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AB-2829 Digital Advertising Services Tax Law.(2023-2024)



Current Version: 04/01/24 - Amended Assembly

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AB2829:v98#DOCUMENT

Amended  IN  Assembly  April 01, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 2829

Introduced by Assembly Member Papan
(Coauthors: Assembly Members Bauer-Kahan and Bonta)

February 15, 2024

An act to amend Section 2605 of the Revenue and Taxation Code, relating to taxation. add Part 27 (commencing with Section 51000) to Division 2 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 2829, as amended, Papan. Property taxes: due date. Digital Advertising Services Tax Law.
Existing law imposes taxes upon income and real property, and taxes upon certain transactions and excise taxes. The Fee Collection Procedures Law provides procedures for the collection of certain fees and surcharges and is administered by the California Department of Tax and Fee Administration. Under existing law, a violation of the Fee Collection Procedures Law is a crime.
This bill would, beginning January 1, 2025, require a person with at least $100,000,000 in annual gross revenues, as defined, to pay a tax on annual gross revenues that are derived from digital advertising services in the state at a specified rate. The bill would prohibit a taxpayer from directly passing on the cost of the tax to a customer. The bill would state the intent of the Legislature that the net proceeds from the tax would be used to fund youth mental health services. The bill would require the department to administer and collect the tax pursuant to the Fee Collection Procedures Law. By expanding the application of the crimes associated with the Fee Collection Procedures Law, the 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.
This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of 2/3 of the membership of each house of the Legislature.
This bill would take effect immediately as a tax levy.

Existing law provides that all taxes on personal property and half the taxes on real property, as described, on the secured roll are due and payable November 1.

This bill would make nonsubstantive changes to that provision.

Vote: MAJORITY2/3   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NOYES  

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


SECTION 1.

 Part 27 (commencing with Section 51000) is added to Division 2 of the Revenue and Taxation Code, to read:

PART 27. Digital Advertising Services Tax Law

CHAPTER  1. General Provisions and Definitions

51000.
 This part shall be known, and may be cited, as the Digital Advertising Services Tax Law.

51001.
 For purposes of this part, the following definitions shall apply:
(a) “Annual gross revenues” means income or revenue from all sources, before any expenses or taxes, computed according to generally accepted accounting principles.
(b) “Broadcast entity” means an entity that is primarily engaged in the business of operating a broadcast television or radio station.
(c) “Department” means the California Department of Tax and Fee Administration.
(d) (1) “Digital advertising services” means advertisement services on a digital interface, including advertisements in the form of banner advertising, search engine advertising, interstitial advertising, and other comparable advertising services.
(2) “Digital advertising services” does not include advertisement services on digital interfaces owned or operated by or operated on behalf of a broadcast entity or news media entity.
(e) “Digital interface” means any type of software, including a website, part of a website, or application, that a user is able to access.
(f) (1) “News media entity” means an entity engaged primarily in the business of newsgathering, reporting, or publishing articles or commentary about news, current events, culture, or other matters of public interest.
(2) “News media entity” does not include an entity that is primarily an aggregator or republisher of third-party content.
(g) “Taxable base” means the annual gross revenues derived from digital advertising services in the state.
(h) “User” means an individual or any other person who accesses a digital interface with a device.

CHAPTER  2. Imposition of Tax

51002.
 (a) Beginning January 1, 2025, a tax is hereby imposed on the annual gross revenues of a person that are derived from digital advertising services in the state.
(b) The tax imposed by this section shall be at a rate of 5 percent.
(c) The tax imposed by this section shall only apply to persons with at least one hundred million dollars ($100,000,000) in global annual gross revenue.
(d) A taxpayer who derives gross revenues from digital advertising services in the state may not directly pass on the cost of the tax imposed under this section to a customer who purchases the digital advertising services by means of a separate fee, surcharge, or line item.

CHAPTER  3. Administration

51003.
 The department shall administer and collect the taxes imposed by 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 the taxes imposed by this part, and references to “feepayer” shall include a person required to pay the taxes imposed by this part.

51004.
 (a) The department may prescribe, adopt, and enforce regulations relating to the administration and enforcement of this part, including, but not limited to, provisions governing collections, reporting, refunds, and appeals.
(b) The department may prescribe, adopt, and enforce emergency regulations relating to the administration and enforcement of this part. Any emergency regulations 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 these regulations 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.

51005.
 It is the intent of the Legislature that net proceeds from the tax imposed by this part shall be used to fund youth mental health services.

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 provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
SECTION 1.Section 2605 of the Revenue and Taxation Code is amended to read:
2605.

The following taxes on the secured roll are due and payable November 1:

(a)All taxes on personal property.

(b)Half the taxes on real property. In addition, if the amount is not evenly divisible by two, the odd cent is also due and payable, unless the roll shows the odd cent as part of the second installment.