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SB-1072 Local agencies: transient occupancy taxes: online short-term rental facilitator: collection.(2019-2020)

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Date Published: 02/18/2020 09:00 PM
SB1072:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill
No. 1072


Introduced by Senator McGuire

February 18, 2020


An act to add Part 1.65 (commencing with Section 7279.51) to Division 2 of the Revenue and Taxation Code, relating to taxation, making an appropriation therefor.


LEGISLATIVE COUNSEL'S DIGEST


SB 1072, as introduced, McGuire. Local agencies: transient occupancy taxes: online short-term rental facilitator: collection.
Existing law authorizes a city, county, or city and county to impose taxes within its jurisdiction, as provided, including a transient occupancy tax, which is generally paid by a person for the privilege of occupying a room or rooms, or other living space, in a hotel, inn, tourist home or house, motel, or other lodging for a period of less than 30 days.
This bill would authorize a local agency, defined to mean a city, county, or city and county, including a charter city, county, or city and county, to enact an ordinance exclusively delegating its authority to collect any transient occupancy tax imposed by that local agency on short-term rentals to the California Department of Tax and Fee Administration and to enter into a contract with the department to perform all functions incident to the collection and administration of any transient occupancy tax imposed on a short-term rental as specified in this bill. This bill would define a short-term rental to mean the occupancy of a home, house, a room in a home or house, or other lodging that is not a hotel or motel in this state for a period of 30 days or less and under any other circumstances specified by the local agency in its ordinance that is facilitated by an online short-term rental facilitator, as defined. This bill would require the department to perform those functions, as specified, and would require all local charges collected by the department to be deposited in the Local Charges for Short-term Rentals Fund, which would be created by the bill in the State Treasury. This bill would continuously appropriate all amounts in the fund to the department and would require the department to transmit the funds to the local agencies periodically as promptly as feasible, as provided.
This bill would require an online short-term rental facilitator engaged in business in this state to be responsible for collecting from the purchaser any local charge imposed on a short-term rental by any local agency exclusively delegating its authority to the department pursuant to this bill to collect those charges and would require the online short-term rental facilitator to register with the department. The bill would require the department to administer and collect the local charges pursuant to the Fee Collection Procedures Law. This bill would also make it a misdemeanor for any deputy, agent, clerk, or other officer or employee of the department, or any former officer or employee or other individual, who in the course of that individual’s employment or duty has or had access to returns, reports, or documents required to be filed under this bill, to disclose or make known in any manner information as to the amount of any local charges or any particulars, including the business affairs of a corporation, set forth or disclosed therein.
By extending the application of the Fee Collection Procedures Law, the violation of which is a crime, and imposing a new crime, this bill would impose 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.
Vote: MAJORITY   Appropriation: YES   Fiscal Committee: YES   Local Program: YES  

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


SECTION 1.

 Part 1.65 (commencing with Section 7279.51) is added to Division 2 of the Revenue and Taxation Code, to read:

PART 1.65. Fair and Effective Collection of Due and Payable Transient Occupancy Taxes Derived from Short-term Rentals Arranged by Online Short-term Rental Facilitators Act of 2020

7279.51.
 This part shall be known, and may be cited, the “Fair and Effective Collection of Due and Payable Transient Occupancy Taxes Derived from Short-term Rentals Arranged by Online Short-term Rental Facilitators Act of 2020.”

