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SB-1733 Taxation.(1993-1994)



Current Version: 09/27/94 - Chaptered

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SB1733:v92#DOCUMENT

Senate Bill No. 1733
CHAPTER 903

An act to amend Sections 6006.5, 6073, 6452, 6479.3, 6701, 6757, 6961, 7152, 7153.5, 8951, 30155, 30461, 43102, 45102, 50108.2, and 55022 of, to amend and renumber Section 43158 of, and to add Section 6487.05 to, the Revenue and Taxation Code, relating to taxation.

[ Filed with Secretary of State  September 27, 1994. Approved by Governor  September 26, 1994. ]

LEGISLATIVE COUNSEL'S DIGEST


SB 1733, Greene. Taxation.
The Sales and Use Tax Law imposes various penalties for failure to file a timely return form, failure to remit the tax when due, and failure to remit the amount due by an appropriate electronic funds transfer.
This bill would add an additional penalty for the failure to remit the tax when due if that failure results in the State Board of Equalization’s issuance of a deficiency determination.
Under the Sales and Use Tax Law, retailers located outside this state who are engaged in business in this state are required to register with the State Board of Equalization and collect, report, and remit any applicable California use taxes on sales made to customers located in this state. If a retailer fails to register with the board and fails to file a return, the board is authorized to issue a notice of determination for a period of 8 years.
This bill would reduce the period within which the board may issue a deficiency determination from 8 years to 3 years for a “qualifying retailer,” as defined.
The Sales and Use Tax Law authorizes the Controller to recover any refund that is erroneously made or any credit that is erroneously allowed in an action brought in a court of competent jurisdiction, as specified. Existing law requires the Attorney General to prosecute the action, and makes relevant provisions of the Code of Civil Procedure applicable to the proceedings.
This bill would, as an alternative to that provision, authorize the State Board of Equalization to recover any refund or credit erroneously made or allowed. It would permit the board, in its discretion, to issue a deficiency determination, as specified.
The Sales and Use Tax Law makes it a misdemeanor to make a false or fraudulent return with intent to defeat or evade the determination of an amount required by law to be made.
This bill would also make it a misdemeanor to willfully aid or assist in, or procure, counsel, or advise in, the preparation of a false or fraudulent return or other document. By creating a new crime punishable as a misdemeanor, this bill would create a state-mandated local program.
This bill would make additional, clarifying changes to the Sales and Use Tax Law.
The Sales and Use Tax Law, the Use Fuel Tax Law, the Hazardous Substances Tax Law, the Integrated Waste Management Fee Law, the Underground Storage Tank Maintenance Fee Law, and the Fee Collection Procedures Law authorize the State Board of Equalization to require any person subject to those laws to place with it security, as determined by the board. Those provisions of existing law refer to bearer bonds issued by the state or federal government as one of the forms of security that may be held by the board.
This bill would delete any reference to bearer bonds in those provisions of law.
Under the Cigarette and Tobacco Products Tax Law, both cigarettes and tobacco products are subject to that tax. The existing law requires any person desiring to engage in the sale of cigarettes as a wholesaler to register with and obtain a wholesaler’s license from the State Board of Equalization.
This bill would also apply that provision to any person desiring to engage in the sale of tobacco products as a wholesaler.
This bill would incorporate the changes to Section 8951 of the Revenue and Taxation Code proposed by both this bill and SB 840, to become operative only if this bill and SB 840 are both chaptered and this bill is chaptered last. 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.

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


SECTION 1.

