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AB-1962 Sales and use taxes: exemption: senior housing.(2019-2020)

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Date Published: 01/21/2020 09:00 PM
AB1962:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 1962


Introduced by Assembly Member Voepel

January 21, 2020


An act to add Section 6369.8 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 1962, as introduced, Voepel. Sales and use taxes: exemption: senior housing.
Existing state 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 of, 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. The Sales and Use Tax Law provides various exemptions from those taxes, including an exemption for the sale of, or the storage, use, or consumption of, building materials and supplies purchased by a qualified person in the construction of specified military and veteran medical facilities.
This bill, on and after January 1, 2021, and before January 1, 2026, would exempt from these taxes the gross receipts from the sale of, and the storage, use, or other consumption in this state of, building materials and supplies purchases by a qualified person for use by that qualified person in the construction of specified senior housing developments.
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 Section 2230 of the Revenue and Taxation Code, 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 6369.8 is added to the Revenue and Taxation Code, to read:

6369.8.
 (a) On and after January 1, 2021, and before January 1, 2026, there are exempted from the taxes imposed by this part the gross receipts from the sale of, and the storage, use, or other consumption in this state of, building materials and supplies purchased by a qualified person for use by that qualified person in the construction of a qualified building.
(b) For purposes of this section:
(1) “Affordable housing” means a multifamily residential structure available at an affordable housing cost or affordable rent, as defined in Sections 50052.5 and 50053, respectively, of the Health and Safety Code, to lower income households.
(2) (A)   “Building materials and supplies” includes any machinery, equipment, materials, accessories, appliances, contrivances, furniture, fixtures, and all technical equipment or other tangible personal property of any other nature or description that meet both of the following:
(i) Are necessary to construct and equip a qualified building.
(ii) Become part of the completed qualified building.
(B) “Building materials and supplies” shall not include any tools or construction equipment other than those specified in subparagraph (A) that a qualified person uses in construction activities, specifically including construction of a qualified building.
(3) “Lower income households” has the same meaning as defined in Section 50079.5 of the Health and Safety Code.
(4) “Qualified building” means affordable housing that is restricted to qualified low-income seniors.
(5) “Qualified person” means either or both of the following:
(A) An organization that is exempt from taxation pursuant to Section 501(c)(3) of the Internal Revenue Code that constructs a qualified building.
(B) A contractor, subcontractor, or builder working under contract with an organization described in subparagraph (A) to construct a qualified facility.
(6) “Qualified low-income senior” means a person who is 65 years of age or older whose income does not exceed the limits established for lower income households described in Section 50079.5 of the Health and Safety Code.
(c) (1)   An exemption shall not be allowed under this section with respect to sales by, or purchases from, a retailer engaged in business in this state or from a retailer that is authorized by the California Department of Tax and Fee Administration, under the rules and regulations as it may prescribe, to collect the tax and that is, for the purposes of this part relating to the use tax, regarded as a retailer engaged in business in this state, unless the purchaser furnishes the retailer with an exemption certificate completed in accordance with any instructions or regulations as the California Department of Tax and Fee Administration may prescribe and the retailer retains a copy of the exemption certificate in its records and furnishes the copy of the exemption certificate to the California Department of Tax and Fee Administration upon request.
(2) If a purchaser furnishes the retailer with a copy of an exemption certificate pursuant to paragraph (1), but uses materials or fixtures purchased with the exemption certificate in a manner not qualifying for the exemption, the purchaser shall be liable for payment of sales tax, with applicable interest, as if the purchaser were a retailer making a retail sale of the materials or fixtures at the time the property is so used, and the cost of the materials or fixtures to the purchaser shall be deemed the gross receipts from that retail sale.

SEC. 2.

 The Legislature finds and declares the following with respect to Section 6369.8 of the Revenue and Taxation Code:
(a) The specific goals, purposes, and objectives that the exemption from sales and use taxes allowed by Section 6369.8 of the Revenue and Taxation Code shall be promoting the development of housing available to low-income seniors by providing a tax exemption for the purchase of building materials and supplies used to construct that housing.
(b) Detailed performance indicators for the Legislature to use in determining whether the exemption from sales and use taxes allowed by Section 6369.8 of the Revenue and Taxation Code meets those goals, purposes, and objectives shall be the number of qualified persons receiving the exemption.
(c) The Legislative Analyst shall, on an annual basis beginning January 1, 2022, and until January 1, 2026, collaborate with the California Department of Tax and Fee Administration to review the effectiveness of the exemption allowed by Section 6369.8 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 Section 6369.8 of the Revenue and Taxation Code 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. 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. 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.