7279.52.
 All of the following definitions shall apply for purposes of this part:
(a) “Department” means the California Department of Tax and Fee Administration.
(b) “Local agency” means a city, county, or city and county, which includes a charter city, county, or city and county.
(c) “Local charge” means a transient occupancy tax imposed by a local agency on the privilege of occupying a home, house, a room in a home or house, or other lodging that is not a hotel or motel in this state for period of 30 days or less and under any other circumstances specified by the local agency in its ordinance.
(d) “Online short-term rental facilitator” means a person who facilitates for consideration, regardless of whether it is deducted as fees from the transaction, the rental of a home, house, a room in a home or house, or other lodging that is not a hotel or motel that is not owned by the person facilitating the rental, through an online marketplace operated by the person or a related person, and who does both of the following:
(1) Directly or indirectly, through one or more related persons, engages in any of the following:
(A) Transmits or otherwise communicates the offer or acceptance between the purchaser and the operator.
(B) Owns or operates the infrastructure, electronic or physical, or technology that brings purchasers and operators together.
(C) Provides a virtual currency that purchasers are allowed or required to use to rent a lodging from the operator.
(D) Software development or research and development activities related to any of the activities described in paragraph (2), if such activities are directly related to facilitating short-term rentals.
(2) Directly or indirectly, through one or more related persons, engages in any of the following activities with respect to facilitating short-term rentals:
(A) Payment processing services.
(B) Listing homes, houses, or rooms in homes or houses, or other lodgings that are not a hotel or motel, and that is not owned by that person or a related person, for rental on a short-term basis.
(C) Setting prices.
(D) Branding short-term rentals as those of the online short-term rental facilitator.
(E) Order taking.
(e) “Ordinance” refers to an ordinance of a local agency imposing a local charge, including any local enactment relating to the filing of a refund or a claim arising under the ordinance. “Ordinance” also refers to an ordinance of a local agency exclusively delegating the collection of transient occupancy taxes imposed on short-term rentals within its jurisdiction to the department.
(f) “Purchaser” means a person who uses an online short-term rental facilitator to facilitate the occupation of a short-term rental in this state.
(g) “Short-term rental” means the occupancy of a home, house, a room in a home or house, or other lodging that is not a hotel or motel in this state for a period of 30 days or less and under any other circumstances specified by the local agency in its ordinance that is facilitated by an online short-term rental facilitator.

7279.54.
 For purposes of this part, a person is related to another person if both persons are related to each other pursuant to Section 267(b) of Title 26 of the United States Code, as that section was amended by Public Law 114-113, and the regulations thereunder.

7279.56.
 (a) (1) On or after January 1, 2021, a local charge imposed by a local agency on a short-term rental shall be collected from the purchaser by an online short-term rental facilitator pursuant to Section 7279.60 and the department shall perform all functions incident to the collection and administration of that local charge pursuant to Section 7279.58 if the local agency does all the following:
(A) Enacts an ordinance exclusively delegating its authority to collect local charges imposed by that local agency on short-term rentals to the department. The ordinance must contain the effective date of the delegation, which must correspond with the date that commences a calendar quarter, and be at least six months from the date the local agency enacts the ordinance.
(B) Enters into a contract with the department to perform all functions incident to the collection and administration of the local charges of a local agency imposed on a short-term rental as specified in Section 7279.58. In the contract, the local agency shall certify to the department that its ordinance applies its local charge on short-term rentals, the applicable transient occupancy tax rate for short-term rentals, any other information the department deems necessary to implement this part, and that the local agency agrees to indemnify, and hold and save harmless, the department, its officers, agents, and employees for any and all liability for damages that may result from collection pursuant to the contract.
(2) In the event that a local agency adopts a new local charge that is imposed on short-term rentals on or after the effective date of this part, the local agency can enact an ordinance exclusively delegating the collection of its transient occupancy taxes imposed on short-term rentals to the department and enter into a contract with the department to perform the functions set forth in this part, on or before December 1 of each year, with collection of the local charge to commence April 1 of the next calendar year. In the contract, the local agency shall certify to the department that its ordinance applies its local charge on short-term rentals, the applicable transient occupancy tax rate for short-term rentals, any other information the department deems necessary to implement this part, and that the local agency agrees to indemnify, and hold and save harmless, the department, its officers, agents, and employees for any and all liability for damages that may result from collection pursuant to the contract.
(3) In the event that a local agency increases its local charge after the effective date of this part, the local agency shall provide the department with written notice of the increased local charge on or before December 1, with collection of the local charge to commence April 1 of the next calendar year.
(4) In the event that a local agency reduces or eliminates a local charge imposed on short-term rentals, the local agency shall provide the department with written notice within 30 days of the reduction or elimination. The reduction or elimination shall become operative on the first day of the calendar quarter commencing more than 60 days from the date the local agency notifies the department that it no longer imposes a local charge or that the rate of its local charge has been reduced.
(b) Notwithstanding any other law, the authority of a local agency to collect a local charge imposed on a short-term rental is suspended as of the effective date specified in its ordinance described in paragraph (1) of subdivision (a).
(c) A local agency may enact an ordinance terminating the delegation of authority to the department pursuant to paragraph (1) of subdivision (a), so long as the effective date of the termination of the delegation corresponds with the date that commences a calendar quarter, and is at least six months from the date the local agency enacts the ordinance terminating the delegation.

