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Business Taxes Law Guide—Revision 2024

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Sales and Use Tax Law

Revenue and Taxation Code

Constitutionality.—The Retail Sales Tax Act, reciting that it should become effective immediately upon its approval, is not unconstitutional because not passed by a two-thirds vote in each house of the Legislature. The constitutional mandate, contained in section 1 of Article VI, that no act shall go into effect until 90 days after the adjournment of the Legislature, specifically excepts three classes of measures, i.e., acts calling elections, acts providing for tax levies or appropriations for the usual current expenses of the state and certain urgency measures. It is only the last group that requires a two-thirds vote. The Legislature has the power to determine by a majority vote in each house when the other two classes of excepted acts shall become effective. Even though the act failed to become effective immediately on July 31, 1933, when it was approved, the collection of taxes for the first quarterly period beginning with August 1, 1933, was not illegal for the reason that the act would become retroactive as to the period of time prior to its effective date.

The act does not contravene either the Federal or the State Constitution by depriving individuals of property without due process of law and does not unreasonably discriminate with respect to the different classes of businesses to which it applies. Thus, the act is not unconstitutional because it applies to retail and not wholesale merchants and to tangible and not intangible personal property, because it provides for certain specific exemptions and because section 8½ authorizes the retailer to collect the tax "from the consumer insofar as the same can be done." Roth Drugs, Inc. v. Johnson (1936) 13 Cal.App.2d 720.

California Constitutional Provision

SEC. 35. Imposition and rate of additional sales and use tax: public safety services. (a) The people of the State of California find and declare all of the following:

(1) Public safety services are critically important to the security and wellbeing of the State's citizens and to the growth and revitalization of the State's economic base.

(2) The protection of the public safety is the first responsibility of local government and local officials have an obligation to give priority to the provision of adequate public safety services.

(3) In order to assist local government in maintaining a sufficient level of public safety services, the proceeds of the tax enacted pursuant to this section shall be designated exclusively for public safety.

(b) In addition to any sales and use taxes imposed by the Legislature, the following sales and use taxes are hereby imposed:

(1) For the privilege of selling tangible personal property at retail, a tax is hereby imposed upon all retailers at the rate of ½ percent of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in this State on and after January 1, 1994.

(2) An excise tax is hereby imposed on the storage, use, or other consumption in this state of tangible personal property purchased from any retailer on and after January 1, 1994, for storage, use, or other consumption in this State at the rate of ½ percent of the sales price of the property.

(c) The Sales and Use Tax Law, including any amendments made thereto on or after the effective date of this section, shall be applicable to the taxes imposed by subdivision (b).

(d) (1) All revenues, less refunds, derived from the taxes imposed pursuant to subdivision (b) shall be transferred to the Local Public Safety Fund for allocation by the Legislature, as prescribed by statute, to counties in which either of the following occurs:

(A) The board of supervisors, by a majority vote of its membership, requests an allocation from the Local Public Safety Fund in a manner prescribed by statute.

(B) A majority of the county's voters voting thereon approve the addition of this section.

(2) Moneys in the Local Public Safety Fund shall be allocated for use exclusively for public safety services of local agencies.

(e) Revenues derived from the taxes imposed pursuant to subdivision (b) shall not be considered proceeds of taxes for purposes of Article XIII B or state General Fund proceeds of taxes within the meaning of Article XVI.

(f) Except for the provisions of Section 34, this section shall supersede any other provisions of this Constitution that are in conflict with the provisions of this section, including, but not limited to, Section 9 of Article II.

History—Adopted by voters, Proposition 172, in effect November 3, 1993.

SEC. 36. Imposition and rate of additional sales and use tax: education; Local Revenue Fund 2011. (a) For purposes of this section:

(1) "Public Safety Services" includes the following:

(A) Employing and training public safety officials, including law enforcement personnel, attorneys assigned to criminal proceedings, and court security staff.

(B) Managing local jails and providing housing, treatment, and services for, and supervision of, juvenile and adult offenders.

(C) Preventing child abuse, neglect, or exploitation; providing services to children and youth who are abused, neglected, or exploited, or who are at risk of abuse, neglect, or exploitation, and the families of those children; providing adoption services; and providing adult protective services.

(D) Providing mental health services to children and adults to reduce failure in school, harm to self or others, homelessness, and preventable incarceration or institutionalization.

(E) Preventing, treating, and providing recovery services for substance abuse.

(2) "2011 Realignment Legislation" means legislation enacted on or before September 30, 2012, to implement the state budget plan, that is entitled 2011 Realignment and provides for the assignment of Public Safety Services responsibilities to local agencies, including related reporting responsibilities. The legislation shall provide local agencies with maximum flexibility and control over the design, administration, and delivery of Public Safety Services consistent with federal law and funding requirements, as determined by the Legislature. However, 2011 Realignment Legislation shall include no new programs assigned to local agencies after January 1, 2012, except for the early periodic screening, diagnosis, and treatment (EPSDT) program and mental health managed care.

(b) (1) Except as provided in subdivision (d), commencing in the 2011-12 fiscal year and continuing thereafter, the following amounts shall be deposited into the Local Revenue Fund 2011, as established by Section 30025 of the Government Code, as follows:

(A) All revenues, less refunds, derived from the taxes described in Sections 6051.15 and 6201.15 of the Revenue and Taxation Code, as those sections read on July 1, 2011.

(B) All revenues, less refunds, derived from the vehicle license fees described in Section 11005 of the Revenue and Taxation Code, as that section read on July 1, 2011.

(2) On and after July 1, 2011, the revenues deposited pursuant to paragraph (1) shall not be considered General Fund revenues or proceeds of taxes for purposes of Section 8 of Article XVI of the California Constitution.

(c) (1) Funds deposited in the Local Revenue Fund 2011 are continuously appropriated exclusively to fund the provision of Public Safety Services by local agencies. Pending full implementation of the 2011 Realignment Legislation, funds may also be used to reimburse the State for program costs incurred in providing Public Safety Services on behalf of local agencies. The methodology for allocating funds shall be as specified in the 2011 Realignment Legislation.

(2) The county treasurer, city and county treasurer, or other appropriate official shall create a County Local Revenue Fund 2011 within the treasury of each county or city and county. The money in each County Local Revenue Fund 2011 shall be exclusively used to fund the provision of Public Safety Services by local agencies as specified by the 2011 Realignment Legislation.

(3) Notwithstanding Section 6 of Article XIII B, or any other constitutional provision, a mandate of a new program or higher level of service on a local agency imposed by the 2011 Realignment Legislation, or by any regulation adopted or any executive order or administrative directive issued to implement that legislation, shall not constitute a mandate requiring the State to provide a subvention of funds within the meaning of that section. Any requirement that a local agency comply with Chapter 9 (commencing with Section 54950) of Part 1 of Division 2 of Title 5 of the Government Code, with respect to performing its Public Safety Services responsibilities, or any other matter, shall not be a reimbursable mandate under Section 6 of Article XIII B.

(4) (A) Legislation enacted after September 30, 2012, that has an overall effect of increasing the costs already borne by a local agency for programs or levels of service mandated by the 2011 Realignment Legislation shall apply to local agencies only to the extent that the State provides annual funding for the cost increase. Local agencies shall not be obligated to provide programs or levels of service required by legislation, described in this subparagraph, above the level for which funding has been provided.

(B) Regulations, executive orders, or administrative directives, implemented after October 9, 2011, that are not necessary to implement the 2011 Realignment Legislation, and that have an overall effect of increasing the costs already borne by a local agency for programs or levels of service mandated by the 2011 Realignment Legislation, shall apply to local agencies only to the extent that the State provides annual funding for the cost increase. Local agencies shall not be obligated to provide programs or levels of service pursuant to new regulations, executive orders, or administrative directives, described in this subparagraph, above the level for which funding has been provided.

(C) Any new program or higher level of service provided by local agencies, as described in subparagraphs (A) and (B), above the level for which funding has been provided, shall not require a subvention of funds by the State nor otherwise be subject to Section 6 of Article XIII B. This paragraph shall not apply to legislation currently exempt from subvention under paragraph (2) of subdivision (a) of Section 6 of Article XIII B as that paragraph read on January 2, 2011.

(D) The State shall not submit to the federal government any plans or waivers, or amendments to those plans or waivers, that have an overall effect of increasing the cost borne by a local agency for programs or levels of service mandated by the 2011 Realignment Legislation, except to the extent that the plans, waivers, or amendments are required by federal law, or the State provides annual funding for the cost increase.