 Section 6006.5 of the Revenue and Taxation Code is amended to read:

6006.5.
 “Occasional sale” includes all of the following:
(a)  A sale of property not held or used by a seller in the course of activities for which he or she is required to hold a seller’s permit or permits or would be required to hold a seller’s permit or permits if the activities were conducted in this state, provided that the sale is not one of a series of sales sufficient in number, scope, and character to constitute an activity for which he or she is required to hold a seller’s permit or would be required to hold a seller’s permit if the activity were conducted in this state.
(b)  Any transfer of all or substantially all the property held or used by a person in the course of those activities when after the transfer the real or ultimate ownership of the property is substantially similar to that which existed before the transfer. For the purposes of this section, stockholders, bondholders, partners, or other persons holding an ownership interest in a corporation or other entity are regarded as having the “real or ultimate ownership” of the property of the corporation or other entity.
(c)  A sale of property, other than hay, by a producer of hay, provided that the sale is not one of a series of sales sufficient in number, scope, or character to constitute an activity for which the producer would be required to hold a seller’s permit if the producer were not also selling hay.

SEC. 2.

 Section 6073 of the Revenue and Taxation Code is amended to read:

6073.
 (a)  (1)  When the board determines it is necessary for the efficient administration of this part, the board may require the operator of a swap meet, flea market, or special event as a prerequisite to renting or leasing space on the premises owned or controlled by that operator to a person desiring to engage in or conduct business as a seller, to obtain written evidence that the seller is the holder of a valid seller’s permit issued pursuant to Section 6067, or a written statement from the seller that he or she is not offering for sale any item that is taxable under this part or is otherwise not required to hold a valid seller’s permit.
(2)  In providing the board with documentation required by the board pursuant to paragraph (1), an operator of a swap meet, flea market, or special event may require each person desiring to engage in or conduct business as a seller at that swap meet, flea market, or special event to provide his or her driver’s license number to the operator on a form authorized by the board or under Section 6073.1.
(b)  At any time as the board may specify in a written notice, but in no case more than three times in a calendar year, the board may require an operator to submit to the board a list of vendors conducting business on their premises as a seller. Each listing shall be provided to the board within 30 days after the date of the board’s notice. The list shall contain the name and seller’s permit number for permitholders and the name, address, and driver’s license number for vendors who do not have seller’s permits. Records shall be retained to the same extent as all transactions involving sales or use tax liability as provided in Section 7053.
(c)  “Swap meet, flea market, or special event,” as used in this section, means an activity involving a series of sales sufficient in number, scope, and character to constitute a regular course of business, or any event at which two or more persons offer tangible personal property for sale or exchange and at which a fee is charged for the privilege of displaying the property for sale or exchange or at which a fee is charged to prospective buyers for admission to the area where the property is offered or displayed for sale or exchange.
(d)  Any operator of a swap meet, flea market, or special event who fails or refuses to comply with this section is subject to a penalty not exceeding one thousand dollars ($1,000) for each offense.

SEC. 3.

 Section 6452 of the Revenue and Taxation Code is amended to read:

6452.
 (a)  On or before the last day of the month following each quarterly period of three months, a return for the preceding quarterly period shall be filed with the board in the form as the board may prescribe.
(b)  (1)  For purposes of the sales tax, a return shall be filed by every seller and also by every person who is liable for the sales tax under this part. For purposes of the use tax, a return shall be filed by every retailer engaged in business in this state and by every person purchasing tangible personal property, the storage, use, or other consumption of which is subject to the use tax, who has not paid the use tax due to a retailer required to collect the tax. Returns shall be signed by the person required to file the return or by his or her duly authorized agent but need not be verified by oath. If a return is prepared by a paid preparer, that preparer shall enter his or her name, social security number or federal employee identification number, and business name and address in the space provided on the return. Any paid preparer who fails to provide the information specified by the preceding sentence shall be subject to a fifty dollar ($50) fine for each failure to provide that information.
(2)  For purposes of paragraph (1), “paid preparer” means any person who for compensation prepares, or employs one or more persons to prepare, any sales and use tax return required to be filed under this part. For purposes of this paragraph, the preparation of a substantial portion of any sales and use tax return required to be filed under this part shall be considered the equivalent of preparing that return in its entirety. A person is not a “paid preparer” as defined in this paragraph solely by reason of doing any of the following:
(A)  Furnishing typing, reproduction, or other mechanical assistance.
(B)  Preparing in a fiduciary capacity a return for any other person.
(c)  Any retailer or other person who fails or refuses to furnish any return required to be made, or who fails or refuses to furnish a supplemental return or other data required by the board, is guilty of a misdemeanor punishable as provided in Section 7153.