7279.58.
 (a) If delegated the authority pursuant to an ordinance described in Section 7279.56, the department shall perform all functions incident to the collection and administration of the local charges of a local agency imposed on a short-term rental as specified in this section, subject to the limitations set forth in subdivision (f).
(b) All local charges collected by the department shall be deposited in the Local Charges for Short-term Rentals Fund, which is hereby created in the State Treasury, and shall be held in trust for the local agency, and shall not be used for any other purpose. Local charges shall consist of all taxes, charges, interest, penalties, and other amounts collected and paid to the department resulting from the imposition of the transient occupancy tax, less payments for refunds and reimbursement to the department for expenses incurred in the administration and collection of the local charges. Notwithstanding Section 13340 of the Government Code, all amounts in the Local Charges for Short-term Rentals Fund are continuously appropriated to the department. The department shall transmit the funds to the local agencies periodically as promptly as feasible, but shall be made at least once in each calendar quarter. The department shall furnish a quarterly statement indicating the amounts paid and withheld for expenses of the department.
(c) The department shall prescribe and adopt rules and regulations as may be necessary or desirable for the administration and collection of local charges and the distribution of the local charges collected.
(d) The department’s audit duties under this part shall be limited to verification that the online short-term rental facilitator complied with this part.
(e) (1) The department shall make available to a requesting local agency any information that is reasonably available to the department regarding the proper collection and remittance of a local charge of the local agency by an online short-term rental facilitator.
(2) Except as otherwise provided in paragraph (1) and as required to administer this part, it is a misdemeanor punishable by a fine not exceeding one thousand dollars ($1,000), by imprisonment in a county jail not exceeding one year, or by both, in the discretion of the court, for any deputy, agent, clerk, or other officer or employee of the department, or any former officer or employee or other individual, who in the course of that individual’s employment or duty has or had access to returns, reports, or documents required to be filed under this part, to disclose or make known in any manner information as to the amount of any local charges or any particulars, including the business affairs of a corporation, set forth or disclosed therein.
(3) Any information subject to paragraph (1) is exempted from any requirement of public disclosure by the department pursuant to subdivisions (i) and (k) of Section 6254 of the Government Code.
(f) The local agency that has adopted an ordinance to impose a local charge that applies to short-term rentals and exclusively delegates the authority to the department shall be solely responsible for:
(1) Defending any claim regarding the validity of the ordinance in its application to short-term rentals.
(2) Interpreting any provision of the ordinance, except to the extent specifically superseded by this statute.
(3) Responding to any claim for refund by a purchaser arising under local charges collected pursuant to an ordinance described in Section 7279.56. The claim shall be processed in accordance with the provisions of the local enactment that allows the claim to be filed.
(4) Certifying that the ordinance of the local agency applies the local charge to short-term rentals and agreeing to indemnify and hold harmless the department and its officers, agents, and employees for any and all liability for damages that may result from collection of the local charge.
(5) Reallocation of local charges as a result of correcting errors relating to the location of the short-term rental, for up to two past quarters from the date of knowledge.
(g) In connection with any actions or claims relating to or arising from the invalidity of a local tax ordinance, in whole or in part, the online short-term rental facilitator shall not be liable to any consumer as a consequence of collecting the tax. In the event a local agency is ordered to refund the tax, it shall be the sole responsibility of the local agency to refund the tax. In any action seeking to enjoin collection of a local charge by an online short-term rental facilitator, in any action seeking declaratory relief concerning a local charge, in any action seeking a refund of a local charge, or in any action seeking to otherwise invalidate a local charge, the sole necessary party defendant in the action shall be the local agency on whose behalf the department collects the charge. There shall be no recovery from the state for the imposition of any unconstitutional or otherwise invalid local charge that is collected pursuant to this part.
(h) For purposes of this section:
(1) “Quarterly local charges” means the total amount of local charges transmitted by the department to a local agency for a calendar quarter.
(2) “Refund” means the amount of local charges deducted by the department from a local agency’s quarterly local charges in order to pay the local agency’s share of a local charge refund due to one taxpayer.
(3) “Offset portion” means that portion of the refund which exceeds the greater of fifty thousand dollars ($50,000) or 20 percent of the local agency’s quarterly local charges.
(i) Except as provided in subdivision (j), if the department has deducted a refund from a local agency’s quarterly local charges that includes an offset portion, then the following provisions apply:
(1) Within three months after the department has deducted an offset portion, the local agency may request the department to transmit the offset portion to the local agency.
(2) As promptly as feasible after the department receives the local agency’s request, the department shall transmit to the local agency the offset portion as part of the department’s periodic transmittal of local charges.
(3) The department shall thereafter deduct a pro rata share of the offset portion from future transmittals of local charges to the local agency over a period to be determined by the department, but not less than two calendar quarters and not more than eight calendar quarters, until the entire amount of the offset portion has been deducted.
(j) The department shall not transmit the offset portion of the refund to the local agency if that transmittal would reduce or delay either the department’s payment of the refund to the taxpayer or the department’s periodic transmittals of local charges to other local agencies.
(k) A local agency shall pay to the department its pro rata share of the department’s cost of collection and administration.
(l) The department shall annually prepare a report showing the amount of both reimbursed and unreimbursed costs incurred by it in administering the collection of local charges pursuant to this part.