(E) The State shall not be required to provide a subvention of funds pursuant to this paragraph for a mandate that is imposed by the State at the request of a local agency or to comply with federal law. State funds required by this paragraph shall be from a source other than those described in subdivisions (b) and (d), ad valorem property taxes, or the Social Services Subaccount of the Sales Tax Account of the Local Revenue Fund.

(5) (A) For programs described in subparagraphs (C) to (E), inclusive, of paragraph (1) of subdivision (a) and included in the 2011 Realignment Legislation, if there are subsequent changes in federal statutes or regulations that alter the conditions under which federal matching funds as described in the 2011 Realignment Legislation are obtained, and have the overall effect of increasing the costs incurred by a local agency, the State shall annually provide at least 50 percent of the nonfederal share of those costs as determined by the State.

(B) When the State is a party to any complaint brought in a federal judicial or administrative proceeding that involves one or more of the programs described in subparagraphs (C) to (E), inclusive, of paragraph (1) of subdivision (a) and included in the 2011 Realignment Legislation, and there is a settlement or judicial or administrative order that imposes a cost in the form of a monetary penalty or has the overall effect of increasing the costs already borne by a local agency for programs or levels of service mandated by the 2011 Realignment Legislation, the State shall annually provide at least 50 percent of the nonfederal share of those costs as determined by the State. Payment by the State is not required if the State determines that the settlement or order relates to one or more local agencies failing to perform a ministerial duty, failing to perform a legal obligation in good faith, or acting in a negligent or reckless manner.

(C) The state funds provided in this paragraph shall be from funding sources other than those described in subdivisions (b) and (d), ad valorem property taxes, or the Social Services Subaccount of the Sales Tax Account of the Local Revenue Fund.

(6) If the State or a local agency fails to perform a duty or obligation under this section or under the 2011 Realignment Legislation, an appropriate party may seek judicial relief. These proceedings shall have priority over all other civil matters.

(7) The funds deposited into a County Local Revenue Fund 2011 shall be spent in a manner designed to maintain the State's eligibility for federal matching funds, and to ensure compliance by the State with applicable federal standards governing the State's provision of Public Safety Services.

(8) The funds deposited into a County Local Revenue Fund 2011 shall not be used by local agencies to supplant other funding for Public Safety Services.

(d) If the taxes described in subdivision (b) are reduced or cease to be operative, the State shall annually provide moneys to the Local Revenue Fund 2011 in an amount equal to or greater than the aggregate amount that otherwise would have been provided by the taxes described in subdivision (b). The method for determining that amount shall be described in the 2011 Realignment Legislation, and the State shall be obligated to provide that amount for so long as the local agencies are required to perform the Public Safety Services responsibilities assigned by the 2011 Realignment Legislation. If the State fails to annually appropriate that amount, the Controller shall transfer that amount from the General Fund in pro rata monthly shares to the Local Revenue Fund 2011. Thereafter, the Controller shall disburse these amounts to local agencies in the manner directed by the 2011 Realignment Legislation. The state obligations under this subdivision shall have a lower priority claim to General Fund money than the first priority for money to be set apart under Section 8 of Article XVI and the second priority to pay voter-approved debts and liabilities described in Section 1 of Article XVI.

(e) (1) To ensure that public education is not harmed in the process of providing critical protection to local Public Safety Services, the Education Protection Account is hereby created in the General Fund to receive and disburse the revenues derived from the incremental increases in taxes imposed by this section, as specified in subdivision (f).

(2) (A) Before June 30, 2013, and before June 30 of each year from 2014 to 2018, inclusive, the Director of Finance shall estimate the total amount of additional revenues, less refunds, that will be derived from the incremental increases in tax rates made in subdivision (f) that will be available for transfer into the Education Protection Account during the next fiscal year. The Director of Finance shall make the same estimate by January 10, 2013, for additional revenues, less refunds, that will be received by the end of the 2012-13 fiscal year.

(B) During the last 10 days of the quarter of each of the first three quarters of each fiscal year from 2013-14 to 2018-19, inclusive, the Controller shall transfer into the Education Protection Account one-fourth of the total amount estimated pursuant to subparagraph (A) for that fiscal year, except as this amount may be adjusted pursuant to subparagraph (D).

(C) In each of the fiscal years from 2012-13 to 2020-21, inclusive, the Director of Finance shall calculate an adjustment to the Education Protection Account, as specified by subparagraph (D), by adding together the following amounts, as applicable:

(i) In the last quarter of each fiscal year from 2012-13 to 2018-19, inclusive, the Director of Finance shall recalculate the estimate made for the fiscal year pursuant to subparagraph (A), and shall subtract from this updated estimate the amounts previously transferred to the Education Protecion Account for that fiscal year.

(ii) In June 2015 and in every June from 2016 to 2021, inclusive, the Director of Finance shall make a final determination of the amount of additional revenues, less refunds, derived from the incremental increases in tax rates made in subdivision (f) for the fiscal year ending two years prior. The amount of the updated estimate calculated in clause (i) for the fiscal year ending two years prior shall be subtracted from the amount of this final determination.

(D) If the sum determined pursuant to subparagraph (C) is positive, the Controller shall transfer an amount equal to that sum into the Education Protection Account within 10 days preceding the end of the fiscal year. If that amount is negative, the Controller shall suspend or reduce subsequent quarterly transfers, if any, to the Education Protection Account until the total reduction equals the negative amount herein described. For purposes of any calculation made pursuant to clause (i) of subparagraph (C), the amount of a quarterly transfer shall not be modified to reflect any suspension or reduction made pursuant to this subparagraph.

(3) All moneys in the Education Protection Account are hereby continuously appropriated for the support of school districts, county offices of education, charter schools, and community college districts as set forth in this paragraph.

(A) Eleven percent of the moneys appropriated pursuant to this paragraph shall be allocated quarterly by the Board of Governors of the California Community Colleges to community college districts to provide general purpose funding to community college districts in proportion to the amounts determined pursuant to Section 84750.5 of the Education Code, as that code section read upon voter approval of this section. The allocations calculated pursuant to this subparagraph shall be offset by the amounts specified in subdivisions (a), (c), and (d) of Section 84751 of the Education Code, as that section read upon voter approval of this section, that are in excess of the amounts calculated pursuant to Section 84750.5 of the Education Code, as that section read upon voter approval of this section, provided that no community college district shall receive less than one hundred dollars ($100) per full time equivalent student.

(B) Eighty-nine percent of the moneys appropriated pursuant to this paragraph shall be allocated quarterly by the Superintendent of Public Instruction to provide general purpose funding to school districts, county offices of education, and state general-purpose funding to charter schools in proportion to the revenue limits calculated pursuant to Sections 2558 and 42238 of the Education Code and the amounts calculated pursuant to Section 47633 of the Education Code for county offices of education, school districts, and charter schools, respectively, as those sections read upon voter approval of this section. The amounts so calculated shall be offset by the amounts specified in subdivision (c) of Section 2558 of, paragraphs (1) through (7) of subdivision (h) of Section 42238 of, and Section 47635 of, the Education Code for county offices of education, school districts, and charter schools, respectively, as those sections read upon voter approval of this section, that are in excess of the amounts calculated pursuant to Sections 2558, 42238, and 47633 of the Education Code for county offices of education, school districts, and charter schools, respectively, as those sections read upon voter approval of this section, provided that no school district, county office of education, or charter school shall receive less than two hundred dollars ($200) per unit of average daily attendance.

(4) This subdivision is self-executing and requires no legislative action to take effect. Distribution of the moneys in the Education Protection Account by the Board of Governors of the California Community Colleges and the Superintendent of Public Instruction shall not be delayed or otherwise affected by failure of the Legislature and Governor to enact an annual budget bill pursuant to Section 12 of Article IV, by invocation of paragraph (h) of Section 8 of Article XVI, or by any other action or failure to act by the Legislature or Governor.

(5) Notwithstanding any other provision of law, the moneys deposited in the Education Protection Account shall not be used to pay any costs incurred by the Legislature, the Governor, or any agency of state government.

(6) A community college district, county office of education, school district, or charter school shall have sole authority to determine how the moneys received from the Education Protection Account are spent in the school or schools within its jurisdiction, provided, however, that the appropriate governing board or body shall make these spending determinations in open session of a public meeting of the governing board or body and shall not use any of the funds from the Education Protection Account for salaries or benefits of administrators or any other administrative costs. Each community college district, county office of education, school district, and charter school shall annually publish on its Internet Web site an accounting of how much money was received from the Education Protection Account and how that money was spent.