SEC. 4.

 Section 6479.3 of the Revenue and Taxation Code is amended to read:

6479.3.
 (a)  Any person whose estimated tax liability under this part averages twenty thousand dollars ($20,000) or more per month, as determined by the board pursuant to methods of calculation prescribed by the board, shall remit amounts due by an electronic funds transfer under procedures prescribed by the board. Any person who collects use tax on a voluntary basis is not required to remit amounts due by electronic funds transfer.
(b)  Any person whose estimated tax liability under this part averages less than twenty thousand dollars ($20,000) per month or any person who voluntarily collects use tax may elect to remit amounts due by electronic funds transfer with the approval of the board. The election shall be operative for a minimum of one year.
(c)  Any person remitting amounts due pursuant to subdivision (a) or (b) shall perform electronic funds transfer in compliance with the due dates set forth in Article 1 (commencing with Section 6451) and Article 1.1 (commencing with Section 6470). Payment is deemed complete on the date the electronic funds transfer is initiated, if settlement to the state’s demand account occurs on or before the banking day following the date the transfer is initiated. If settlement to the state’s demand account does not occur on or before the banking day following the date the transfer is initiated, payment is deemed to occur on the date settlement occurs.
(d)  Any person remitting taxes by electronic funds transfer shall, on or before the due date of the remittance, file a return for the preceding reporting period in the form and manner prescribed by the board. Any person who fails to timely file the required return shall pay a penalty of 10 percent of the amount of taxes, exclusive of prepayments, with respect to the period for which the return is required.
(e)  Any person required to remit taxes pursuant to this article who remits those taxes by means other than appropriate electronic funds transfer shall pay a penalty of 10 percent of the taxes incorrectly remitted.
(f)  Any person who is required to remit taxes pursuant to this article, who fails to timely remit those taxes, and who is issued a deficiency determination pursuant to Section 6481 with respect to those taxes, shall, in addition to any other penalties imposed, pay a 10 percent penalty of the amount of those taxes.
(g)  In determining whether a person’s estimated tax liability averages twenty thousand dollars ($20,000) or more per month, the board may consider tax returns filed pursuant to this part and any other information in the board’s possession.
(h)  The board shall promulgate regulations pursuant to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code for purposes of implementing this section.
(i)  This section shall become operative on January 1, 1995.

SEC. 5.

 Section 6487.05 is added to the Revenue and Taxation Code, to read:

6487.05.
 (a)  Notwithstanding Section 6487, the period during which a deficiency determination may be mailed to a qualifying retailer is limited to three years after the last day of the calendar month following the quarterly period for which the amount is proposed to be determined. For purposes of this section, a “qualifying retailer” is a retailer that meets all of the following conditions:
(1)  The retailer is located outside this state, and has not previously registered with the board.
(2)  The retailer is engaged in business in this state, as defined in Section 6203.
(3)  The retailer voluntarily registers with the board.
(4)  The retailer has not been previously contacted by the board or its agents regarding the provisions of Section 6203.
(5)  As determined by the board, the retailer’s failure to file a return or failure to report or pay the tax or amount due required by law was due to reasonable cause and was not a result of negligence or intentional disregard of the law, or because of fraud or an intent to evade the provisions of this part.
(b)  If the board or its designee finds that the retailer’s failure to make a timely return or payment is due to reasonable cause and circumstances beyond the retailer’s control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the retailer shall be relieved of the penalties imposed pursuant to this part. Any retailer seeking relief of penalty shall file a statement under penalty of perjury setting forth the facts upon which he or she bases his or her claim for relief.

SEC. 6.

