AB 2321: Vehicles: registration and transfers of title or interest: use tax.
- Session Year: 2015-2016
- House: Assembly
- Latest Version Date: 2016-04-20
Existing law requires the Department of Motor Vehicles to withhold the registration or the transfer of registration of any vehicle or vessel, and to withhold identification or transfer of ownership of any off-highway vehicle subject to identification, until the applicant for registration or identification pays to the department the use tax measured by the sales price of the vehicle or vessel as required by the Sales and Use Tax Law, together with penalty, except as specified. Existing law requires the department to transmit all collections of use tax and penalty to the State Board of Equalization.
This bill would require, in addition, that the department determine all local use taxes the applicant is responsible to pay by specific address data provided by the applicant, and where the vehicle or vessel is to be registered. The bill would require the department to transmit the address data to the board, and would make the data subject to specified information sharing provisions. tax area codes and the amount of local use tax and penalty collections attributable to those tax area codes to the board. This bill would require the board to allocate the use taxes transmitted by the department to the jurisdiction where the purchaser registers the purchased vehicle or vessel by the specific address tax area code data provided to the board by the department.
This bill would declare the intent of the Legislature that the department and the board administer the provisions relating to registration of vehicles and vessels and identification of off-highway vehicles for these purposes in a manner that ensures that applicable local sales taxes and local transaction and use taxes are collected and then remitted to the specific jurisdiction where the vehicle or vessel is registered.
Existing law requires the Department of Motor Vehicles to withhold the registration or the transfer of registration of any vehicle or vessel, and to withhold identification of, or the or transfer of ownership, ownership of any off-highway vehicle subject to identification identification, until the applicant for registration or identification pays to the department the use tax measured by the sales price of the vehicle or vessel as required by the Sales and Use Tax Law, together with penalty, except as specified. Existing law requires the department to transmit all collections of use tax and penalty to the State Board of Equalization.
This bill would require, in addition, that the department determine all local use taxes the applicant is responsible to pay by specific address data provided by the applicant, and where the vehicle or vessel is to be registered. The bill would require the department to transmit the address data to the board, and would make the data subject to specified information sharing provisions. This bill would require the board to allocate the use taxes transmitted by the department to the jurisdiction where the purchaser registers the purchased vehicle or vessel by the specific address data provided to the board by the department.
This bill would declare the intent of the Legislature that the department and the board administer the provisions relating to registration of vehicles and vessels and identification of off-highway vehicles for these purposes in a manner that ensures that applicable local sales taxes and local transaction and use taxes are collected and then remitted to the specific jurisdiction where the vehicle or vessel is registered.
Existing law requires the Department of Motor Vehicles to withhold identification of, or the transfer of ownership, of any off-highway vehicle subject to identification until the applicant for identification pays to the department the use tax measured by the sales price of the vehicle as required by the Sales and Use Tax Law, together with penalty, except as specified. Existing law requires the department to transmit all collections of use tax and penalty to the State Board of Equalization.
This bill would require, in addition, that the department determine all local use taxes the applicant is responsible to pay by specific address data provided by the applicant, and where the vehicle is to be registered. The bill would require the department to transmit the address data to the board, and would make the data subject to specified information sharing provisions. This bill would require the board to allocate the use taxes transmitted by the department to the jurisdiction where the purchaser registers the purchased vehicle by the specific address data provided to the board by the department.
This bill would declare the intent of the Legislature that the department and the board administer the provisions relating to identification of off-highway vehicles in a manner that ensures that applicable local sales taxes and local transaction and use taxes are collected and then remitted to the specific jurisdiction where the vehicle is registered.
(a)Except when the sale is by lease, when a mobilehome or commercial coach required to be registered annually under the Health and Safety Code or a vehicle required to be registered under the Vehicle Code is sold at retail by other than a person licensed or certificated pursuant to the Health and Safety Code or the Vehicle Code as a manufacturer, remanufacturer, dealer, dismantler, or lessor-retailer, subject to Section 11615.5 of the Vehicle Code, the retailer is not required or authorized to collect the use tax from the purchaser, but the purchaser of the vehicle shall pay the use tax to the Department of Housing and Community Development acting for and on behalf of the board pursuant to Section 18123 of the Health and Safety Code or to the Department of Motor Vehicles acting for and on behalf of the board pursuant to Section 4750.5 of the Vehicle Code.
(b)If the purchaser makes an application to either department that is not timely, and is subject to penalty because of delinquency in effecting registration or transfer of registration of the vehicle, he or she then becomes liable also for penalty as specified in Section 6591, but no interest shall accrue.
(c)Application to the appropriate department by the purchaser relieves the purchaser of the obligation to file a return with the board under Section 6452.
(d)If the purchaser does not make application to either department, or does not pay the amount of use tax due, or files a return with the board under Section 6455 that is not timely, interest and penalties shall apply with respect to the unpaid amount as provided in Chapter 5 (commencing with Section 6451).
(e)Use taxes collected by the Department of Motor Vehicles and transmitted to the board pursuant to Section 4750.5 of the Vehicle Code shall be allocated to the jurisdiction where the purchaser registers the purchased vehicle, by the specific address tax area code data provided to the board by the Department of Motor Vehicles. The board shall reimburse the Department of Motor Vehicles as prescribed in subdivision (d) of Section 4750.5 of the Vehicle Code.
SEC. 2.Section 6293 of the Revenue and Taxation Code is amended to read:6293.(a)Except when the sale is by lease, when a vehicle subject to identification under Division 16.5 (commencing with Section 38000) of the Vehicle Code or a vehicle that qualifies under the permanent trailer identification plate program pursuant to subdivision (a) of Section 5014.1 of the Vehicle Code, is sold at retail by other than a person licensed or certificated pursuant to the Vehicle Code as a manufacturer, remanufacturer, dealer, dismantler, or lessor-retailer, subject to Section 11615.5 of the Vehicle Code, or a person required to hold a sellers permit pursuant to Article 2 (commencing with Section 6066) of Chapter 2 by reason of the number, scope, and character of his or her sales of those vehicles, the retailer is not required or authorized to collect the use tax from the purchaser, but the purchaser of the vehicle shall pay the use tax to the Department of Motor Vehicles acting for and on behalf of the board pursuant to Section 38211 of the Vehicle Code.
(b)If the purchaser makes an application to that the department which that is not timely, and is subject to penalty because of delinquency in effecting identification or transfer of ownership of the vehicle, he or she then becomes liable also for penalty as specified in Section 6591 of this code, but no interest shall accrue.
(c)Application to that the department by the purchaser relieves the purchaser of the obligation to file a return with the board under Section 6452.
(d)If the purchaser does not make application to that the department, or does not pay the amount of use tax due, or files a return with the board under Section 6455 which that is not timely, interest and penalties shall apply with respect to the unpaid amount as provided in Chapter 5 (commencing with Section 6451).
(e)Use taxes collected by the Department of Motor Vehicles and transmitted to the board pursuant to Section 38211 of the Vehicle Code shall be allocated to the jurisdiction where the purchaser registers the purchased vehicle, by the tax area code data provided to the board by the Department of Motor Vehicles. The board shall reimburse the Department of Motor Vehicles as prescribed in subdivision (d) of Section 38211 of the Vehicle Code.
SEC. 3.Section 6294 of the Revenue and Taxation Code is amended to read:6294.(a)When an undocumented vessel required to be registered under the Vehicle Code is sold at retail by other than a person holding a sellers permit and regularly engaged in the business of selling vessels, the retailer is not required or authorized to collect the use tax from the purchaser, but the purchaser of the vessel must pay the use tax to the Department of Motor Vehicles acting for, and on behalf of, the board pursuant to Section 9928 of the Vehicle Code.