(7) The annual independent financial and compliance audit required of community college districts, county offices of education, school districts, and charter schools shall, in addition to all other requirements of law, ascertain and verify whether the funds provided from the Education Protection Account have been properly disbursed and expended as required by this section. Expenses incurred by those entities to comply with the additional audit requirement of this section may be paid with funding from the Education Protection Account, and shall not be considered administrative costs for purposes of this section.

(8) Revenues, less refunds, derived pursuant to subdivision (f) for deposit in the Education Protection Account pursuant to this section shall be deemed "General Fund revenues," "General Fund proceeds of taxes," and "moneys to be applied by the State for the support of school districts and community college districts" for purposes of Section 8 of Article XVI.

(f) (1) (A) In addition to the taxes imposed by Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code, for the privilege of selling tangible personal property at retail, a tax is hereby imposed upon all retailers at the rate of 1/4 percent of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in this State on and after January 1, 2013, and before January 1, 2017.

(B) In addition to the taxes imposed by Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code, an excise tax is hereby imposed on the storage, use, or other consumption in this State of tangible personal property purchased from any retailer on and after January 1, 2013, and before January 1, 2017, for storage, use, or other consumption in this state at the rate of 1/4 percent of the sales price of the property.

(C) The Sales and Use Tax Law, including any amendments enacted on or after the effective date of this section, shall apply to the taxes imposed pursuant to this paragraph.

(D) This paragraph shall become inoperative on January 1, 2017.

1, 2019, with respect to the tax imposed pursuant to Section 17041 of the Revenue and Taxation Code, the income tax bracket and the rate of 9.3 percent set forth in paragraph (1) of subdivision (a) of Section 17041 of the Revenue and Taxation Code shall be modified by each of the following:

(A) (i) For that portion of taxable income that is over two hundred fifty thousand dollars ($250,000) but not over three hundred thousand dollars ($300,000), the tax rate is 10.3 percent of the excess over two hundred fifty thousand dollars ($250,000).

(ii) For that portion of taxable income that is over three hundred thousand dollars ($300,000) but not over five hundred thousand dollars ($500,000), the tax rate is 11.3 percent of the excess over three hundred thousand dollars ($300,000).

(iii) For that portion of taxable income that is over five hundred thousand dollars ($500,000), the tax rate is 12.3 percent of the excess over five hundred thousand dollars ($500,000).

(B) The income tax brackets specified in clauses (i), (ii), and (iii) of subparagraph (A) shall be recomputed, as otherwise provided in subdivision (h) of Section 17041 of the Revenue and Taxation Code, only for taxable years beginning on and after January 1, 2013.

(C) (i) For purposes of subdivision (g) of Section 19136 of the Revenue and Taxation Code, this paragraph shall be considered to be chaptered on the date it becomes effective.

(ii) For purposes of Part 10 (commencing with Section 17001) of, and Part 10.2 (commencing with Section 18401) of, Division 2 of the Revenue and Taxation Code, the modified tax brackets and tax rates established and imposed by this paragraph shall be deemed to be established and imposed under Section 17041 of the Revenue and Taxation Code.

(D) This paragraph shall become inoperative on December 1, 2019.

(3) For any taxable year beginning on or after January 1, 2012, and before January 1, 2019, with respect to the tax imposed pursuant to Section 17041 of the Revenue and Taxation Code, the income tax bracket and the rate of 9.3 percent set forth in paragraph (1) of subdivision (c) of Section 17041 of the Revenue and Taxation Code shall be modified by each of the following:

(A) (i) For that portion of taxable income that is over three hundred forty thousand dollars ($340,000) but not over four hundred eight thousand dollars ($408,000), the tax rate is 10.3 percent of the excess over three hundred forty thousand dollars ($340,000).

(ii) For that portion of taxable income that is over four hundred eight thousand dollars ($408,000) but not over six hundred eighty thousand dollars ($680,000), the tax rate is 11.3 percent of the excess over four hundred eight thousand dollars ($408,000).

(iii) For that portion of taxable income that is over six hundred eighty thousand dollars ($680,000), the tax rate is 12.3 percent of the excess over six hundred eighty thousand dollars ($680,000).

(C) (i) For purposes of subdivision (g) of Section 19136 of the Revenue and Taxation Code, this paragraph shall be considered to be chaptered on the date it becomes effective.

(D) This paragraph shall become inoperative on December 1, 2019.

(g) (1) The Controller, pursuant to his or her statutory authority, may perform audits of expenditures from the Local Revenue Fund 2011 and any County Local Revenue Fund 2011, and shall audit the Education Protection Account to ensure that those funds are used and accounted for in a manner consistent with this section.

(2) The Attorney General or local district attorney shall expeditiously investigate, and may seek civil or criminal penalties for, any misuse of moneys from the County Local Revenue Fund 2011 or the Education Protection Account.

History—Adopted by voters, Proposition 30, at the November 6, 2012 election, subdivision (b), operative as of July 1, 2011; paragraphs (2) and (3) of subdivision (f), operative as of January 1, 2012; all other provisions operative November 7, 2012.

6051. Imposition and rate of sales tax. [Repealed by Stats. 1986, Ch. 308, effective January 1, 1987.]

6051. Imposition and rate of sales tax. For the privilege of selling tangible personal property at retail a tax is hereby imposed upon all retailers at the rate of 2½ percent of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in this state on or after August 1, 1933, and to and including June 30, 1935, and at the rate of 3 percent thereafter, and at the rate of 2½ percent on and after July 1, 1943, and to and including June 30, 1949, and at the rate of 3 percent on and after July 1, 1949, and to and including July 31, 1967, and at the rate of 4 percent on and after August 1, 1967, and to and including June 30, 1972, and at the rate of 3¾ percent on and after July 1, 1972, and to and including June 30, 1973, and at the rate of 4¾ percent on and after July 1, 1973, and to and including September 30, 1973, and at the rate of 3¾ percent on and after October 1, 1973, and to and including March 31, 1974, and at the rate of 4¾ percent thereafter.

History—Stats. 1943, p. 2918, in effect June 1, 1943, added provision for temporary 2½ percent rate, and added provisions for postwar reserve. Temporary reduction and postwar reserve were also provided for by Stats. 1943, p. 1581, in effect May 7, 1943. Stats. 1945, p. 1292, in effect June 5, 1945, continued temporary 2½ percent rate. Stats. 1947, p. 1866, in effect June 17, 1947, continued temporary 2½ percent rate, and deleted provisions for postwar reserve. Stats. 1948, p. 16, in effect April 9, 1948, continued temporary 2½ percent rate. Stats. 1967, p. 2471, operative August 1, 1967, increased the rate to 4 percent. Stats. 1971, p. 2783, operative July 1, 1972, decreased the tax rate to 3¾ percent, pp. 4895 and 5131, effective December 8, 1971, amended the section to decrease the rate to 3¾ percent during 1975, operative if the Legislative Analyst does not make the certification referred to in section 316.2. (p. 5131). Stats. 1972, p. 2969, effective December 26, 1972, repealed the section as amended by Ch. 1400 of Stats. 1971, and reenacted the section operative June 1, 1973, increasing the rate to 4¾ percent after May 31, 1973, and repeals this section if the Legislative Analyst does not make the certification described in subdivision (c) of section 316.2 of Ch. 1 of the 1971 First Extraordinary Session. Stats. 1973, Ch. 67, effective May 29, 1973, delayed to July 1, 1973, the rate increase to 4¾ percent; Ch. 296, effective August 23, 1973, decreased the rate to 3¾ percent on October 1, 1973, and raises it to 4¾ percent on April 1, 1974, operative October 1, 1973. On October 7, 1974, the Legislative Analyst made the certification described in section 316.2(c) of Chapter 1 of the Stats 1971. Stats. 1991, Ch. 85, in effect June 30, 1991, operative July 1, 1991, added "on and after April 1, 1974, and to and including June 30, 1991, and at the rate of 5 percent" after "March 31, 1974, and at the rate of 4¾ percent". Stats. 1991, Ch. 117, in effect July 16, 1991, deleted "on and after April 1, 1974, and to and including July 14, 1991, and at the rate of 5 percent" after "March 31, 1974, and at the rate of 4¾ percent".