7279.60.
 (a) (1) An online short-term rental facilitator engaged in business in this state shall be responsible for collecting from the purchaser any local charge imposed on a short-term rental by any local agency exclusively delegating its authority to the department pursuant to Section 7279.56 to collect those charges. The online short-term rental facilitator shall remit those local charges collected to the department.
(2) All amounts collected by the online short-term rental facilitator pursuant to this section is due and payable to the department on or before the last day of the month following each calendar quarter. On or before the last day of the month following each quarterly period, a return for the preceding quarterly period shall be filed with the department by each online short-term rental facilitator using electronic media. Returns shall be authenticated in a form or pursuant to methods as may be prescribed by the department.
(b) The department shall administer and collect the local charges exclusively delegated by a local agency under this part pursuant to the Fee Collection Procedures Law (Part 30 (commencing with Section 55001)). For purposes of this part, the references in the Fee Collection Procedures Law to “fee” shall include local charges delegated by a local agency to be collected by the department pursuant to this part, and references to “feepayer” shall include any online short-term rental facilitator required to collect and remit local charges exclusively delegated by a local agency to be collected by the department pursuant to this part.
(c) The department shall publish and maintain a list of local agencies delegating its authority to collect local charges on short-term rentals on its internet website, including the rate. The list shall also include any other information determined to be relevant to the department for the proper collection of the local charges, including, but not limited to, the duration period of the short-term rental, or any other circumstances specified by the local agency applicable in those jurisdictions for determining whether any local charge is due for the occupancy of a short-term rental.
(d) (1) The department may prescribe, adopt, and enforce regulations relating to the administration and enforcement of this part, including, but not limited to, collections, reporting, refunds, and appeals.
(2) The department may prescribe, adopt, and enforce any emergency regulations as necessary to implement this part. Any emergency regulation prescribed, adopted, or enforced pursuant to this section shall be adopted in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, and, for purposes of that chapter, including Section 11349.6 of the Government Code, the adoption of the regulation is an emergency and shall be considered by the Office of Administrative Law as necessary for the immediate preservation of the public peace, health and safety, and general welfare.

7279.62.
 An online short-term rental facilitator that is subject to a local agency ordinance that delegates authority for collection of a local charge to the department pursuant to Section 7279.56 is required to register with the department. Every application for registration shall be made upon a form prescribed by the department and shall set forth the name under which the applicant transacts or intends to transact business, the location of its place or places of business, and such other information as the department may require. An application for registration shall be authenticated in a form or pursuant to methods as may be prescribed by the department.

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.