AB 2560: Taxation: prison contracts: goods and services.

Existing law imposes various taxes, including taxes on the privilege of engaging in certain activities. The Fee Collection Procedures Law, the violation of which is a crime, provides procedures for the collection of certain fees and surcharges.

This bill, for the privilege of contracting with the Department of Corrections and Rehabilitation to provide a state prison with goods, services, or both, would impose a tax on vendors, as defined, at specified rates for the final contract price, as defined, for contracts entered into on or after January 1, 2019. The bill would not apply the tax to health care contracts or to contracts with private prison vendors. The bill would require all amounts paid, less refunds, to be deposited into the State Incarceration Prevention Fund, which this bill would establish in the State Treasury, and would continuously appropriate those moneys to the State Department of Education for preschool and after school programs for the purposes of providing services to prevent people from being incarcerated and providing early intervention programs, less the amount needed to reimburse the State Board of Equalization and the Attorney General for costs incurred in administering these provisions and maintaining a database of specified information relating to the contracts. The bill would prohibit this tax from being passed through to the state by way of higher prices for the goods or services in the contract, and would require a vendor to certify under penalty of perjury that this tax was not passed through to the state. The bill would require a vendor to pay a penalty if it fails to comply with these provisions. The bill would require the Attorney General to enforce this prohibition and would authorize the Attorney General to monitor and, if necessary, investigate any instance where a vendor has passed or attempted to pass the tax through to the state. The bill would require the State Board of Equalization to assess and collect the tax imposed by this part pursuant to the Fee Collection Procedures Law and would provide an appeals process for a person from whom the state incarceration prevention tax is determined to be due, as provided. By expanding the application of the Fee Collection Procedures Law, the violation of which is a crime, and by expanding the scope of the crime of perjury, this bill imposes 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.