Tax on retailer.—The sales tax is a charge upon the retailer and not upon the consumer. Meyer Construction Co. v. Corbett (1934) 7 F.Supp. 616; People v. Herbert's of Los Angeles (1935) 3 Cal.App.2d 482; Graham Brothers, Inc. v. City of Los Angeles (1935) 6 Cal.App.2d 203; Clary v. Basalt Rock Co. (1950) 99 Cal.App.2d 458; Pacific Coast Engineering Co. v. State of California (1952) 111 Cal.App.2d 31; Livingston Rock and Gravel Co., Inc. v. De Salvo (1955) 136 Cal.App.2d 156. In the Meyer Construction Co. case, supra, the court decided that a contractor who had undertaken to construct buildings on a military reservation under the exclusive jurisdiction of the United States, and who was considered the consumer of the personal property used in this work under a lump sum contract with the government, was not the proper party to raise any question with respect to the constitutionality of the Sales Tax Act. The court ruled that this issue could be raised only by the person upon whom the tax is levied, i.e., the retailer, and that the tax was not on the consumer, although it might be passed on to him by the retailer as a part of the purchase price of the goods sold.

Sale of retailer's equipment.—A retailer is required to pay sales tax on his receipts from the sale of equipment used in his business. Bigsby v. Johnson (1941) 18 Cal.2d 860.

Sales of capital equipment.—A railroad company holding a seller's permit and making regular sales from its "stores department" is required to pay the sales tax upon retail sales of rolling stock and a motor vehicle to its parent and other subsidiaries even though the sales are not made through that department. In view of the number, scope and character of the sales of the rolling stock and vehicle, they are not exempt from tax as casual or isolated sales. Northwestern Pacific Railroad Co. v. State Board of Equalization (1943) 21 Cal.2d 524.

Nature of liability for tax.—Liability for sales tax arises by operation of law and not by contract. Hence, the provisions of sections 700 and 707 of the Probate Code, which require that a claim against an estate arising upon contract must be presented within six months after the first publication of notice to creditors, are not effective to bar a claim of the state for additional sales taxes filed after the six months' period. People v. Hochwender (1942) 20 Cal.2d 181. In a claim against a county for sales tax the provisions of the Sales and Use Tax Law control and take priority over the general statutes dealing with the filing of claims aganst counties in ordinary cases. People v. Imperial County (1946) 76 Cal.App.2d 572.

Liquidation sale.—The tax upon the privilege of selling tangible personal property at retail applies to liquidation sales where a retailer is going out of business. Market Street Railway Co. v. State Board of Equalization (1955) 137 Cal.App.2d 87.

Title passage.—Where a sale is made under a contract which provides that title is to pass to the buyer at the out-ofstate shipping point upon delivery of the property by the seller to a common carrier consigned to the buyer, the sale does not occur in this state and is not subject to sales tax. Where a sale is made under a contract which provided for shipment from an out-of-state point f.o.b. shipping point with freight charges prepaid by seller, trial court's finding that the title passed at the destination was supported and the sales tax applied. Diebold, Inc. v. State Board of Equalization (1959) 168 Cal.App.2d 628.

Sale of sand and gravel.—Where a supplier agreed to furnish sand and gravel to a contractor "f.o.b. job site," the transaction was a sale of tangible personal property and not a transfer of an interest in real property notwithstanding that the agreement of sale referred to "royalty" for materials removed. The nomenclature does not bind the board as a third party to the contract, and the true nature of the contract must be looked to to determine whether there was a sale of personal property subject to the sales tax. Santa Clara Sand and Gravel Co. v. State Board of Equalization (1964) 225 Cal.App.2d 676.

Former Section 6376 and fixed price construction contracts prior to August 1, 1967.—Former Section 6376, added by Stats. 1967, Ch. 964, exempted construction material and fixtures from 1 percent tax rate increase where fixed price construction contract was entered into prior to August 1, 1967. Section 6376 did not also exempt construction equipment and supplies, where it is reasonable to assume the Legislature used the terms "material and fixtures" in the sense which had been given to the terms by the Board's longstanding administrative ruling. Further, plaintiff was not subjected to any unconstitutional impairment of its contract with the Department of Water Resources as a result of any additional burden falling on it by virtue of the increased tax. Western Contracting Corp. v. State Board of Equalization (1974) 39 Cal.App.3d 341.

Incidence of the Sales Tax for Federal Purposes is on the Purchaser.—The incidence of the sales tax for federal purposes is on the purchaser. Accordingly, sales to a national bank were not subject to sales tax. [The Federal law, 12 U.S.C. Section 548, was amended after the period involved in the case to allow states to tax national banks the same as state banks.] Diamond National Corp. v. State Board of Equalization (1976) 425 U.S. 268.

Incidence of the Sales Tax for Federal Purposes is on the Purchaser.—Where a lessor leases tangible personal property to the United States, the incidence of sales tax applied to the rental receipts would fall upon the United States; such tax is impermissible because it would be a violation of the constitutional immunity of the United States from state taxation. United States v. State Board of Equalization (1976) 536 F.2d 294.

Incidence of the Sales Tax is on the retailer.—Under California law, the legal incidence and the economic burden are two separate and distinct concepts. Where no federal immunity is involved, the legal incidence of the retail sales tax is on the retailer. Accordingly, article XIII, section 28(f) of the California Constitution (and Rev. and Tax. Code § 12204), which provides that the insurance tax is in lieu of other taxes, does not forbid the imposition of a sales tax on retail sales of personal property to insurance companies. Occidental Life Ins. Co. v. State Board of Equalization (1982) 135 Cal.App.3d 845.

Sales to State Banks.—Sales tax on sales to state banks was constitutional even though sales tax on sales to national banks was barred by federal law and court decision. Hibernia Bank v. State Board of Equalization (1985) 166 Cal.App.3d 393.

6051.1. Temporary sales tax increase. [Repealed by Stats. 1991, Ch. 1091, in effect January 1, 1992.]

6051.2. Imposition and rate of additional sales tax. (a) In addition to the taxes imposed by Section 6051 and any other provision of this part, to the taxes imposed by Section 6051 and any other provision of this part,for the privilege of selling tangible personal property at retail, a tax is hereby imposed upon all retailers at the rate of ½ percent of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in this state on and after July 15, 1991.

(b) All revenues received pursuant to this section shall be deposited in the State Treasury to the credit of the Local Revenue Fund, as established pursuant to Section 17600 of the Welfare and Institutions Code.

(c) This section shall cease to be operative on the first day of the first month of the calendar quarter following notification to the board by the Department of Finance of a final judicial determination by the California Supreme Court or any California court of appeal that the revenues collected pursuant to this section and Section 6201.2 that are deposited in the Local Revenue Fund are either of the following:

(1) "General Fund proceeds of taxes appropriated pursuant to Article XIII B of the California Constitution," as used in subdivision (b) of Section 8 of Article XVI of the California Constitution.

(2) "Allocated local proceeds of taxes," as used in subdivision (b) of Section 8 of Article XVI of the California Constitution.

(d) Notwithstanding subdivisions (a) and (b), if the Director of Finance determines that the State Board of Equalization has allocated more revenue to the Local Revenue Fund than required by subdivisions (a) and (b) for taxable sales that occurred during the period of July 1, 2011, to June 30, 2016, inclusive, the total amount of revenues credited to the Local Revenue Fund for this period shall be considered to have fulfilled the requirements of subdivisions (a) and (b), and no allocation adjustment for this period shall be made.

History—Added by Stats. 1991, Ch. 85 (AB 2181), in effect June 30, 1991, operative July 1, 1991. Stats. 1991, Ch. 88 (SB 179), in effect June 30, 1991 operative July 15, 1991, substituted "July 15" for "July 1" in subdivision (a). Stats. 1993, Ch. 100 (SB 463), in effect July 13, 1993, added subdivision (b) and relettered former subdivision (b) as (c). Stats. 2017, Ch. 25 (SB 90), in effect June 27, 2017 added subdivision (d).

6051.3. Imposition and rate of additional sales tax. In addition to the taxes imposed by Sections 6051, 6051.2, 6051.5, and any other provision of this part, for the privilege of selling tangible personal property at retail, a tax is hereby imposed upon all retailers at the rate of ¼ percent of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in this state on and after July 15, 1991, and during any period in which this section is operative pursuant to Section 6051.4.

History—Added by Stats. 1991, Ch. 117, in effect July 16, 1991.

6051.4. Conditions necessary for additional sales tax to cease. (a) Section 6051.3 shall be operative with respect to the sale of all tangible personal property sold at retail in this state on or after July 15, 1991, but shall cease to be operative during any period described in subdivision (c) or (d).

(b) On or before November 1, 1993, and on or before every November 1 thereafter, the Director of Finance shall determine and certify to the Governor, the Legislature, and the board both of the following:

(1) Whether the amount in the Special Fund for Economic Uncertainties, as established pursuant to Section 16418 of the Government Code, as of June 30 of the prior fiscal year exceeded 4 percent of General Fund revenues for that prior fiscal year.