(b)If the purchaser makes an application to the department that is not timely, and is subject to penalty because of delinquency in effecting registration or transfer of registration of the undocumented vessel, he or she then becomes liable also for penalty as specified in Section 6591, but no interest shall accrue.
(c)Application to the department by the purchaser shall relieve the purchaser of the obligation to file a return with the board under Section 6452.
(d)If the purchaser does not make application to either department, or does not pay the amount of use tax due, or files a return with the board under Section 6455 that is not timely, interest and penalties shall apply with respect to the unpaid amount as provided in Chapter 5 (commencing with Section 6451).
(e)Use taxes collected by the Department of Motor Vehicles and transmitted to the board pursuant to Section 9928 of the Vehicle Code shall be allocated to the jurisdiction where the purchaser registers the purchased vessel, by the specific address tax area code data provided to the board by the Department of Motor Vehicles. The board shall reimburse the Department of Motor Vehicles as prescribed in subdivision (d) of Section 9928 of the Vehicle Code.
SEC. 4.Section 4750.5 of the Vehicle Code is amended to read:4750.5.(a)The department shall withhold the registration or the transfer of registration of a vehicle sold at retail to an applicant by a person other than a vehicle manufacturer or dealer holding a license and certificate issued pursuant to Chapter 4 (commencing with Section 11700) of Division 5, or an automobile dismantler holding a license and certificate issued pursuant to Chapter 3 (commencing with Section 11500) of Division 5, or a lessor-retailer holding a license issued pursuant to Chapter 3.5 (commencing with Section 11600) of Division 5, and subject to the provisions of Section 11615.5, until the applicant pays to the department the use tax measured by the sales price of the vehicle as required by the Sales and Use Tax Law (Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code), together with penalty, if any, unless the State Board of Equalization finds that no use tax is due. If the applicant so desires, he or she may pay the use tax and penalty, if any, to the department so as to secure immediate action upon his or her application for registration or transfer of registration, and thereafter he or she may apply through the Department of Motor Vehicles to the State Board of Equalization under the Sales and Use Tax Law for a refund of the amount paid.
(b)(1)If applicable, the department shall determine all local use taxes that the applicant is responsible to pay by specific address data provided by the applicant and to which the vehicle shall be registered. The department shall utilize all available tools, including those available through the State Board of Equalization, to determine the correct use tax rates to apply to the applicant.
(2)Using the specific address data provided by the applicant and to which the vehicle shall be registered, the department shall identify the correct tax area code for the applicable local jurisdiction to which the vehicle shall be registered and to which the local use tax shall be allocated. The State Board of Equalization shall provide a list of state tax area codes applicable to each jurisdiction for purposes of allocating the local use taxes directly, pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code) and the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code).
(c)The department shall transmit all collections of use tax and penalty made under this section to the State Board of Equalization. The department also shall collect and transmit to the board specific address data provided by applicants upon application and to which a purchased vehicle will be registered, for proper allocation of use tax collections. The transmitted data shall be subject to the requirements of Section 7056 of the Revenue and Taxation Code. transmit the tax area codes and the amount of local use tax and penalty collections attributable to those tax area codes to the board for the proper direct allocation of local use tax collections. This transmittal shall be made at least monthly, accompanied by a schedule in the form that the department and board may prescribe.
(d)The State Board of Equalization shall reimburse the department for its costs incurred in carrying out the provisions of this section. The reimbursement shall be effected under agreement between the agencies, approved by the Department of Finance.
(e)In computing any use tax or penalty under this section, dollar fractions shall be disregarded in the manner specified in Section 9559. Payment of tax and penalty on this basis shall be deemed full compliance with the requirements of the Sales and Use Tax Law and local transaction and use tax law insofar as they are applicable to the use of vehicles to which this section relates.
(f)It is the intent of the Legislature that the department and the State Board of Equalization administer this part in a manner that ensures that applicable Bradley-Burns uniform local sales use taxes and local transaction and use taxes are collected and then remitted to the specific jurisdiction where the vehicle is registered.
SEC. 5.Section 9928 of the Vehicle Code is amended to read:9928.(a)The department shall withhold the certificate of number or the transfer of registration of a vessel sold at retail to an applicant by a person other than a person holding a sellers permit pursuant to Section 6066 of the Revenue and Taxation Code, and regularly engaged in the business of selling vessels, until the applicant pays to the department the use tax measured by the sales price of the vessel as required by the Sales and Use Tax Law (Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code), together with penalty, if any, unless the State Board of Equalization finds that no use tax is due. If the applicant so desires, he or she may pay the use tax and penalty, if any, to the department so as to secure immediate action upon his or her application for registration or transfer of registration and thereafter he or she may apply through the Department of Motor Vehicles to the State Board of Equalization under the Sales and Use Tax Law for a refund of the amount paid.
(b)(1)If applicable, the department shall determine all local use taxes that the applicant is responsible to pay by specific address data provided by the applicant and to which the vessel shall be registered. The department shall utilize all available tools, including those available through the State Board of Equalization, to determine the correct use tax rates to apply to the applicant.
(2)Using the specific address data provided by the applicant and to which the vehicle shall be registered, the department shall identify the correct tax area code for the applicable local jurisdiction to which the vessel shall be registered and to which the local use tax shall be allocated. The State Board of Equalization shall provide a list of state tax area codes applicable to each jurisdiction for purposes of allocating the local use taxes directly, pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code) and the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code).
(c)The department shall transmit all collections of the use tax and penalty made under this section to the State Board of Equalization. The department also shall collect and transmit to the board specific address data provided by applicants upon application and to which a purchased vessel will be registered, for proper allocation of use tax collections. The transmitted data shall be subject to the requirements of Section 7056 of the Revenue and Taxation Code. transmit the tax area codes and the amount of local use tax and penalty collections attributable to those tax area codes to the board for the proper direct allocation of local use tax collections. This transmittal shall be made at least monthly, accompanied by a schedule in the form that the department and board may prescribe.
(d)The State Board of Equalization shall reimburse the department for its costs incurred in carrying out the provisions of this section.
(e)In computing any use tax or penalty under this section, dollar fractions shall be disregarded in the manner specified in Section 9559. Payment of tax and penalty on this basis shall be deemed full compliance with the requirements of the Sales and Use Tax Law and local transaction and use tax law insofar as they are applicable to the use of vessels to which this section relates.
(f)The department and the State Board of Equalization shall enter into an agreement for the collection of the use tax pursuant to this section and Section 6294 of the Revenue and Taxation Code. The agreement shall specify the procedures agreed upon by the department and the board for collection of the tax and the reimbursement provided for in subdivision (d). The agreement shall be approved by the Department of Finance.
(g)It is the intent of the Legislature that the department and the State Board of Equalization administer this part in a manner that ensures that applicable Bradley-Burns uniform local sales use taxes and local transaction and use taxes are collected and then remitted to the specific jurisdiction where the vessel is registered.
SEC. 6.Section 38211 of the Vehicle Code is amended to read:38211.(a)The department shall withhold identification of or the transfer of ownership of a vehicle subject to identification under this division until the applicant pays to the department the use tax measured by the sales price of the vehicle as required by the Sales and Use Tax Law, together with penalty, if any, unless the purchaser presents evidence on a form prescribed by the State Board of Equalization that sales tax will be paid by the seller or that use tax has been collected by the seller or that the State Board of Equalization finds that no use tax is due. If the applicant so desires, he or she may pay the use tax and penalty, if any, to the department so as to secure immediate action upon his or her application for identification or transfer of ownership, and thereafter he or she may apply through the Department of Motor Vehicles to the State Board of Equalization under the Sales and Use Tax Law for a refund of the amount paid.