 Section 6701 of the Revenue and Taxation Code is amended to read:

6701.
 The board, whenever it deems it necessary to ensure compliance with this part, may require any person subject thereto, to place with it any security that the board may determine. Any security in the form of cash, government bonds, or insured deposits in banks or savings and loan institutions shall be held by the board in trust to be used solely in the manner provided by this section and Section 6815. The amount of the security shall be fixed by the board but, except as noted below, shall not be greater than twice the estimated average liability of persons filing returns for quarterly periods or three times the estimated average liability of persons required to file returns for monthly periods, determined in the manner that the board deems proper, or ten thousand dollars ($10,000), whichever amount is the lesser. In case of a person who, pursuant to Section 6070 of this part, has been given notice of hearing to show cause why his or her permit or permits should not be revoked, or a person whose permit or permits has been revoked or suspended, the amount of the security shall not be greater than three times the average liability of persons filing returns for quarterly periods or five times the average liability of persons required to file returns for monthly periods, or ten thousand dollars ($10,000), whichever amount is the lesser. The limitations herein provided apply regardless of the type of security placed with the board. The amount of the security may be increased or decreased by the board subject to the limitations herein provided. The board may sell the security at public auction if it becomes necessary to do so in order to recover any tax or any amount required to be collected, interest, or penalty due. Notice of the sale may be served upon the person who placed the security personally or by mail; if by mail, service shall be made in the manner prescribed for service of a notice of a deficiency determination and shall be addressed to the person at his or her address as it appears in the records of the board. Upon any sale any surplus above the amounts due shall be returned to the person who placed the security.

SEC. 7.

 Section 6757 of the Revenue and Taxation Code is amended to read:

6757.
 (a)  If any person fails to pay any amount imposed under this part at the time that it becomes due and payable, the amount thereof, including penalties and interest, together with any costs in addition thereto, shall thereupon be a perfected and enforceable state tax lien. The lien is subject to Chapter 14 (commencing with Section 7150) of Division 7 of Title 1 of the Government Code.
(b)  For the purpose of this section, amounts are “due and payable” on the following dates:
(1)  For amounts disclosed on a return received by the board before the date the return is delinquent, the date the return would have been delinquent;
(2)  For amounts disclosed on a return filed on or after the date the return is delinquent, the date the return is received by the board;
(3)  For amounts determined under Section 6536 (pertaining to jeopardy assessments), the date the notice of the board’s finding is mailed or issued;
(4)  For all other amounts, the date the assessment is final.
(c)  The lien provided by this section shall not arise during any period that Section 362 of the United States Bankruptcy Code applies to the person against whom the lien would otherwise apply.

SEC. 8.

 Section 6961 of the Revenue and Taxation Code is amended to read:

6961.
 (a)  The Controller may recover any refund or part thereof that is erroneously made and any credit or part thereof that is erroneously allowed in an action brought in a court of competent jurisdiction in the County of Sacramento in the name of the people of the State of California.
(b)  As an alternative to subdivision (a), the board may recover any refund or part thereof that is erroneously made and any credit or part thereof that is erroneously allowed. In recovering any erroneous refunds or credits, the board, in its discretion, may issue a deficiency determination in accordance with Article 2 (commencing with Section 6481) or Article 4 (commencing with Section 6536) of Chapter 5. Except in the case of fraud, the determination shall be made within three years from the last day of the month following the quarterly period in which the board made its certification to the Controller that the amount collected was in excess of the amount legally due.

SEC. 9.

 Section 7152 of the Revenue and Taxation Code is amended to read:

7152.
 (a)  Any person required to make, render, sign, or verify any report who makes any false or fraudulent return, with intent to defeat or evade the determination of an amount due required by law to be made is guilty of a misdemeanor punishable as provided in Section 7153.
(b)  Any person who willfully aids or assists in, or procures, counsels, or advises in, the preparation or presentation, in connection with any matter arising under this part, of a return, affidavit, claim, or other document that is fraudulent or false as to any material matter, whether or not the falsity or fraud is with the knowledge or consent of the person authorized or required to present the return, affidavit, claim, or document, is guilty of a misdemeanor punishable as provided in Section 7153.