(2) Whether the estimated amount in the Special Fund for Economic Uncertainties as of June 30 of the current fiscal year (without inclusion of any revenue derived pursuant to Section 6051.3 on and after January 1 of the current fiscal year) exceeds 4 percent of General Fund revenues for the current fiscal year.

(c) Section 6051.3 shall cease to be operative on and after January 1, 1994, if on or before November 1, 1993, the Director of Finance certifies pursuant to subdivision (b) that both amounts certified pursuant to paragraphs (1) and (2) of that subdivision exceed 4 percent of General Fund revenues for the respective fiscal year for which each amount is determined and certified.

(d) Section 6051.3 shall cease to be operative on and after January 1 following any November 1 in which Section 6051.3 is operative and the Director of Finance certifies pursuant to subdivision (b) that both amounts certified pursuant to paragraphs (1) and (2) of that subdivision exceed 4 percent of General Fund revenues for the respective fiscal year for which each amount is determined and certified.

(e) Section 6051.3 shall become operative on and after January 1 following any November 1 in which Section 6051.3 is inoperative and the Director of Finance certifies pursuant to paragraph (2) of subdivision (b) that the estimated amount does not exceed 4 percent of the General Fund revenues as of June 30 of the current fiscal year.

History—Added by Stats. 1991, Ch. 117, in effect July 16, 1991.

6051.5. Imposition and rate of sales tax. [Repealed by Stats. 1986, Ch. 308, effective January 1, 1987.]

6051.5. Imposition and rate of additional sales tax; Fiscal Recovery Fund. (a) In addition to the taxes imposed by Section 6051 and any other provision of this part, for the privilege of selling tangible personal property at retail a tax is hereby imposed upon all retailers at the rate of one-quarter of 1 percent of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in this state.

(b) All revenues, net of refunds, received pursuant to this section shall be deposited in the State Treasury to the credit of the Fiscal Recovery Fund, as established pursuant to Section 99008 of the Government Code.

(c) Revenues received pursuant to this section accruing to the Fiscal Recovery Fund shall not be considered to be "State General Fund proceeds of taxes appropriated pursuant to Article XIII B" within the meaning of either Section 8 of Article XVI of the California Constitution or Section 41202 of the Education Code.

(d) This section shall become operative on July 1, 2004, and shall cease to be operative on the first day of the first calendar quarter commencing more than 90 days following a notification to the board by the Director of Finance pursuant to subdivision (b) of Section 99006 of the Government Code.

History—Added by Stats. 2003, Ch. 13X (AB 7X), in effect August 2, 2003, but operative July 1, 2004. Stats. 2003, Ch. 2 (AB X5 9), in effect December 12, 2003, but operative July 1, 2004, substituted "quarter" for "half" after "at the rate of one-" in subdivision (a).

6051.6. Comparison of estimated receipts with actual receipts by Controller. [Repealed by Stats. 1986, Ch. 308, effective January 1, 1987.]

6051.6. Exemption from tax; aircraft common carriers. There are exempted from the taxes imposed by Section 6051.5 the gross receipts derived from the sale of tangible personal property, other than fuel or petroleum products, to operators of aircraft to be used or consumed principally outside the county in which the sale is made and directly and exclusively in the use of the aircraft as common carriers of persons or property under the authority of the laws of this state, the United States, or any foreign government.

History—Added by Stats. 2003, Ch. 13X (AB 7X), in effect August 2, 2003, but operative July 1, 2004.

6051.7. Imposition and rate of sales tax. [Repealed by Stats. 1986, Ch. 308, effective January 1, 1987.]

6051.7. Imposition and rate of additional sales tax. [Repealed by Stats. 2015 (Ch. 303 (AB 731), in effect January 1, 2016.]

6051.8. Conditions for activation of Section 6051.7. [Repealed by Stats. 1986, Ch. 308, effective January 1, 1987.]

6051.8. Diesel fuel: sales tax rate increase. [Repealed by Stats. 2011, Ch. 6 (AB 105), effective March 24, 2011.]

6051.8. Diesel fuel: sales tax rate increase. (a) Except as provided by Section 6357.3, in addition to the taxes imposed by this part, for the privilege of selling tangible personal property at retail a tax is hereby imposed upon all retailers at the rate of 1.75 percent of the gross receipts of any retailer from the sale of all diesel fuel, as defined in Section 60022.

(b) Except as provided by Section 6357.3, in addition to the taxes imposed by this part and by subdivision (a), commencing November 1, 2017, for the privilege of selling tangible personal property at retail a tax is hereby imposed upon all retailers at the rate of 4 percent of the gross receipts of any retailer from the sale of all diesel fuel, as defined in Section 60022, sold at retail in this state.

(c) (1) Notwithstanding subdivision (b) of Section 7102, except as otherwise provided in paragraph (2), all of the revenues, less refunds, collected pursuant to this section shall be estimated by the State Board of Equalization, with the concurrence of the Department of Finance, and transferred quarterly to the Public Transportation Account in the State Transportation Fund for allocation under the State Transit Assistance Program pursuant to Section 99312.1 of the Public Utilities Code.

(2) The revenues, less refunds, attributable to a rate of 0.5 percent of the 4-percent increase in the rate pursuant to subdivision (b), amounting to one-eighth of revenues from the increase in the rate under that subdivision, shall be estimated by the State Board of Equalization, with the concurrence of the Department of Finance, and transferred quarterly to the Public Transportation Account in the State Transportation Fund for allocation by the Transportation Agency to intercity rail and commuter rail purposes pursuant to Section 99312.3 of the Public Utilities Code.

History—Added by Stats. 2011, Ch. 6 (AB 105), in effect March 24, 2011, but operative July 1, 2011. Stats. 2017, Ch. 23 (SB 1), in effect April 28, 2017, Ch. 23 (SB 1), in effect April 28, 2017, substituted "fuel, as defined in Section 60022" for "diesel fuel, as defined in Section 60022, sold at retail in this state on and after the operative date of this subdivision" of subdivision (a); deleted former subdivision(b) which stated, "Notwithstanding subdivision (a), for the 2011-12 fiscal year only, the rate referenced in subdivision (a) shall be 1.87 percent"; deleted former subdivision (c) which stated "Notwithstanding subdivision (a), for the 2012-13 fiscal year only, the rate referenced of subdivision (a) shall be 2.17 percent."; deleted former subdivision (d) which stated, "(d) Notwithstanding subdivision (a), for the 2013-14 fiscal year only, the rate referenced of subdivision (a) shall be 1.94 percent."; added subdivision (b); relettered former subdivision (e) to (c), added "(1)" to subdivision (c), added "except as otherwise proved of paragraph (2)," after "Section 7102," to subdivision (c)(1), added "under the State Transit Assistance Program" after "for allocation" of subdivision (c)(1); added paragraph (2) to subdivision (c); deleted former subdivision (f) which stated v(f) Subdivisions (a) to (e), inclusive, shall become operative on July 1, 2011." Former § 6051.8, similar to the present section, was added Stats. 2010, Ch. 11, Eighth Extraordinary Session (ABx8 6), in effect March 22, 2010; amended by Stats. 2010, Ch. 9 (SB70), in effect March 23, 2010; and repealed by Stats. 2011, Ch. 6 (AB 105), in effect March 24, 2011.

6051.15. Local Revenue Fund 2011. (a) Notwithstanding Section 7101 or any other law, the amount of revenues, net of refunds, collected pursuant to Section 6051 and attributable to a rate of 1.0625 percent shall, subject to subdivision (b), be deposited in the State Treasury to the credit of the Local Revenue Fund 2011, as established pursuant to Section 30025 of the Government Code, and shall be used exclusively for the public safety purposes for which that fund is created.

(b) The amount of revenues derived from any tax or tax increase enacted after July 1, 2011, that is deposited in the Local Revenue Fund 2011 shall be applied to reduce the amount otherwise required to be deposited in that fund pursuant to subdivision (a).

(c) Notwithstanding subdivisions (a) and (b), if the Director of Finance determines that the State Board of Equalization has allocated more revenue to the Local Revenue Fund 2011 than required by subdivisions (a) and (b) for taxable sales that occurred during the period of July 1, 2011, to June 30, 2016, inclusive, the total amount of revenues credited to the Local Revenue Fund 2011 for this period shall be considered to have fulfilled the requirements of subdivisions (a) and (b), and no allocation adjustment for this period shall be made.

History—Added by Stats. 2011, Ch. 40 (AB 118), in effect June 30, 2011. Stats. 2017, Ch. 25 (SB 90), in effect June 27, 2017, added subdivision (c).