(b)(1)If applicable, the department shall determine all local use taxes that the applicant is responsible to pay by specific address data provided by the applicant and to which the vehicle shall be registered. The department shall utilize all available tools, including those available through the State Board of Equalization, to determine the correct use tax rates to apply to the applicant.
(2)Using the specific address data provided by the applicant and to which the vehicle shall be registered, the department shall identify the correct tax area code for the applicable local jurisdiction to which the vehicle shall be registered and to which the local use tax shall be allocated. The State Board of Equalization shall provide a list of state tax area codes applicable to each jurisdiction for purposes of allocating the local use taxes directly, pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code) and the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code).
(c)The department shall transmit all collections of use tax and penalty made under this section to the State Board of Equalization. The department also shall collect and transmit to the board specific address data provided by applicants upon application and to which a purchased vehicle will be registered, for proper allocation of use tax collections. The transmitted data shall be subject to the requirements of Section 7056 of the Revenue and Taxation Code. transmit the tax area codes and the amount of local use tax and penalty collections attributable to those tax area codes to the board for the proper direct allocation of local use tax collections. This transmittal shall be made at least monthly, accompanied by a schedule in the form that the department and board may prescribe.
(d)The State Board of Equalization shall reimburse the department for its costs incurred in carrying out the provisions of this section. The reimbursement shall be effected under agreement between the agencies, approved by the Department of Finance.
(e)In computing any use tax or penalty under this section, dollar fractions shall be disregarded in the manner specified in Section 9559. Payment of tax and penalty on this basis shall be deemed full compliance with the requirements of the Sales and Use Tax Law and local transaction and use tax law insofar as they are applicable to the use of vehicles to which this section relates.
(f)It is the intent of the Legislature that the department and the State Board of Equalization administer this part in a manner that ensures that applicable Bradley-Burns uniform local sales use taxes and local transaction and use taxes are collected and then remitted to the specific jurisdiction where the vehicle is registered.
(a)Except when the sale is by lease, when a mobilehome or commercial coach required to be registered annually under the Health and Safety Code or a vehicle required to be registered under the Vehicle Code is sold at retail by other than a person licensed or certificated pursuant to the Health and Safety Code or the Vehicle Code as a manufacturer, remanufacturer, dealer, dismantler, or lessor-retailer, subject to Section 11615.5 of the Vehicle Code, the retailer is not required or authorized to collect the use tax from the purchaser, but the purchaser of the vehicle shall pay the use tax to the Department of Housing and Community Development acting for and on behalf of the board pursuant to Section 18123 of the Health and Safety Code or to the Department of Motor Vehicles acting for and on behalf of the board pursuant to Section 4750.5 of the Vehicle Code.
(b)If the purchaser makes an application to either department which that is not timely, and is subject to penalty because of delinquency in effecting registration or transfer of registration of the vehicle, he or she then becomes liable also for penalty as specified in Section 6591, but no interest shall accrue.
(c)Application to the appropriate department by the purchaser relieves the purchaser of the obligation to file a return with the board under Section 6452.
(d)If the purchaser does not make application to either department, or does not pay the amount of use tax due, or files a return with the board under Section 6455 which that is not timely, interest and penalties shall apply with respect to the unpaid amount as provided in Chapter 5 (commencing with Section 6451).
(e)Use taxes collected by the Department of Motor Vehicles and transmitted to the board pursuant to Section 4750.5 of the Vehicle Code shall be allocated to the jurisdiction where the purchaser registers the purchased vehicle, by the specific address data provided to the board by the Department of Motor Vehicles. The board shall reimburse the Department of Motor Vehicles as prescribed in subdivision (d) of Section 4750.5 of the Vehicle Code.
SEC. 2.Section 6293 of the Revenue and Taxation Code is amended to read:6293.(a)Except when the sale is by lease, when a vehicle subject to identification under Division 16.5 (commencing with Section 38000) of the Vehicle Code or a vehicle that qualifies under the permanent trailer identification plate program pursuant to subdivision (a) of Section 5014.1 of the Vehicle Code, is sold at retail by other than a person licensed or certificated pursuant to the Vehicle Code as a manufacturer, remanufacturer, dealer, dismantler, or lessor-retailer, subject to Section 11615.5 of the Vehicle Code, or a person required to hold a sellers permit pursuant to Article 2 (commencing with Section 6066) of Chapter 2 by reason of the number, scope, and character of his or her sales of those vehicles, the retailer is not required or authorized to collect the use tax from the purchaser, but the purchaser of the vehicle shall pay the use tax to the Department of Motor Vehicles acting for and on behalf of the board pursuant to Section 38211 of the Vehicle Code.
(b)If the purchaser makes an application to that department which is not timely, and is subject to penalty because of delinquency in effecting identification or transfer of ownership of the vehicle, he or she then becomes liable also for penalty as specified in Section 6591 of this code, but no interest shall accrue.
(c)Application to that department by the purchaser relieves the purchaser of the obligation to file a return with the board under Section 6452.
(d)If the purchaser does not make application to that department, or does not pay the amount of use tax due, or files a return with the board under Section 6455 which is not timely, interest and penalties shall apply with respect to the unpaid amount as provided in Chapter 5 (commencing with Section 6451).
SEC. 3.Section 6294 of the Revenue and Taxation Code is amended to read:6294.(a)When an undocumented vessel required to be registered under the Vehicle Code is sold at retail by other than a person holding a sellers permit and regularly engaged in the business of selling vessels, the retailer is not required or authorized to collect the use tax from the purchaser, but the purchaser of the vessel must pay the use tax to the Department of Motor Vehicles acting for, and on behalf of, the board pursuant to Section 9928 of the Vehicle Code.
(b)If the purchaser makes an application to the department which that is not timely, and is subject to penalty because of delinquency in effecting registration or transfer of registration of the undocumented vessel, he or she then becomes liable also for penalty as specified in Section 6591, but no interest shall accrue.
(c)Application to the department by the purchaser shall relieve the purchaser of the obligation to file a return with the board under Section 6452.
(d)If the purchaser does not make application to either department, or does not pay the amount of use tax due, or files a return with the board under Section 6455 which that is not timely, interest and penalties shall apply with respect to the unpaid amount as provided in Chapter 5 (commencing with Section 6451).
(e)Use taxes collected by the Department of Motor Vehicles and transmitted to the board pursuant to Section 9928 of the Vehicle Code shall be allocated to the jurisdiction where the purchaser registers the purchased vessel, by the specific address data provided to the board by the Department of Motor Vehicles. The board shall reimburse the Department of Motor Vehicles as prescribed in subdivision (d) of Section 9928 of the Vehicle Code.
SEC. 4.Section 4750.5 of the Vehicle Code is amended to read:4750.5.(a)The department shall withhold the registration or the transfer of registration of any a vehicle sold at retail to any an applicant by any a person other than a vehicle manufacturer or dealer holding a license and certificate issued pursuant to Chapter 4 (commencing with Section 11700) of Division 5, or an automobile dismantler holding a license and certificate issued pursuant to Chapter 3 (commencing with Section 11500) of Division 5, or a lessor-retailer holding a license issued pursuant to Chapter 3.5 (commencing with Section 11600) of Division 5, and subject to the provisions of Section 11615.5, until the applicant pays to the department the use tax measured by the sales price of the vehicle as required by the Sales and Use Tax Law (Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code), together with penalty, if any, unless the State Board of Equalization finds that no use tax is due. If the applicant so desires, he or she may pay the use tax and penalty, if any, to the department so as to secure immediate action upon his or her application for registration or transfer of registration, and thereafter he or she may apply through the Department of Motor Vehicles to the State Board of Equalization under the provisions of the Sales and Use Tax Law for a refund of the amount so paid.