SEC. 10.

 Section 7153.5 of the Revenue and Taxation Code is amended to read:

7153.5.
 Notwithstanding any other provision of this part, any person who violates this part with intent to defeat or evade the reporting, assessment, or payment of a tax or an amount due required by law to be made is guilty of a felony when the amount of unreported tax liability aggregates twenty-five thousand dollars ($25,000) or more in any 12-consecutive-month period. Each offense shall be punished by a fine of not less than five thousand dollars ($5,000) and not more than twenty thousand dollars ($20,000), or imprisonment for 16 months, two years, or three years, or both the fine and imprisonment in the discretion of the court.

SEC. 11.

 Section 8951 of the Revenue and Taxation Code is amended to read:

8951.
 The board, whenever it deems it necessary to ensure compliance with this part or any rule or regulation adopted under this part, may require any user, vendor, or wholesaler to deposit with it any security that it may determine. Any security in the form of cash, government bonds, or insured deposits in banks and savings and loan institutions shall be held by the board in trust to be used solely in the manner provided for by this section and Section 8956. The board may sell the security at public sale if it becomes necessary so to do in order to recover any amount due under this part. Notice of the sale may be served upon the person who deposited the security personally or by mail in the manner prescribed for service of notice of a deficiency determination. Upon any sale, any surplus above the amount due shall be returned to the person who deposited the security.

SEC. 11.5.

 Section 8951 of the Revenue and Taxation Code is amended to read:

8951.
 The board, whenever it deems it necessary to ensure compliance with this part or any rule or regulation adopted under this part, may require any user or vendor to deposit with it any security that it may determine. Any security in the form of cash, government bonds, or insured deposits in banks and savings and loan institutions shall be held by the board in trust to be used solely in the manner provided for by this section and Section 8956. The board may sell the security at public sale if it becomes necessary in order to recover any amount due under this part. Notice of the sale may be served upon the person who deposited the security personally or by mail in the manner prescribed for service of notice of a deficiency determination. Upon any sale, any surplus above the amount due shall be returned to the person who deposited the security.

SEC. 12.

 Section 30155 of the Revenue and Taxation Code is amended to read:

30155.
 Every person desiring to engage in the sale of cigarettes or tobacco products as a wholesaler shall file with the board an application, in that form as the board may prescribe, for a wholesaler’s license. A wholesaler shall apply for and obtain a license for each place of business at which he or she engages in the business of selling cigarettes or tobacco products as a wholesaler.

SEC. 13.

 Section 30461 of the Revenue and Taxation Code is amended to read:

30461.
 (a)  All amounts required to be paid to the state under this part shall be paid to the board in the form of remittances payable to the State Board of Equalization. Except as provided in subdivision (b) and Section 30461.6, the board shall transmit the payments to the Treasurer to be deposited in the State Treasury to the credit of the Cigarette Tax Fund, which fund is hereby created.
(b)  The board shall transmit amounts received from the penalty assessed pursuant to Section 30474 to the Treasurer for deposit in the General Fund.

SEC. 14.

 Section 43102 of the Revenue and Taxation Code is amended to read:

43102.
 The board, whenever it deems it necessary to ensure compliance with this part, may require any person subject to this part to place with it any security that the board determines to be reasonable, taking into account the circumstances of that person. Any security in the form of cash, government bonds, or insured deposits in banks or savings and loan institutions shall be held by the board in trust to be used solely in the manner provided by this section. The board may sell the security at public auction if it becomes necessary to do so in order to recover any tax or any amount required to be collected, including any interest or penalty due. Notice of the sale shall be served upon the person who placed the security personally or by mail. If service is made by mail, service shall be addressed to the person at his or her address as it appears in the records of the board. Service shall be made at least 30 days prior to the sale in the case of personal service, and at least 40 days prior to the sale in the case of service by mail. Upon any sale, any surplus above the amounts due shall be returned to the person who placed the security.

SEC. 15.