6051.45. Operative date of tax. Notwithstanding 6051.4 or any other provision of law, the state sales tax rate in Section 6051.3 shall not be operative in any calendar year beginning on or after January 1, 2002, if the Director of Finance determines both of the following:

(a) The General Fund reserve is 3 percent of revenues excluding the revenues derived from the ¼ cent sales and use tax rate.

(b) Actual General Fund revenues for the period May 1 through September 30 equal or exceed the May Revision forecast, prior to the November 1 determination.

The Director of Finance shall make the determination on or before November 1 of each year.

The ¼ cent reduction shall be operative for each calendar year commencing on the next January 1 after the determination is made.

History—Added by Stats. 2001, Ch. 156 (AB 426), in effect August 7, 2001, operative September 1, 2001.

6052. Reimbursement. [Repealed by Stats. 1978, Ch. 1211, effective January 1, 1979.]

6052.5. Reimbursement schedules. [Repealed by Stats. 1978, Ch. 1211, effective January 1, 1979.]

6053. Unlawful advertising. [Repealed by Stats. 1978, Ch. 1211, effective January 1, 1979.]

6054. Itemization of tax reimbursement. [Repealed by Stats. 1978, Ch. 1211, effective January 1, 1979.]

6054.5. Excessive reimbursement. [Repealed by Stats. 1978, Ch. 1211, effective January 1, 1979.]

6055. Worthless accounts. (a) A retailer is relieved from liability for sales tax that became due and payable, insofar as the measure of the tax is represented by accounts that have been found to be worthless and charged off for income tax purposes by the retailer or, if the retailer is not required to file income tax returns, charged off in accordance with generally accepted accounting principles. A retailer that has previously paid the tax may, under rules and regulations prescribed by the board, take as a deduction the amount found worthless and charged off by the retailer. If these accounts are thereafter in whole or in part collected by the retailer, the amount collected shall be included in the first return filed after the collection and the tax shall be paid with the return. For purposes of this subdivision, the term "retailer" shall include any entity affiliated with the retailer under Section 1504 of Title 26 of the United States Code.

(b) (1) In the case of accounts held by a lender, a retailer or lender that makes a proper election under paragraph (4) shall be entitled to a deduction or refund of the tax that the retailer has previously reported and paid if all of the following conditions are met:

(A) A deduction was not previously claimed or allowed on any portion of the accounts.

(B) The accounts have been found worthless and written off by the lender in accordance with the requirements of subdivision (a).

(C) The contract between the retailer and the lender contains an irrevocable relinquishment of all rights to the account from the retailer to the lender.

(D) The retailer remitted the tax on or after January 1, 2000.

(E) The party electing to claim the deduction or refund under paragraph

(4) files a claim in a manner prescribed by the board.

(2) If the retailer or the lender thereafter collects in whole or in part any accounts, one of the following shall apply:

(A) If the retailer is entitled to the deduction or refund under the election specified in paragraph (4), the retailer shall include the amount collected in its first return filed after the collection and pay tax on that amount with the return.

(B) If the lender is entitled to the deduction or refund under the election specified in paragraph (4), the lender shall pay the tax to the board in accordance with Section 6451.

(3) For purposes of this subdivision, the term "lender" means any of the following:

(A) Any person that holds a retail account which that person purchased directly from a retailer who reported the tax.

(B) Any person that holds a retail account pursuant to that person's contract directly with the retailer that reported the tax.

(C) Any person that is either an affiliated entity, under Section 1504 of Title 26 of the United States Code, of a person described in subparagraph (A) or (B), or an assignee of a person described in subparagraph (A) or (B).

(4) For purposes of this section, a "proper election" shall be established when the retailer that reported the tax and the lender prepare and retain an election, signed by both parties, designating which party is entitled to claim the deduction or refund. This election may not be amended or revoked unless a new election, signed by both parties, is prepared and retained by the retailer and the lender.

History—Added by Stats. 1959, p. 3263, in effect September 18, 1959. Adopted from former Section 6453.5, added by Stats. 1957, p. 1938, in effect September 11, 1957, except that Section 6055 applies solely to sales tax, substitutes "retailer" for "seller," adds the provision for relief from liability, changes from a "credit … against the tax shown to be due on the return" to a "deduction," deletes the requirement that the credit be limited to accounts found to be worthless and actually charged off "during the period covered by the return," and rearranges wording for clarity. Stats. 1970, p. 1056, in effect November 23, 1970, added to first sentence, "or, if the retailer is not required to file income tax returns, charged off in accordance with generally accepted accounting principles.", and deleted "for income tax purposes" from the end of the second sentence. Stats. 2000, Ch. 600 (AB 599), in effect January 1, 2001, added subdivision letter designation (a) before first paragraph, substituted "that" for "which" after "for sales tax", deleted "subsequent to September 30, 1957" after "due and payable", substituted "that" for "which" after "by accounts", and added "by the retailer" after "tax purposes" in the first sentence, substituted "A retailer that" for "If the retailer" after "accounting principles.", deleted ", he" after "paid the tax" and added "by the retailer" after "charged off" in the second sentence, substituted "these" for "any such" before "accounts are", substituted "the" for "such" after "collection", and added "shall be" after "and the tax" in the third sentence, and added the fourth sentence therein; and added subdivision (b). Stats. 2011, Ch. 727 (AB 242), in effect January 1, 2012, substituted "A deduction was not" for "No deduction was" before "previously claimed" in subparagraph (A) of paragraph (1) of subdivision (b); and substituted "prepare and retain" for "file" after "the lender shall", deleted "with the board" after "an election", substituted "prepared and retained by the retailer and the lender" for "filed with the board" after "new election, signed by both parties," in paragraph (4) of subdivision (b). Stats. 2012, Ch. 362 (AB 2688), in effect January 1, 2013, substituted "that" for "who" in paragraph (1) and in subparagraphs (A), twice in (B) and in (C) of paragraph (3), substituted "For purposes … retailer that" for "Prior to claiming any deduction or refund under this subdivision, the retailer who" after "(4)", and deleted "shall" after "and the lender" in paragraph (4) of subdivision (b).

Bankruptcy.—Bad debt credits resulting from the writeoff of pre-petition accounts receivable were the property of the receiver in bankruptcy and could not be used by the reorganized debtor to offset its liability for penalties and interest for late payment of taxes. Gough Industries v. Rothman (1971) 446 F.2d 536; Cert den. (1972) 405 U.S. 916.

Article 2. Permits

6066. Application for permit. (a) Every person desiring to engage in or conduct business as a seller within this state shall file with the board an application for a permit for each place of business. Every application for a permit shall be made upon a form prescribed by the board and shall set forth the name under which the applicant transacts or intends to transact business, the location of his place or places of business, and such other information as the board may require. An application for a permit shall be authenticated in a form or pursuant to methods as may be prescribed by the board. The application shall state that the applicant will actively engage in or conduct business as a seller of tangible personal property.

(b) An application filed pursuant to this section may be filed using electronic media as prescribed by the board.

(c) Electronic media includes, but is not limited to, computer modem, magnetic media, optical disk, facsimile machine, or telephone.

History—Stats. 1971, Ch. 1634, operative January 1, 1972, deleted "to which shall be attached the written evidence of his authority" from the last sentence. Stats. 1980, Ch. 91, operative January 1, 1981, added second paragraph. Stats. 2000, Ch. 923 (AB 2894), in effect January 1, 2001, add subdivision letter designation (a) before first paragraph, added second sentence, deleted "be signed by the owner if a natural person; in the case of an association or partnership, by a member or partner; in the case of a corporation, by an executive officer or some person specifically authorized by the corporation to sign the application. The person signing the application shall certify" after "The application shall" in the former second sentence; and added subdivisions (b) and (c).

6066.3. Collection of information by cities and counties for seller's permits. (a) A city, county, or city and county may collect information from persons desiring to engage in business in that jurisdiction for the purposes of selling tangible personal property under this part and shall transmit that information to the board. The information shall be provided to the board in a format to be determined by the board after consulting with the League of California Cities and the California State Association of Counties.

(b) The information submitted to the board under subdivision (a) shall serve as all of the following:

(1) The preliminary application for a seller's permit.

(2) Notification to the board by the city, county, or city and county of a person desiring to engage in the business of selling of tangible personal property in that jurisdiction.

(3) Notice to the board for purposes of redistribution under Section7209.

(c) The board shall issue a determination regarding issuance of a seller's permit and receipt of notification for purposes of paragraphs (2) and (3) of subdivision (b). The board shall provide a copy of that determination and receipt of notification to the city, county, or city and county from which the board has received information under subdivision (a). The board shall make its determination as follows:

(1) For persons for whom a determination can be made based on the information submitted, the determination shall be issued within 30 days of receipt of the information.