(b)(1)If applicable, the department shall determine all local use taxes that the applicant is responsible to pay by specific address data provided by the applicant and to which the vehicle shall be registered. The department shall utilize all available tools, including those available through the State Board of Equalization, to determine the correct use tax rates to apply to the applicant.
(2)Using the specific address data provided by the applicant and to which the vehicle shall be registered, the department shall identify the correct tax area code for the applicable local jurisdiction to which the vehicle shall be registered and to which the local use tax shall be allocated. The State Board of Equalization shall provide a list of state tax area codes applicable to each jurisdiction for purposes of allocating the local use taxes directly, pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code) and the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code).
(b)
(c)The department shall transmit to the State Board of Equalization all collections of use tax and penalty made under this section. section to the State Board of Equalization. The department also shall collect and transmit to the board specific address data provided by applicants upon application and to which a purchased vehicle will be registered, for proper allocation of use tax collections. The transmitted data shall be subject to the requirements of Section 7056 of the Revenue and Taxation Code. This transmittal shall be made at least monthly, accompanied by a schedule in such form as the form that the department and board may prescribe.
(c)
(d)The State Board of Equalization shall reimburse the department for its costs incurred in carrying out the provisions of this section. Such The reimbursement shall be effected under agreement between the agencies, approved by the Department of Finance.
(d)
(e)In computing any use tax or penalty thereon under the provisions of under this section, dollar fractions shall be disregarded in the manner specified in Section 9559 of this code. 9559. Payment of tax and penalty on this basis shall be deemed full compliance with the requirements of the Sales and Use Tax Law and local transaction and use tax law insofar as they are applicable to the use of vehicles to which this section relates.
(f)It is the intent of the Legislature that the department and the State Board of Equalization administer this part in a manner that ensures that applicable Bradley-Burns uniform local sales taxes and local transaction and use taxes are collected and then remitted to the specific jurisdiction where the vehicle is registered.
SEC. 5.Section 9928 of the Vehicle Code is amended to read:9928.(a)The department shall withhold the certificate of number or the transfer of registration of any a vessel sold at retail to any an applicant by any a person other than a person holding a sellers permit pursuant to Section 6066 of the Revenue and Taxation Code, and regularly engaged in the business of selling vessels, until the applicant pays to the department the use tax measured by the sales price of the vessel as required by the Sales and Use Tax Law, Law (Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code), together with penalty, if any, unless the State Board of Equalization finds that no use tax is due. If the applicant so desires, he or she may pay the use tax and penalty, if any, to the department so as to secure immediate action upon his or her application for registration or transfer of registration and thereafter he or she may apply through the Department of Motor Vehicles to the State Board of Equalization under the provisions of the Sales and Use Tax Law for a refund of the amount so paid.
(b)(1)If applicable, the department shall determine all local use taxes that the applicant is responsible to pay by specific address data provided by the applicant and to which the vessel shall be registered. The department shall utilize all available tools, including those available through the State Board of Equalization, to determine the correct use tax rates to apply to the applicant.
(2)Using the specific address data provided by the applicant and to which the vehicle shall be registered, the department shall identify the correct tax area code for the applicable local jurisdiction to which the vessel shall be registered and to which the local use tax shall be allocated. The State Board of Equalization shall provide a list of state tax area codes applicable to each jurisdiction for purposes of allocating the local use taxes directly, pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code) and the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code).
(b)
(c)The department shall transmit to the State Board of Equalization all collections of the use tax and penalty made under this section. section to the State Board of Equalization. The department also shall collect and transmit to the board specific address data provided by applicants upon application and to which a purchased vessel will be registered, for proper allocation of use tax collections. The transmitted data shall be subject to the requirements of Section 7056 of the Revenue and Taxation Code. This transmittal shall be made at least monthly, accompanied by a schedule in such form as the form that the department and board may prescribe.
(c)
(d)The State Board of Equalization shall reimburse the department for its costs incurred in carrying out the provisions of this section.
(d)
(e)In computing any use tax or penalty thereon under the provisions of the under this section, dollar fractions shall be disregarded in the manner specified in Section 9559. Payment of tax and penalty on this basis shall be deemed full compliance with the requirements of the Sales and Use Tax Law and local transaction and use tax law insofar as they are applicable to the use of vessels to which this section relates.
(e)
(f)The department and the State Board of Equalization shall enter into an agreement for the collection of the use tax pursuant to this section and Section 6294 of the Revenue and Taxation Code. The agreement shall specify the procedures agreed upon by the department and the board for collection of the tax and the reimbursement provided for in subdivision (c). (d). The agreement shall be approved by the Department of Finance.
(g)It is the intent of the Legislature that the department and the State Board of Equalization administer this part in a manner that ensures that applicable Bradley-Burns uniform local sales taxes and local transaction and use taxes are collected and then remitted to the specific jurisdiction where the vessel is registered.
SEC. 6.Section 38211 of the Vehicle Code is amended to read:38211.(a)The department shall withhold identification of or the transfer of ownership of any a vehicle subject to identification under this division until the applicant pays to the department the use tax measured by the sales price of the vehicle as required by the Sales and Use Tax Law, together with penalty, if any, unless the purchaser presents evidence on a form prescribed by the State Board of Equalization that sales tax will be paid by the seller or that use tax has been collected by the seller or that the State Board of Equalization finds that no use tax is due. If the applicant so desires, he or she may pay the use tax and penalty, if any, to the department so as to secure immediate action upon his or her application for identification or transfer of ownership, and thereafter he or she may apply through the Department of Motor Vehicles to the State Board of Equalization under the provisions of the Sales and Use Tax Law for a refund of the amount so paid.
(b)(1)If applicable, the department shall determine all local use taxes that the applicant is responsible to pay by specific address data provided by the applicant and to which the vehicle shall be registered. The department shall utilize all available tools, including those available through the State Board of Equalization, to determine the correct use tax rates to apply to the applicant.
(2)Using the specific address data provided by the applicant and to which the vehicle shall be registered, the department shall identify the correct tax area code for the applicable local jurisdiction to which the vehicle shall be registered and to which the local use tax shall be allocated. The State Board of Equalization shall provide a list of state tax area codes applicable to each jurisdiction for purposes of allocating the local use taxes directly, pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200) of Division 2 of the Revenue and Taxation Code) and the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code).
(b)
(c)The department shall transmit to the State Board of Equalization all collections of use tax and penalty made under this section. section to the State Board of Equalization. The department also shall collect and transmit to the board specific address data provided by applicants upon application and to which a purchased vehicle will be registered, for proper allocation of use tax collections. The transmitted data shall be subject to the requirements of Section 7056 of the Revenue and Taxation Code. This transmittal shall be made at least monthly, accompanied by a schedule in such form as the form that the department and board may prescribe.
(c)
(d)The State Board of Equalization shall reimburse the department for its costs incurred in carrying out the provisions of this section. Such The reimbursement shall be effected under agreement between the agencies, approved by the Department of Finance.
(d)
(e)In computing any use tax or penalty thereon under the provisions of this section under this section, dollar fractions shall be disregarded in the manner specified in Section 9559 of this code. 9559. Payment of tax and penalty on this basis shall be deemed full compliance with the requirements of the Sales and Use Tax Law and local transaction and use tax law insofar as they are applicable to the use of vehicles to which this section relates.
(f)It is the intent of the Legislature that the department and the State Board of Equalization administer this part in a manner that ensures that applicable Bradley-Burns uniform local sales taxes and local transaction and use taxes are collected and then remitted to the specific jurisdiction where the vehicle is registered.
