mutually agreed upon total amount that a state prison, the Department of Corrections and Rehabilitation, or Department of General Services pays to a vendor on completion of the contract, in accordance with contract terms and conditions and their subsequent modifications, for goods, services, or both.
(c) (1) Except as specified in paragraph (2), “person” means an individual, trust firm, joint stock company, business concern, corporation, including, but not limited to, a government corporation, partnership, limited liability company, and association.
(2) “Person” shall not include organizations that are exempt from income tax pursuant to Section 23701 of the Revenue and Taxation Code and state and local agencies.
(d) “Vendor” means a person who contracts with a department to provide a state prison with goods, services, or both.

53001.53002.
 For contracts entered into on or after January 1, 2018, for the privilege of contracting with a state prison, the Department of Corrections and Rehabilitation, or the Department of General Services department to provide a state prison with goods, services, or both, a tax is hereby imposed upon all taxpayers vendors at the rate equal to 10 percent of the final contract price.

53002.

(a)For the purposes of this part, “taxpayer” means a person that contracts with a state prison, the Department of Corrections and Rehabilitation, or the Department of General Services to provide a state prison with goods, services, or both.

(b)Notwithstanding subdivision (a), there are exempt from the tax imposed pursuant to Section 53001, organizations that are exempt from tax pursuant to Section 23701 of the Revenue and Taxation Code and state and local agencies.

53004.
 (a) (1) The tax imposed pursuant to Section 53002 shall be collected annually by the board pursuant to the Fee Collection Procedures Law (Part 30 (commencing with Section 55001)). For the purposes of this part, the references in the Fee Collection Procedures Law to “fee” shall include the tax imposed by this part, and references to “feepayer” shall include any vendor.
(2) Notwithstanding the appeal provisions in the Fee Collection Procedures Law, a determination by the department that a person is required to pay the tax, or a determination by the department regarding the amount of that tax, is subject to review pursuant to Section 53006 and is not subject to a petition for redetermination by the board.
(3) (A) Notwithstanding the refund provisions in the Fee Collection Procedures Law, the board shall not accept any claim for refund that is based on the assertion that a determination by the department improperly or erroneously calculated the amount of the tax, or incorrectly determined that the person is subject to that tax, unless that determination has been set aside by the department or a court reviewing the determination of the department.
(B) If it is determined by the department or a reviewing court that a person is entitled to a refund of all or part of the state incarceration prevention tax, the vendor shall make a claim to the board pursuant to Chapter 5 (commencing with Section 55221) of Part 30 of Division 2 of the Revenue and Taxation Code.
(b) (1) On or before each January 1, the department shall annually transmit to the board the name and address of each person who is liable for the tax and the amount of the tax to be assessed. The department also shall provide the board a department contact telephone number to be printed on the bill to respond to questions about the tax.
(2) The board shall assess and collect the tax annually on or before April 1 of each year.

53005.
 Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the board or the Attorney General to implement the purposes of this part.

53003.53006.
 (a) The State Incarceration Prevention Fund is hereby created in the State Treasury.
(b) A state prison, the Department of Corrections and Rehabilitation, or the Department of General Services shall collect the tax imposed pursuant to Section 53001 at the time a payment is made on a contract for goods and services for a state prison, shall remit the amounts collected to the board, and shall file a return with the board on or before the last day of the month following each quarterly calendar period. The board shall transmit the payments, less refunds, to the State Treasury to be deposited into the State Incarceration Prevention Fund.
(c) Notwithstanding Section 13340 of the Government Code, all amounts deposited into the State Incarceration Prevention Fund shall be continuously appropriated without regard to fiscal years to the following:
(1) The board and the Attorney General for reimbursement of their costs for administering this part.
(2) The remainder to the State Department of Education to administer grants for preschool and after school programs for the purposes of providing services to prevent people from being incarcerated and providing early intervention programs.

53004.

(a)The board shall administer and collect the tax imposed by this part pursuant to the Fee Collection Procedures Law (Part 30 (commencing with Section 55001)). For the purposes of this part, the references in the Fee Collection Procedures Law to “fee” shall include the tax imposed by this part, and references to “feepayer” shall include any taxpayer.

(b)Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code shall not apply to any standard, criterion, procedure, determination, rule, notice, or guideline established or issued by the board or the Attorney General to implement the purposes of this part.

53005.53008.
 (a) The tax imposed by this part shall not be passed through to the state by way of higher prices for the goods or services in the contract.
(b) A taxpayer vendor shall certify in the contract under penalty of perjury that the tax imposed by this part was not passed through to the state by way of higher prices for the goods and services in the contract.
(c) The Attorney General shall enforce this section and may monitor and, if necessary, investigate any instance where a taxpayer vendor has passed or attempted to pass the tax through to the state.
(d) Any taxpayer vendor that fails to comply with this section shall pay a penalty in an amount not to exceed 1 percent of the final contract price for each instance the taxpayer vendor fails to comply with this section.

CHAPTER  2. Appeals Process

53010.
 A person from whom the tax under this part is determined to be due may petition for a redetermination of whether this part applies to that person within 30 days after service upon him or her of a notice of determination. If a petition for redetermination is not filed within the 30-day period, the amount determined to be due becomes final at the expiration of the 30-day period.

53011.
 A petition for redetermination of the application of this part shall be in writing and be sent to the department or its designee. The petition shall state the specific grounds upon which the petition is founded and include supporting documentation. The petition may be amended to state additional grounds or provide additional documentation at any time prior to the date that the department issues its order or decision with regard to the petition for redetermination.

53012.
 If a petition for redetermination of the application of this part is filed within the 30-day period, the department shall reconsider whether the tax is due and make its decision in writing. The department may eliminate the imposition of the tax based on its determination that this part does not apply to the person who filed the petition.

53013.
 If a timely petition for redetermination has been filed pursuant to Section 53010, all action to collect the tax shall be stayed pending the final decision of the department pursuant to Section 53015.

53014.
 Notice of the decision of the department pursuant to Section 53012 shall be served on the same date to the board and the person who filed the petition.

53015.
 The order or decision of the department upon a petition for redetermination of the tax shall become final 30 days after service upon the petitioner of notice of its decision.

53016.
 The tax determined to be due by the department pursuant to this article is due and payable at the time the notice pursuant to Section 53015 becomes final, and if it is not paid when due, the penalty imposed pursuant to Section 55086 shall be applied.

53017.
 Written notice required by this article shall be served as follows:
(a) The notice shall be placed in a sealed envelope, with postage paid, addressed to the petitioner at his or her address as it appears in the records of the department. The giving of notice shall be deemed complete at the time of the deposit of the notice in a United States Post Office, or a mailbox, sub-post office, substation, mail chute, or other facility regularly maintained or provided by the United States Postal Service without extension of time for any reason.
(b) In lieu of mailing, a notice may be served personally by delivering it to the person to be served and service shall be deemed complete at the time of delivery. Personal service to a corporation may be made by delivery of a notice to any person designated in the Code of Civil Procedure to be served for the corporation with summons and complaint in a civil action.

53018.
 A dispute regarding the tax imposed by this part shall be resolved pursuant to this article only.

53019.
 If the department determines that a person is entitled to a refund of all or part of the tax paid pursuant to this part, the person shall make a claim to the board pursuant to Chapter 5 (commencing with Section 55221).

SEC. 2.

 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.

 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 California Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to begin generating funds for early education programs that will prevent incarceration, it is necessary that this act take effect immediately.