(2) For persons for whom additional information is required before a determination can be made, the determination shall be issued within 120 days of receipt of the information.

(d) The board shall, after consulting with the League of California Cities and the California State Association of Counties, adopt standardized data addressing and naming conventions that are compatible with local jurisdiction conventions for new registrants and, to the extent possible, for current accounts.

(e) A city, county, or city and county may not charge applicants a fee for collecting and transmitting information pursuant to this section.

History—Added by Stats. 1999, Ch. 908,(AB 990), in effect January 1, 2000. Stats. 2003, Ch. 471 (SB 1062), in effect January 1, 2004, deleted former subdivision (f) which provided "(f) This section shall remain in effect only until January 1, 2004, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2004, deletes or extends that date."

6066.4. Providing of seller's permit to cities and counties. A city, county, or city and county may require each person desiring to engage in business in that jurisdiction for the purposes of selling tangible personal property to provide his or her seller's permit account number, if any.

History—Added by Stats. 1999, Ch. 908, (AB 990), in effect January 1, 2000. Stats. 2003, Ch. 471 (SB 1062), in effect January 1, 2004, deleted subdivision letter designation (a) before "A city, county," and deleted former subdivision (b) which provided "(b) This section shall remain in effect only until January 1, 2004, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2004, deletes or extends that date."

Note.—Sec. 3, Stats. 1999, Ch. 908,(AB 990), requires that, on or before January 1, 2003, the State Board of Equalization shall report to the Legislature the amount of sales and use tax revenues collected from persons not previously registered by the board and the board's cost to administer the provisions of this act.

6066.5. Notice to applicant. At the time the board provides the applicant with an application form, the applicant shall be provided with a written notice in a form prescribed by the board outlining the provisions of Sections 6072 and 6094.5 and the penalties that will accrue to the applicant should the permit be used in a manner which is prohibited by those sections.

History—Added by Stats. 1980, Ch. 91, operative January 1, 1981.

6067. Issuance and display of permit. After compliance with Sections 6066 and 6701 by the applicant, and after giving the applicant the notice required by Section 6066.5, the board shall grant and issue to each applicant a separate permit for each place of business within the state. A permit is not assignable and is valid only for the person in whose name it is issued and for the transaction of business at the place designated therein. It shall at all times be conspicuously displayed at the place for which issued.

History—Former section 6068 renumbered and amended by Stats. 1966, p. 185, in effect April 18, 1966, operative July 1, 1966, deleted reference to section 6067. Stats. 1980, Ch. 91, operative January 1, 1981, added "and after the giving the applicant the notice required by Section 6066.5,". Stats. 2006, Ch. 538 (SB 1852), in effect January 1, 2007, deleted "the" after "by the applicant, and after" in the first sentence.

6068. Change of address. Upon such notification of a change of address as may be required by the board, a permit may be reissued for the new address of a business place of a permitholder without the filing of a new application.

History—Added by Stats. 1966, p. 185, in effect April 18, 1966, operative July 1, 1966. Former section 6068 was renumbered and amended as section 6067 by Stats. 1966, p. 185, in effect April 18, 1966.

6069. Renewal of permit. A seller whose permit has been previously suspended or revoked shall pay the board a fee of one hundred dollars ($100) for the renewal or issuance of a permit.

History—Stats. 1966, p. 185, in effect April 18, 1966, operative July 1, 1966, raised the fee from $1 to $15. Stats. 1986, Ch. 1361, effective January 1, 1987, raised the fee from $15 to $50. Stats. 2009, Ch, 545 (AB 1547), in effect January 1, 2010, raised the fee from $50 to $100.

Note.—Sec. 41, Stats. 1986, Ch. 1361 required that:

(a) On January 15 of each year from 1988 to 1992, inclusive, the State Board of Equalization and the Franchise Tax Board shall submit a report to the Legislature on implementation of the provisions of this act, with the exception of Section 40 of this act (for which separate reporting requirements are set out).

(b) The revenue and taxation policy committees of each house of the Legislature shall hold a public hearing no later than June 30 of each year from 1988 to 1992, inclusive, on the reports submitted pursuant to subdivision (a).

(c) The intent of this section is to assure the Legislature the opportunity to oversee the implementation of this act. The intent of the Legislature in enacting this act is to improve enforcement and voluntary compliance with the tax system and cash-pay reporting rules. The intent of the Legislature in enacting this act is not to cause harassment of or undue burden on innocent taxpayers.

Sec. 41 applies to the following Revenue and Taxation Code Sections: 6069, 6071, 6366, 6366.1, 6368.1, 6452, 6455, 6776, 6777, 7154, 8404, 9355, 30481, 32556, 40188, 41143, and 44186.

6070. Revocation of permit. Whenever any person fails to comply with any provision of this part relating to the sales tax or any rule or regulation of the board relating to the sales tax prescribed and adopted under this part, the board upon hearing, after giving the person 10 days' notice in writing specifying the time and place of hearing and requiring him to show cause why his permit or permits should not be revoked, may revoke or suspend any one or more of the permits held by the person. The board shall give to the person written notice of the suspension or revocation of any of his permits. The notices herein required may be served personally or by mail in the manner prescribed for service of notice of a deficiency determination. The board shall not issue a new permit after the revocation of a permit unless it is satisfied that the former holder of the permit will comply with the provisions of this part relating to the sales tax and the regulations of the board.

History—Stats. 1951, p. 2389, operative July 1, 1951, added provision requiring notice of suspension or revocation of permit. Stats. 1957, p. 1207, in effect September 11, 1957, added the former last paragraph, which imposed a $25 fee for a new permit after the permit had been revoked three times within a two-year period. Stats. 1966, p. 186, in effect April 18, 1966; operative July 1, 1966, deleted the former last paragraph.

6070.5. Authorization to refuse issuance of permit. (a) The board may refuse to issue a permit to any person submitting an application for a permit as required in Section 6066 if the person desiring to engage in or conduct business as a seller within this state has an outstanding final liability with the board for any amount due under this part.

(b) In addition to the provisions of subdivision (a), the board may also refuse to issue a permit if the person desiring to engage in or conduct business as a seller within this state is not a natural person or individual and any person controlling the person desiring to engage in or conduct business as a seller within this state has an outstanding final liability with the board as provided in subdivision (a). For the purposes of this section, "controlling" has the same meaning as defined in Section 22971 of the Business and Professions Code.

(c) For purposes of this section, a liability will not be deemed to be outstanding if the person has entered into an installment payment agreement pursuant to Section 6832 for any liability and is in full compliance with the terms of the installment payment agreement.

(d) If the person submitting an application for a seller's permit has entered into an installment payment agreement as provided in subdivision (c) and fails to comply with the terms of the installment payment agreement, the board may seek revocation of the seller's permit obtained by the person pursuant to this section.

(e) (1) Whenever any person desiring to engage in or conduct business as a seller within this state is denied a permit pursuant to this section, the board shall give to the person written notice of the denial. The notice of the denial may be served personally, by mail, or by other means deemed appropriate by the board. If served by mail, the notice shall be placed in a sealed envelope, with postage paid, addressed to the person at the address as it appears in the records of the board. The giving of notice shall be deemed complete at the time of deposit of the notice at the United States Postal Service, or a mailbox, subpost office, substation or mail chute, or other facility regularly maintained or provided by the United States Postal Service, without extension of time for any reason. In lieu of mailing, a notice may be served personally by delivering to the person to be served and service shall be deemed complete at the time of the delivery. Delivery of notice by other means deemed appropriate by the board may include, but is not limited to, electronic transmission. Personal service or delivery by other means deemed appropriate by the board to a corporation may be made by delivery of a notice to any person listed on the application as an officer.

(2) Any person who is denied a seller's permit pursuant to this section may request reconsideration of the board's denial of the permit. This request shall be submitted in writing within 30 days of the date of the notice of denial. Timely submission of a written request for reconsideration shall afford the person a hearing in a manner that is consistent with a hearing provided for by Section 6070. If a request for reconsideration is not filed within the 30-day period, the denial becomes final at the end of the 30-day period.

(f) The board shall consider offers in compromise when determining whether to issue a seller's permit.

History—Added by Stats. 2011, Ch. 734 (AB 1307), in effect January 1, 2012.

6071. Unlawful acts. A person who engages in business as a seller in this state without a permit or permits or after a permit has been suspended or revoked, and each officer of any corporation which so engages in business, is guilty of a misdemeanor punishable as provided in Section 7153.