SECTION 1.Section 38211 of the Vehicle Code is amended to read:38211.(a)The department shall withhold identification of or the transfer of ownership of any vehicle subject to identification under this division until the applicant pays to the department the use tax measured by the sales price of the vehicle as required by the Sales and Use Tax Law, together with penalty, if any, unless the purchaser presents evidence on a form prescribed by the State Board of Equalization that sales tax will be paid by the seller or that use tax has been collected by the seller or that the State Board of Equalization finds that no use tax is due. If the applicant so desires, he or she may pay the use tax and penalty, if any, to the department so as to secure immediate action upon his or her application for identification or transfer of ownership, and thereafter he or she may apply through the Department of Motor Vehicles to the State Board of Equalization under the Sales and Use Tax Law for a refund of the amount paid.
(b)If applicable, the department shall determine all local use taxes that the applicant is responsible to pay by specific address data provided by the applicant and to which the vehicle shall be registered. The department shall utilize all available tools, including those available through the State Board of Equalization, to determine the correct use tax rates to apply to the applicant.
(c)The department shall transmit all collections of use tax and penalty made under this section to the State Board of Equalization. The department also shall collect and transmit to the board specific address data provided by applicants upon application and to which a purchased vehicle will be registered, for proper allocation of use tax collections. The transmitted data shall be subject to the requirements of Section 7056 of the Revenue and Taxation Code. This transmittal shall be made at least monthly, accompanied by a schedule in the form that the department and board may prescribe.
(d)The State Board of Equalization shall reimburse the department for its costs incurred in carrying out the provisions of this section. The reimbursement shall be effected under agreement between the agencies, approved by the Department of Finance.
(e)In computing any use tax or penalty under this section, dollar fractions shall be disregarded in the manner specified in Section 9559. Payment of tax and penalty on this basis shall be deemed full compliance with the requirements of the Sales and Use Tax Law and local transaction and use tax law insofar as they are applicable to the use of vehicles to which this section relates.
(f)It is the intent of the Legislature that the department and the State Board of Equalization administer this part in a manner that ensures that applicable Bradley-Burns uniform local sales taxes and local transaction and use taxes are collected and then remitted to the specific jurisdiction where the vehicle is registered.
SEC. 2.Section 6293 of the Revenue and Taxation Code is amended to read:6293.(a)Except when the sale is by lease, when a vehicle subject to identification under Division 16.5 (commencing with Section 38000) of the Vehicle Code or a vehicle that qualifies under the permanent trailer identification plate program pursuant to subdivision (a) of Section 5014.1 of the Vehicle Code, is sold at retail by other than a person licensed or certificated pursuant to the Vehicle Code as a manufacturer, remanufacturer, dealer, dismantler, or lessor-retailer, subject to Section 11615.5 of the Vehicle Code, or a person required to hold a sellers permit pursuant to Article 2 (commencing with Section 6066) of Chapter 2 by reason of the number, scope, and character of his or her sales of those vehicles, the retailer is not required or authorized to collect the use tax from the purchaser, but the purchaser of the vehicle shall pay the use tax to the Department of Motor Vehicles acting for and on behalf of the board pursuant to Section 38211 of the Vehicle Code.
(b)If the purchaser makes an application to that department that is not timely, and is subject to penalty because of delinquency in effecting identification or transfer of ownership of the vehicle, he or she then becomes liable also for penalty as specified in Section 6591 but no interest shall accrue.
(c)Application to that department by the purchaser relieves the purchaser of the obligation to file a return with the board under Section 6452.
(d)If the purchaser does not make application to that department, or does not pay the amount of use tax due, or files a return with the board under Section 6455 that is not timely, interest and penalties shall apply with respect to the unpaid amount as provided in Chapter 5 (commencing with Section 6451).
(e)Use taxes collected by the Department of Motor Vehicles and transmitted to the board pursuant to Section 38211 of the Vehicle Code shall be allocated to the jurisdiction where the purchaser registers the purchased vehicle, by the specific address data provided to the board by the Department of Motor Vehicles. The board shall reimburse the Department of Motor Vehicles as prescribed in subdivision (d) of Section 38211 of the Vehicle Code.
(a)The department shall withhold identification of or the transfer of ownership of any vehicle subject to identification under this division until the applicant pays to the department the use tax measured by the sales price of the vehicle as required by the Sales and Use Tax Law, together with penalty, if any, unless the purchaser presents evidence on a form prescribed by the State Board of Equalization that sales tax will be paid by the seller or that use tax has been collected by the seller or that the State Board of Equalization finds that no use tax is due. If the applicant so desires, he or she may pay the use tax and penalty, if any, to the department so as to secure immediate action upon his or her application for identification or transfer of ownership, and thereafter he or she may apply through the Department of Motor Vehicles to the State Board of Equalization under the provisions of the Sales and Use Tax Law for a refund of the amount so paid.
(b)If applicable, the department shall determine all local use taxes that the applicant is responsible to pay by specific address data provided by the applicant and to which the vehicle shall be registered. The department shall utilize all available tools, including those available through the State Board of Equalization, to determine the correct use tax rates to apply to the applicant.
(b)
(c)The department shall transmit to the State Board of Equalization all collections of use tax and penalty made under this section. section to the State Board of Equalization. The department also shall collect and transmit to the board specific address data provided by applicants upon application and to which a purchased vehicle will be registered, for proper allocation of use tax collections. The transmitted data shall be subject to the requirements of Section 7056 of the Revenue and Taxation Code. This transmittal shall be made at least monthly, accompanied by a schedule in such form as the form that the department and board may prescribe.
(c)
(d)The State Board of Equalization shall reimburse the department for its costs incurred in carrying out the provisions of this section. Such The reimbursement shall be effected under agreement between the agencies, approved by the Department of Finance.
(d)
(e)In computing any use tax or penalty thereon under the provisions of this section under this section, dollar fractions shall be disregarded in the manner specified in Section 9559 of this code. 9559. Payment of tax and penalty on this basis shall be deemed full compliance with the requirements of the Sales and Use Tax Law and local transaction and use tax law insofar as they are applicable to the use of vehicles to which this section relates.
(f)It is the intent of the Legislature that the department and the State Board of Equalization administer this part in a manner that ensures that applicable Bradley-Burns uniform local sales taxes and local transaction and use taxes are collected and then remitted to the specific jurisdiction where the vehicle is registered.
SEC. 2.Section 6293 of the Revenue and Taxation Code is amended to read:6293.(a)Except when the sale is by lease, when a vehicle subject to identification under Division 16.5 (commencing with Section 38000) of the Vehicle Code or a vehicle that qualifies under the permanent trailer identification plate program pursuant to subdivision (a) of Section 5014.1 of the Vehicle Code, is sold at retail by other than a person licensed or certificated pursuant to the Vehicle Code as a manufacturer, remanufacturer, dealer, dismantler, or lessor-retailer, subject to Section 11615.5 of the Vehicle Code, or a person required to hold a sellers permit pursuant to Article 2 (commencing with Section 6066) of Chapter 2 by reason of the number, scope, and character of his or her sales of those vehicles, the retailer is not required or authorized to collect the use tax from the purchaser, but the purchaser of the vehicle shall pay the use tax to the Department of Motor Vehicles acting for and on behalf of the board pursuant to Section 38211 of the Vehicle Code.
(b)If the purchaser makes an application to that department which that is not timely, and is subject to penalty because of delinquency in effecting identification or transfer of ownership of the vehicle, he or she then becomes liable also for penalty as specified in Section 6591 of this code, but no interest shall accrue.
(c)Application to that department by the purchaser relieves the purchaser of the obligation to file a return with the board under Section 6452.