 Section 43158 of the Revenue and Taxation Code, as added by Chapter 852 of the Statutes of 1992, is amended and renumbered to read:

43160.
 Every person who is required to file the returns and make the payments specified in Section 43151, 43152.6, 43152.7, 43152.9, 43152.11, 43152.13, 43152.14, or 43153 shall, upon transfer or discontinuance of operations, file closing returns on forms prescribed by the board. The closing returns shall be due and payable on the last day of the month following the end of the quarterly period in which the transfer or discontinuance takes place.

SEC. 16.

 Section 45102 of the Revenue and Taxation Code is amended to read:

45102.
 The board, whenever it deems it necessary to ensure compliance with this part, may require any person subject to this part to place with it any security that the board determines to be reasonable, taking into account the circumstances of that person. Any security in the form of cash, government bonds, or insured deposits in banks or savings and loan institutions shall be held by the board in trust to be used solely in the manner provided by this section. The board may sell the security at public auction if it becomes necessary to do so in order to recover any fee or any amount required to be collected, including any interest or penalty due. Notice of the sale shall be served upon the person who placed the security personally or by mail.
If service is made by mail, the notice shall be addressed to the person at his or her address as it appears in the records of the board. Service shall be made at least 30 days prior to the sale in the case of personal service, and at least 40 days prior to the sale in the case of service by mail. Upon any sale, any surplus above the amounts due shall be returned to the person who placed the security.

SEC. 17.

 Section 50108.2 of the Revenue and Taxation Code is amended to read:

50108.2.
 (a)  The board, whenever it determines it to be necessary to ensure compliance with this part, may require any person subject to this part to place with it any security that the board determines to be reasonable, taking into account the circumstances of that person. Any security in the form of cash, government bonds, or insured deposits in banks or savings and loan institutions shall be held by the board in trust to be used solely in the manner provided by this section. The board may sell the security at a public auction if it becomes necessary to do so in order to recover any fee or any amount required to be collected, including any interest or penalty due.
(b)  Notice of the sale authorized in subdivision (a) shall be served upon the person who placed the security personally or by mail. If service is made by mail, the notice shall be addressed to the person at his or her address as it appears in the records of the board. Service shall be made at least 30 days prior to the sale in the case of personal service, and at least 40 days prior to the sale in the case of service by mail. Upon any sale, any surplus above the amounts due shall be returned to the person who placed the security.

SEC. 18.

 Section 55022 of the Revenue and Taxation Code is amended to read:

55022.
 The board, whenever it deems necessary to ensure compliance with this part, may require any person subject to this part to place with it any security that the board determines to be reasonable, taking into account the circumstances of that person. The board may sell the security at public auction if it becomes necessary to do so in order to recover any fee or any amount required to be collected, including any interest or penalty due. Notice of the sale shall be served upon the person who placed the security personally or by mail.
If service is made by mail, the notice shall be addressed to the person at his or her address as it appears in the records of the board. Service shall be made at least 30 days prior to the sale in the case of personal service, and at least 40 days prior to the sale in the case of service by mail. Upon any sale, any surplus above the amounts due shall be returned to the person who placed the security.

SEC. 19.

 Section 11.5 of this bill incorporates amendments to Section 8951 of the Revenue and Taxation Code proposed by both this bill and SB 840. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 1995, but this bill becomes operative first, (2) each bill amends Section 8951 of the Revenue and Taxation Code, and (3) this bill is enacted after SB 840, in which case Section 8951 of the Revenue and Taxation Code, as amended by Section 11 of this bill, shall remain operative only until the operative date of SB 840, at which time Section 11.5 of this bill shall become operative.

SEC. 20.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII  B of the California Constitution because the only costs which may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, changes the definition of a crime or infraction, changes the penalty for a crime or infraction, or eliminates a crime or infraction. Notwithstanding Section 17580 of the Government Code, unless otherwise specified in this act, the provisions of this act shall become operative on the same date that the act takes effect pursuant to the California Constitution.