SB 600: Sales and use taxes: exemption: manufacturing and research: useful life: electric power generation.

Existing sales and use tax laws impose taxes on retailers measured by gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state, measured by sales price. Those laws partially exempt from those taxes, for a specified period, the gross receipts from the sale of, and the storage, use, or other consumption of, specified tangible personal property purchased for use by a qualified person, as defined, to be used primarily in manufacturing or other processes, and in research and development. Consumables On and after July 1, 2014, tangible personal property with a useful life of less than one year do not qualify for exemption, and useful life is or more years, as defined by reference to state income or franchise taxes. taxes, is deemed to have a useful life of one or more years for purposes of the exemption.

This bill would additionally define useful life by reference to manufacturer or other warranties, maintenance contracts, and normal replacement as established by industry or business practices and would provide that those definitions would apply on and after July 1, 2014. The define useful life for periods on and after July 1, 2014, to also include tangible personal property that is expensed for state income or franchise tax purposes and that has a physical useful life of one or more years. The bill, with respect to property with a useful life of one or more years as redefined by this bill, would require the State Board of Equalization to cancel any notice of determination and any related penalties and interest and would prohibit the board from issuing any notice of determination with respect to the purchase or sale of that property. The bill would authorize a qualified person to offset the amount of sales tax reimbursement or use tax paid against any sales and use tax imposed on the qualified person when a qualified person has paid sales tax reimbursement or use tax on purchases of qualified tangible personal property that has a useful life of one or more years, as redefined by the bill, as provided.

The bill, for taxable years beginning on and after January 1, 2018, and before July 1, 2030, 2026, would additionally exempt from those taxes special purpose buildings and foundations used for the generation, production, storage, or distribution, generation or production or storage and distribution, as defined, of electric power and would qualified tangible personal property purchased for used by a qualified person to be used primarily in the generation or production or storage and distribution of electric power or purchased for use by a contractor for the qualified person, as specified. The bill, on and after January 1, 2018, would expand the definition of qualified person to include, among others, a person primarily engaged in the business of electric power generation. The bill would declare the intent of the Legislature to enact legislation that would improve the states sales and use tax incentives to promote a stronger California economy by securing a greater share of the high-paying, high-skilled jobs in manufacturing and research and development. The bill would also make various findings and declarations.