(d)If the purchaser does not make application to that department, or does not pay the amount of use tax due, or files a return with the board under Section 6455 which that is not timely, interest and penalties shall apply with respect to the unpaid amount as provided in Chapter 5 (commencing with Section 6451).
(e)Use taxes collected by the Department of Motor Vehicles and transmitted to the board pursuant to Section 38211 of the Vehicle Code shall be allocated to the jurisdiction where the purchaser registers the purchased vehicle, by the specific address data provided to the board by the Department of Motor Vehicles. The board shall reimburse the Department of Motor Vehicles as prescribed in subdivision (d) of Section 38211 of the Vehicle Code.
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Date
|
Status
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|---|---|
| Feb 18, 2016 | Read first time. To print. |
| Feb 19, 2016 | From printer. May be heard in committee March 20. |
| Mar 3, 2016 | Referred to Coms. on TRANS. and REV. & TAX. |
| Mar 28, 2016 | From committee chair, with author's amendments: Amend, and re-refer to Com. on TRANS. Read second time and amended. |
| Mar 29, 2016 | Re-referred to Com. on TRANS. |
| Apr 5, 2016 | From committee: Do pass and re-refer to Com. on REV. & TAX. (Ayes 16. Noes 0.) (April 4). Re-referred to Com. on REV. & TAX. |
| Apr 19, 2016 | From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 9. Noes 0.) (April 18). |
| Apr 20, 2016 | Read second time and amended. |
| Apr 21, 2016 | Re-referred to Com. on APPR. |
| May 11, 2016 | In committee: Set, first hearing. Referred to APPR. suspense file. |
| May 27, 2016 | In committee: Held under submission. |
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Date
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Description
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Location
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Votes
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|---|---|---|---|---|
| Apr 18, 2016 | Do pass as amended and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Revenue and Taxation |
Passed |
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| Apr 4, 2016 | Do pass and be re-referred to the Committee on [Revenue and Taxation] | Assembly Standing Committee on Transportation |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
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Organization
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Position
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Date
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|---|---|---|
| League Of California Cities | ** Support | Apr 4, 2016 |
Date of Hearing: May 11, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
ABPCA Bill Id:AB 2321
Author:(Rodriguez) – As Amended Ver:April 20, 2016
Policy Committee: | Transportation | Vote: | 16 - 0 |
Revenue and Taxation | 9 - 0 |
Urgency: No State Mandated Local Program: No Reimbursable: No
SUMMARY:
This bill:
- Requires the DMV, in collecting use taxes, to code transactions to specific addresses when vehicles or vessels involved in private party transactions are registered in order to ensure that remittance of tax revenue by the State Board of Equalization (BOE) is made to the specific city or county in which the purchaser resides.
- Requires the BOE to reimburse the DMV for costs associated with this bill.
FISCAL EFFECT:
One-time costs of around $225,000 for the DMV to reprogram its collection of the use tax for private party transfers of ownership. These costs will be reimbursed by the BOE pursuant to an interagency agreement with the DMV. The BOE's costs are in turn borne by local governments, which contract with the BOE to administer local Sales and Use Tax (SUT) revenues. The BOE will also incur minor absorbable administrative costs.
As discussed below, this bill will result in some minor reallocation among cities and counties of about $70 million in SUT revenues.
COMMENTS:
- Background. Currently, the BOE collects the SUT on a 7.5% statewide base rate, composed of a state portion and a local portion for cities and counties. The local portion is referred to as the Bradley-Burns Local SUT (Bradley-Burns) and is fixed at 1.25% of the sales price of tangible personal property.
The use tax is imposed in lieu of the sales tax for the privilege of the property's storage, use, or other consumption in California. The use tax is generally imposed on out-of-state purchases brought into California, but also applies in private party transactions of vehicles and vessels.
For use tax transactions that cannot be easily identified to a specific location, the BOE generally distributes the local portion through countywide pools. Under this process, local use tax revenues are prorated into pools for each city in the county and the unincorporated area of the county, at a ratio based upon each jurisdiction's total share of local SUT revenues generated in the county.
Current law requires the purchaser of a vehicle or vessel in a private party transaction to pay use tax, including both Bradley-Burns and applicable district-specific taxes to the DMV during registration of the vehicle or vessel. (As of April 1, 2016, 31 California counties, 132 cities, and 7 towns impose SUT higher than the base rate due to voter approval of additional district taxes.) The DMV then transmits all use tax collections to the BOE.
For the purposes of allocating Bradley-Burns, the DMV codes taxes collected from the applicant to the county in which the vehicle is being registered. The BOE then remits the taxes to the county of jurisdiction for distribution through the countywide pool. The DMV collects approximately $70 million annually in Bradley-Burns revenue on behalf of the BOE.
For purposes of allocating district-specific taxes, the DMV codes taxes collected from the applicant to the specific city or county jurisdiction in which the vehicle is being registered.
- Purpose. This bill proposes that the DMV code, and the BOE remit, Bradley-Burns revenues in a process similar to that established for district taxes, so that the 1.25% of Bradley-Burns revenues can be directly allocated to fund general purposes in the specific city or county where it is paid. This bill is supported by the California State Association of Counties and the League of California Cities.
Analysis Prepared by: Chuck Nicol / APPR. / (916) 319-2081
Date of Hearing: April 18, 2016
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Sebastian Ridley-Thomas, Chair
ABPCA Bill Id:AB 2321 (
Author:Rodriguez) – As Amended Ver:March 28, 2016
Majority vote. Fiscal committee.
SUBJECT: Vehicles: registration and transfers of title or interest: use tax
SUMMARY: Requires the Department of Motor Vehicles (DMV), in collecting use taxes, to code transactions to specific addresses when vehicles or vessels are registered to ensure that remittance of tax revenue by the State Board of Equalization (BOE) is made to the specific city or county in which the purchaser resides. Specifically, this bill:
- Requires the DMV to determine local use taxes owed by the applicant during registration of a vehicle or vessel according to specific address data provided by the applicant.
- Requires the BOE to provide the DMV with a list of state tax area codes applicable to each jurisdiction, so the DMV can identify and apply the correct tax area code for the applicable local jurisdiction to which the vehicle or vessel will be registered.
- Requires the DMV to collect and transmit to the BOE specific address data provided by applicants to which a purchased vehicle or vessel will be registered.
- Requires the BOE to allocate use taxes collected and transmitted by the DMV directly to the jurisdiction where the purchaser registered the vehicle or vessel, based on specific address data provided to the BOE by the DMV.
- Specifies that data transmitted from the DMV to the BOE shall be subject to Revenue and Taxation Code (R&TC) Section 7056, governing confidentiality.
- Requires the BOE to reimburse the DMV for costs associated with this bill.
- Declares the intent of the Legislature that the DMV and BOE ensure that applicable Bradley-Burns uniform local sales taxes and local transaction and use taxes are collected and remitted to the specific jurisdiction where the vehicle is registered.
EXISTING LAW:
- Authorizes cities and counties to impose a local sales and use tax (SUT), pursuant to the Bradley-Burns Uniform Local SUT Law, fixed at 1.25% of the sales price of tangible personal property (TPP) sold at retail or purchased outside the county for use within the county. Counties receive 0.25% for county-wide transportation purposes (restricted to road maintenance or operation of transit systems), regardless of whether the sale occurs in a city or in the unincorporated area of the county, with the remaining 1% used to support general operations of the city or county in which it is collected.
- Allows use taxpayers and certain sellers without a permanent place of business to report their local use and sales taxes, respectively, on a countywide basis, which is allocated to local jurisdictions through the countywide pool. However, use tax on transactions of $500,000 or more must be reported directly to the participating jurisdiction in which the first functional use of the property is made. [BOE SUT Regulation 1802]
- Authorizes cities and counties to impose transactions and use taxes for general or special purposes, at a rate of 0.125% or multiples of 0.125%, if approved by the requisite threshold of voters.
