Government Finance and Operations 03/25/2011
Use Tax Collection
AB 155 (Calderon) – Support
As Amended on March 3, 2011
AB 155, by Assembly Member Charles Calderon, would redefine “retailer engaged in business in this state” to include sister companies where one of them designs or solicits sales within the state and another actually sells those products.
The bill aims specifically at companies like Amazon.com. What most consumers think of as “Amazon” is actually a group of commonly controlled companies, only one of which makes actual sales. Other members of the group, Amazon.com’s sister companies, are located within California. They perform activities such as designing Amazon’s Kindle reader and conducting consumers’ searches for products Amazon.com sells.
Under current law, the liability for remitting use taxes for these transactions rests with the consumers, who have an opportunity to announce such liabilities on their personal income tax filings, but who rarely do. This change aims to reduce the use tax gap caused by the increasing use of the internet by Californians to purchase goods. As such, AB 155 attempts to collect taxes that Californians currently owe but do not pay. A portion of these uncollected taxes would benefit counties.
The Assembly Revenue and Taxation Committee will consider AB 155 at its meeting on April 4.
Transaction and Use Taxes
AB 686 (Huffman) – Support
As Amended on March 9, 2011
AB 686, by Assembly Member Jared Huffman, would allow counties and cities to set their transactions and use taxes in increments of an eighth of a percent, instead of a quarter.
Under AB 686, county and city tax increases and extensions will still need to comply with all constitutional voting requirements. However, allowing local agencies to more precisely set their tax rates will give them more flexibility in matching the tax rate with a community’s specific need.
The Assembly Revenue and Taxation Committee will consider AB 686 at its meeting on April 4.