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AB-1120 Sales and use taxes: exemptions: oak barrels.(2019-2020)

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Date Published: 03/25/2019 09:00 PM
AB1120:v98#DOCUMENT

Amended  IN  Assembly  March 25, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 1120


Introduced by Assembly Member Cunningham
(Coauthor: Senator Dodd)

February 21, 2019


An act to add Section 6010.12 to and repeal Section 6359.9 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 1120, as amended, Cunningham. Sales and use taxes: exclusions: exemptions: oak barrels.
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. Existing law defines “sale” and “purchase” for these purposes and provides certain exclusions from those definitions. The Sales and Use Tax Law provides various exemptions from those taxes.
This bill would provide that “sale” and “purchase” do not include any lease or transfer of title of exempt from these taxes the gross receipts in this state of, and the storage, use, or other consumption in this state of, a new or used oak barrel to a person who leases or purchases that oak barrel for the purpose of incorporating oak into distilled spirits. The bill would repeal this exemption on January 1, 2025.
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.
Existing law requires the state to reimburse counties and cities for revenue losses caused by the enactment of sales and use tax exemptions.
This bill would provide that, notwithstanding these provisions, no appropriation is made and the state shall not reimburse any local agencies for sales and use tax revenues lost by them pursuant to this bill.
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.Section 6010.12 is added to the Revenue and Taxation Code, to read:
6010.12.

“Sale” and “purchase,” for purposes of this part, do not include any lease or transfer of title of a new or used oak barrel to a person who purchases that oak barrel for the purpose of incorporating oak into distilled spirits.

SECTION 1.

 Section 6359.9 is added to the Revenue and Taxation Code, to read:

6359.9.
 (a) There are exempted from the taxes imposed by this part the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, a new or used oak barrel to a person who purchases that oak barrel for the purpose of incorporating oak into distilled spirits. The bill would repeal this exemption on January 1, 2025.
(b) This section shall become inoperative on January 1, 2025, and as of that date is repealed.

SEC. 2.

 The Legislature finds and declares the following with respect to Section 6359.9 of the Revenue and Taxation Code:
(a) The specific goals, purposes, and objectives that the exemption from sales and use taxes allowed by this act will achieve are as follows:
(1) Relieving part of the significant financial burden that distillers face trying to craft their product.
(2) Reducing the number of loans distillers must take out in order to brew their product with the appropriate ingredients and infrastructure.
(b) Detailed performance indicators for the Legislature to use in determining whether the exemption from sales and use taxes allowed by this act meets those goals, purposes, and objectives shall be the number of people receiving the exemption.
(c) The Legislative Analyst shall, on an annual basis beginning January 1, 2021, until January 1, 2026, collaborate with the California Department of Tax and Fee Administration to review the effectiveness of the exemption allowed by Section 6359.9 of the Revenue and Taxation Code. The review shall include, but not be limited to, an analysis of the demand for the exemption and the economic impact of the exemption.
(d) The data collection requirements for determining whether the exemption from sales and use taxes allowed by this act is meeting, failing to meet, or exceeding those specific goals, purposes, and objectives are as follows:
(1) To assist the Legislature in determining whether the exemption allowed by this act meets the goals, purposes, and objectives specified in subdivision (a), and in carrying out their duties under subdivision (c), the Legislative Analyst may request information from the California Department of Tax and Fee Administration.
(2) The California Department of Tax and Fee Administration shall provide any data requested by the Legislative Analyst pursuant to this subdivision.

SEC. 2.SEC. 3.

 Notwithstanding Section 2230 of the Revenue and Taxation Code, no appropriation is made by this act and the state shall not reimburse any local agency for any sales and use tax revenues lost by it under this act.

SEC. 3.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.