- Requires a person who purchases a vehicle or undocumented vessel from a person who is not licensed by the DMV as a manufacturer, remanufacturer, dealer, dismantler, or lessor-retailer to pay use tax, and any applicable penalties, to the DMV when registering the vehicle or undocumented vessel.
- Specifies that the applicable use tax rate is based on the address provided to the DMV by the registered owner of the vehicle or undocumented vessel.
- Requires the DMV to transmit all use tax and penalty collections to the BOE at least monthly, according to a schedule agreed upon by the DMV and BOE, and requires the BOE to reimburse the DMV for associated transmission costs.
FISCAL EFFECT: According to the BOE, this bill would not affect state revenues, but only result in a shift in local use tax from one local jurisdiction to another. However, administrative costs will be incurred by the DMV and BOE.
COMMENTS:
- Author's Statement: The author has provided the following statement in support of this bill:
AB 2321 is a straightforward bill that ensures municipalities receive their fair share of taxes collected on the private sales of vehicles. It accomplishes this by requiring private vehicle transactions to be assigned specific tax area location by the DMV, so that the Board of Equalization can properly identify and allocate the taxes collected. In 2014, DMV reported approximately $65 million in activity related to an estimated 2 million private vehicle and vessel registrations. This bill ensures that the city where the private sale took place, receive its portion of the taxes collected. Improving this process will result in more accurate allocations and may stand to benefit smaller and disadvantaged cities and unincorporated county areas.
- Arguments in Support: Proponents state that the practice to be enacted by this bill is "already the practice for the distribution of local voter-approved transaction and use tax rates. However, the Bradley-Burns portion is treated differently and is coded only to the county. The end result is that the BOE allocates the appropriate amount of Bradley-Burns revenue but to the county pool rather than the individual jurisdictions where the vehicle or vessel is registered."
To address this problem, "AB 2321 proposes that use tax collections on private party vehicle and vessel transactions be assigned specific tax area location information by the DMV…. This fix would provide the BOE the needed information without the need for substantial change to the current process or technology."
- Bradley-Burns Uniform Local Sales and Use Tax Law: Currently, the BOE collects SUT on a 7.5% statewide base rate, composed of a state portion and a local portion for cities and counties. The local portion is referred to as the Bradley-Burns Local SUT (Bradley-Burns) and is fixed at 1.25% of the sales price of TPP. Of the 1.25%, cities and counties receive 1% to support general operations, with the remaining 0.25% designated for countywide transportation purposes.
The use tax is imposed in lieu of the sales tax for the privilege of the property's storage, use, or other consumption in California. The use tax is generally imposed on out-of-state purchases brought into California, but also applies in private party transactions of vehicles and vessels.
- Countywide Pool Process: For use tax transactions that cannot be easily identified to a specific location, the BOE generally distributes the local portion through countywide pools. Under this process, local use tax revenues are prorated into pools for each city in the county and the unincorporated area of the county, at a ratio based upon each jurisdiction's total share of local SUT revenues generated in the county. For example, if the unincorporated area of the county generates 8% of the county's total taxable sales, it will receive 8% of the countywide pool.
The countywide pool accounts for about 12% of the total local SUT reported, with use tax accounting for the majority of the pooled revenues. Taxpayers who report use tax allocated through the countywide pool include out-of-state sellers who ship merchandise directly to California consumers, construction contractors for materials used, long-term lessors of equipment and other tangible personal property, and private sellers of vehicles and vessels. The BOE has always used the countywide pool process for allocating the local use tax generated by private party vehicle and vessel transactions, the largest component of county pool use tax revenues.
- Transaction and Use Tax Law: Cities and counties are authorized to impose additional transactions and use taxes, known as district taxes, subject to a vote of the people. General purpose taxes require majority voter approval and special purpose taxes require two-thirds voter approval. Generally, district taxes may be imposed in 0.125% increments, up to a total of 2%. As of April 1, 2016, 31 California counties, 132 cities, and 7 towns impose SUT higher than the base rate due to voter approval of additional district taxes. Unlike allocation of the Bradley-Burns through the countywide pool process, however, the BOE allocates district taxes directly to the city or county in which it is imposed.
- Role of the DMV: Existing law requires the purchaser of a vehicle or vessel in a private party transaction to pay use tax, including both Bradley-Burns and applicable district taxes to the DMV during registration of the vehicle or vessel. The DMV then transmits all use tax collections to the BOE.
For the purposes of allocating Bradley-Burns, the DMV codes taxes collected from the applicant to the county in which the vehicle is being registered. The BOE then remits the taxes to the county of jurisdiction for distribution through the countywide pool. The DMV collects approximately $70 million annually in Bradley-Burns revenue on behalf of the BOE.
For purposes of allocating district taxes, the DMV codes taxes collected from the applicant to the specific city or county jurisdiction in which the vehicle is being registered.
This bill proposes that the DMV code, and the BOE remit, Bradley-Burns revenues in a process similar to that established for district taxes, so that the 1% of Bradley-Burns revenues can be directly allocated to fund general purposes in the specific city or county it is paid.
- Shifting Tax Revenues: As noted in the BOE's staff analysis, this bill would result in a shift of revenues between local government jurisdictions. For example, if a used car is purchased in the City of Sacramento for $3,000, the table below uses hypothetical countywide pool percentages to illustrate how the provisions of this bill could increase allocation of Bradley-Burns for the City of Sacramento, but reduce allocation of Bradley-Burns for other cities and the unincorporated area in Sacramento County:
Jurisdiction | Countywide Pool Percentage | Direct Allocation under this bill | Indirect Allocation under current law | Change |
Unincorporated Sacramento | 10% | $0 | $3.00 | -$3.00 |
Citrus Heights | 13% | $0 | $3.90 | -$3.90 |
Elk Grove | 18% | $0 | $5.40 | -$5.40 |
Folsom | 19% | $0 | $5.70 | -$5.70 |
Galt | 9% | $0 | $2.70 | -$2.70 |
Isleton | 4% | $0 | $1.20 | -$1.20 |
Rancho Cordova | 9% | $0 | $2.70 | -$2.70 |
Sacramento | 18% | $30 | $5.40 | +24.60 |
Total | $30.00 | $30.00 |
The author of this bill states that more accurate allocations may stand to benefit smaller and disadvantaged cities and unincorporated county areas. In order for smaller cities and unincorporated county areas to increase their allocation of Bradley-Burns under this bill, it must be assumed that a high volume of private party transactions of vehicles and vessels occur in such jurisdictions, at a value that exceeds what these jurisdictions would otherwise be allocated from sales made across the county. It is unclear how revenues will shift as a result of this bill.
- Setting a New Precedent: The countywide pool process is not prescribed in statute, but in BOE regulations, and has been upheld by the courts as "an accounting technique which is reasonable, [and] subserves the interests of all cities and counties" (City of San Joaquin v. State Board of Equalization (1970) 9 Cal.App.3d 365). The City of San Joaquin had argued that the pooling process failed to allocate taxes levied by cities in connection with construction contracts on a transaction for transaction basis, resulting in the BOE giving taxes belonging to one local jurisdiction to another. However, the Court found that while the pooling process does result in one city's sales taxes being allocated to other jurisdictions, that city also shares in the sales tax revenues of other cities. Additionally, by having its SUT ordinance administered by the BOE, under an administrative contract agreed upon by both parties, the city gains a tremendous economic advantage. Thus, the city has not necessarily sustained a loss of tax income from the BOE's accounting practice.
According to the BOE, the countywide pool process allows for efficient administration of both SUT when a sale cannot be easily identified with a permanent place of business or a specific location in the state. However, the BOE has allowed for some of the use tax revenue previously allocated through the countywide pool process to be directly allocated to the city or county in which it is imposed. For example, the BOE has determined that a retailer must report the local use tax directly to the jurisdiction of first functional use when the transaction totals $500,000 or more. Since the BOE currently has the regulatory authority to decide when use the countywide pool process best serves taxpayers, the Committee may wish to consider whether requiring the direct allocation of use taxes from private party transactions on vehicles and vessels should be first evaluated via the regulatory process.
- Administrative Issues: According to the BOE, the codes provided to the DMV to identify the specific city or county jurisdiction in which the vehicle is being registered for purposes of allocating district taxes are different from the codes the BOE would have to provide the DMV for purposes of allocating Bradley-Burns directly. For example, a city has a specific tax area code for purposes of identifying Bradley-Burns, but a separate tax area code for purposes of identifying the district taxes collected within that city. Thus, new information would have to be shared between the DMV and BOE to carry out the provisions of this bill.
The relationship between the DMV and BOE is established by an interagency contract. The most recent contract was entered into on July 1, 2015 and expires on June 30, 2016. While the terms of subsequent contracts can be updated to require the BOE to share tax rate codes with the DMV so the DMV can inform the BOE where Bradley-Burns revenues should be directly allocated, these additional duties on both agencies will like raise administrative costs of the contract. The contract is collectively paid for by the General Fund, local jurisdictions imposing Bradley-Burns, and local jurisdictions imposing district taxes. Although certain local jurisdictions may recover more Bradley-Burns revenues as a result of this bill, the cost will be borne by all local jurisdictions across the state.
- Author's Amendments: Following discussions with BOE staff, the Author's office has suggested the following amendments to avoid duplicative language and clarify the practical effect of this bill:
- Shift language amending Part 1 of R&TC pertaining to Sales and Use Tax Law to Part 1.5 of R&TC pertaining to Uniform Local Sales and Use Taxes;
- Correct references to "local sales taxes" to "local use taxes";
- Strike the requirement for the DMV to utilize all available tools to determine the applicable tax rate, as it is already ongoing practice to do so;
- Strike the requirement for transmitted data to be subject to R&TC Section 7056, as the confidentiality of transmitted data is already protected under current law;
- Strike the requirement that the DMV transmit address data to the BOE, as the BOE would not need address data for allocating use tax pursuant to this bill;
- Add language specifying that the DMV transmit tax area codes and the amount of use tax attributable to those tax area codes to the BOE for proper direct allocation; and,
- Correct a drafting error that omitted a provision of this bill from R&TC Section 6293.
- Double Referral: This bill was double-referred to the Assembly Committee on Transportation, which passed this bill on April 4, 2016, with a vote of 16-0. For additional discussion of DMV administration related to this bill, please refer to the analysis prepared by the Assembly Committee on Transportation.
REGISTERED SUPPORT / OPPOSITION:
Support
California State Association of Counties
League of California Cities
MuniServices
Opposition
None on file
Analysis Prepared by: Irene Ho / REV. & TAX. / (916) 319-2098
Date of Hearing: April 4, 2016
ASSEMBLY COMMITTEE ON TRANSPORTATION
Jim Frazier, Chair
ABPCA Bill Id:AB 2321 (
Author:Rodriguez) – As Amended Ver:March 28, 2016
SUBJECT: Vehicles and vessels: transfers of title or interest: use tax
SUMMARY: Requires the Department of Motor Vehicles (DMV) to code transactions in the collection of the Bradley-Burns Uniform Sales and Use Tax to specific address data when vehicles or vessels are registered to ensure the remittance of that tax revenue to the specific city or county in which the person resides. Specifically, this bill:
- Requires DMV to determine all local use taxes that a person registering a vehicle or vessel, purchased through a private-to-private sale, is responsible to pay based upon address data provided of where the vehicle or vessel would be registered.
- Requires DMV to use this address data to determine the correct tax area code for the applicable local jurisdiction (city or unincorporated county) that the local use tax revenue would be allocated.
- Requires DMV to remit this data to the Board of Equalization (BOE) for direct allocation to the local jurisdictions.
- Declares the intent of the Legislature that DMV and BOE administer this in a manner that ensures the applicable Bradley-Burns Uniform local use taxes and transactions and use taxes are collected and allocated directly to the specific jurisdiction where the vehicle is registered based on the tax area code.
- Requires the BOE to allocate the tax revenue collected to the jurisdiction where the purchaser registered the vehicle or vessel.
- Requires BOE to reimburse the DMV for costs associated with this transaction.
EXISTING LAW:
- Authorizes the imposition of various local sales and use taxes.
- Requires DMV to collect sales and use taxes at the time of the registration of a vehicle, off-highway vehicle, mobile home, or vessel in a private-to private party sale.
- Requires DMV to remit the collected tax revenue to BOE for distribution to the local jurisdictions.
- Requires BOE to reimburse DMV for its costs incurred in carrying out these provisions.
FISCAL EFFECT: Unknown
COMMENTS: This analysis only speaks to the process in which DMV administers the collection of local use taxes and what changes would need to be made to implement these new requirements. The tax policies included in this bill will be considered by the Revenue and Taxation Committee, where this bill will be referred, should it pass out of this committee.
Currently, DMV collects local sales and use taxes, including the Bradley Burns taxes upon registration of a vehicle or vessel purchased through a private-to-private party sale. At the point of collection, DMV codes the local transaction and use taxes, such as a local add-on tax like a countywide tax dedicated to transportation, to the specific city or county jurisdiction in which the applicant registering the vehicle or vessel resides. However, the Bradley-Burns portion of the taxes collected from the applicant is coded only to the county in which the vehicle is being registered. All tax revenue collected is remitted to BOE for distribution to appropriate local jurisdictions. The Bradley-Burns portion is remitted to the county of jurisdiction for distribution through a countywide pool.
According to the author, AB 2321 seeks to improve BOE’s allocation of the local Bradley-Burns portion of use taxes collected by DMV utilizing DMV’s existing infrastructure that is currently used to process private-to-private vehicle and vessel registrations. This can be accomplished by using the specific local tax area codes to identify the location of the registrant, as used in the collection of the local transaction and use taxes, rather than the countywide tax area codes currently used for Bradley-Burns. He contends that improving the process will result in more accurate allocations and may stand to benefit smaller and disadvantaged cities and unincorporated county areas.
As mentioned, DMV currently utilizes a system that allows for the coding of collections to a specific tax area code for the purposes of the local transaction and use taxes which represent approximately 100 jurisdictions. This bill would require DMV to code specific tax area codes to the Bradley-Burns portion of the tax revenue collected, which would entail the use of codes for 482 cities plus 58 counties.
This proposal may be able to be implemented administratively. It is unclear what process steps would need to take place with BOE and DMV to make the changes required in this bill, but the author should continue to work with the agencies. It is also unclear what the impacts of this bill would have on DMV’s workforce, however, changes to DMV’s computer systems typically require significant programming efforts. Costs associated with the new coding could be recovered through DMV’s interagency agreement with BOE.
Double referral: This bill will be referred to the Assembly Revenue and Taxation Committee should it pass out of this committee.
REGISTERED SUPPORT / OPPOSITION:
Support
League of California Cities (Sponsor)
Opposition
None on file
Analysis Prepared by: Melissa White / TRANS. / (916) 319-2093
Discussed in Hearing
2MIN
Assembly Standing Committee on Transportation
Bill Author
Bill Co-Author(s):