History—Stats. 1971, p. 3526, operative January 1, 1972, added "or revoked" after "suspended". Stats. 1986, Ch. 1361, effective January 1, 1987, added reference to Section 7153.

Note.—Sec. 41, Stats. 1986, Ch. 1361 required that:

Sec. 41 applies to the following Revenue and Taxation Code Sections: 6069, 6071, 6366, 6366.1, 6368.1, 6452, 6455, 6776, 6777, 7154, 8404, 9355, 30481, 32556, 40188, 41143, and 44186.

6071.1. Surrender of permit. (a) A permitholder who fails to surrender a seller's permit upon transfer of a business shall be liable for any tax, interest, and penalty incurred by the transferee if the permitholder has actual or constructive knowledge that the transferee is using the permit in any manner. The predecessor's liability shall be limited to the quarter in which the business is transferred, and the three subsequent quarters.

(b) The limitation on liability provided for in subdivision (a) shall not apply in cases where, after the transfer, 80 percent or more of the real or ultimate ownership of the business transferred is held by the predecessor.

(c) For purposes of this section, stockholders, bondholders, partners, or other persons holding an ownership interest in a corporation or other entity shall be regarded as having the "real or ultimate ownership" of the property of the corporation or other entity.

History—Added by Stats. 1993, Ch. 1109, in effect January 1, 1994.

6072. Inactive permit. A permit shall be held only by persons actively engaging in or conducting a business as a seller of tangible personal property. Any person not so engaged shall forthwith surrender his or her permit to the board for cancellation. The board may revoke the permit of a person found to be not actively engaged in or conducting a business as a seller of tangible personal property.

Any person who knowingly issues a resale certificate while the person is not actively engaged in business as a seller, for personal gain or to evade the payment of taxes, shall be liable for the taxes that would otherwise have been due on the transaction, plus a penalty of 10 percent or five hundred dollars ($500), whichever is greater, in addition to all other penalties imposed by this part, and interest at the modified adjusted rate per month, or fraction thereof, established pursuant to Section 6591.5, from the last day of the month following the quarterly period for which the amount or any portion thereof should have been returned until the date of payment.

History—Added by Stats. 1965, p. 1475, in effect September 17, 1965. Stats. 1980, Ch. 91, operative January 1, 1981, added second paragraph. Stats. 1982, Ch. 1589, in effect January 1, 1983, substituted "the person" for "he" after "while," added "which is in … this part" after "percent," and substituted "adjusted annual … until" for "rate of … transaction to" in the second paragraph. Stats. 1984, Ch. 1020, effective January 1, 1985, operative July 1, 1985, in second paragraph substituted "in … greater" for "which is" after "10 percent," substituted "modified adjusted … thereof" for "adjusted annual rate" before "established," substituted "Section 6591.5" for "Section 19269." Stats. 1984, Ch. 512, effective July 17, 1984, deleted "which is" after "10 percent" in second paragraph, added "or … greater" after "10 percent." Stats. 1984, Ch. 930, effective January 1, 1985, added "compounded daily", after "Section 19269."

6073. Swap meet or flea market. (a) (1) When the board determines it is necessary for the efficient administration of this part, the board may require the operator of a swap meet, flea market, or special event as a prerequisite to renting or leasing space on the premises owned or controlled by that operator to a person desiring to engage in or conduct business as a seller, to obtain written evidence that the seller is the holder of a valid seller's permit issued pursuant to Section 6067, or a written statement from the seller that he or she is not offering for sale any item that is taxable under this part or is otherwise not required to hold a valid seller's permit.

(2) In providing the board with documentation required by the board pursuant to paragraph (1), an operator of a swap meet, flea market, or special event may require each person desiring to engage in or conduct business as a seller at that swap meet, flea market, or special event to provide his or her driver's license number to the operator on a form authorized by the board or under Section 6073.1.

(b) At any time as the board may specify in a written notice, but in no case more than three times in a calendar year, the board may require an operator to submit to the board a list of vendors conducting business on their premises as a seller. Each listing shall be provided to the board within 30 days after the date of the board's notice. The list shall contain the name and seller's permit number for permitholders and the name, address, and driver's license number for vendors who do not have seller's permits. Records shall be retained to the same extent as all transactions involving sales or use tax liability as provided in Section 7053.

(c) "Swap meet, flea market, or special event," as used in this section, means an activity involving a series of sales sufficient in number, scope and character to constitute a regular course of business, or any event at which two or more persons offer tangible personal property for sale or exchange and at which a fee is charged for the privilege of displaying the property for sale or exchange or at which a fee is charged to prospective buyers for admission to the area where the property is offered or displayed for sale or exchange.

(d) Any operator of a swap meet, flea market, or special event who fails or refuses to comply with this section is subject to a penalty not exceeding one thousand dollars ($1,000) for each offense.

History—Added by Stats. 1973, Ch. 746, effective January 1, 1974. Stats. 1983, Ch. 1092, in effect September 27, 1983, operative January 1, 1983, substituted "one thousand dollars ($1,000)" for "five hundred dollars ($500)" after "exceeding" in subdivision (c). Stats. 1988, Ch. 1029, in effect January 1, 1989, substituted "swap meet, flea market, or special event" for "swap meet or flea market" in subdivisions (a) and (c), following "operator of a," and at the beginning of subdivision (b), inserted "or she" following "seller that he" in subdivision (a), and added ", or any event … for sale or exchange" at the end of subdivision (b). Stats. 1992, Ch. 902, in effect September 25, 1992, operative January 1, 1993, deleted "of this part" after "Section 6067" in subdivision (a), added subdivision (b), and relettered former subdivisions (b) and (c) as (c) and (d); added a comma after "flea market", deleted "the provisions of" after "comply with", and substituted "subject to a penalty" for "punishable by a fine of" after "this section is" in subdivision (d). Stats. 1993, Ch. 1109, in effect January 1, 1994, added "(1)" to subdivision (a), substituted "that" for "such" preceding "operator" in the first sentence, added "written" before "evidence" in subdivision (a), added "or is otherwise …" at the end of subdivision (a), added subparagraph (2) to subdivision (a), substituted "driver's license" for "social security" preceding "number for vendors" in the last sentence of subdivision (b), and substituted "the" for "such" preceding both references of "property" in subdivision (c). Stats. 1994, Ch. 903, in effect January 1, 1995, added "to the same … liability" after "retained" in the third sentence of subdivision (b).

Note.—See Business and Professions Code, Sections 21660–21667, concerning recordkeeping and reporting duties for swap meet operators and vendors.

6073.1. Form requirement; swap meet, flea market, or special event. An operator of a swap meet or flea market, as defined in Section 6073, or special event, who verifies that a seller has a valid seller's permit, or who obtains from the seller a certificate that the seller is not offering for sale any item that is taxable under this part and who completes the form requirements of Section 21663 of the Business and Professions Code, shall be deemed to have complied with the requirements of Section 6073. No additional forms will be required by the State Board of Equalization.

History—Added by Stats. 1988, Ch. 1138, in effect January 1, 1989.

6073.2. Trade shows; exclusion. (a) Section 6073 shall not apply to any of the following:

(1) An event or show for which all exhibitors' contracts prohibit any sale of tangible personal property at the event or show and at which no tangible personal property is actually sold.

(2) An event or show that is conducted for informational or educational purposes only, and at which no sales of tangible personal property occur.

(3) A trade show.

(b) For purposes of this section, a "trade show" means an event or show that complies with all of the following conditions:

(1) The event or show is not open to the general public for any portion of the show.

(2) Only orders for tangible personal property are solicited or taken during the event or show from sellers, as defined in Section 6014, for purposes of subsequent resale.

(3) The event or show is operated by an organization that qualifies for tax exempt status under Section 501(c) of the Internal Revenue Code.

(c) When the board determines it is necessary for the efficient administration of this part, the board may require the operator of a trade show, within 10 days from the close of that show, to provide the board with a listing of the names and addresses of the agents or representatives soliciting orders at the trade show, and their principals, including, but not limited to, manufacturers, wholesalers, distributors, or suppliers.

(d) Any operator of a trade show who willfully fails or refuses to comply with subdivision (c) is subject to a penalty in an amount not to exceed one thousand dollars ($1,000) for each offense.

History—Added by Stats. 1994, Ch. 393, in effect September 1, 1994.

6074. Catering trucks. (a) When the board determines it is necessary for the efficient administration of this part, the board may, by written notice, require any person making sales to operators of catering trucks, operated out of that person's facility pursuant to Section 114295 of the Health and Safety Code, who resell the property in the regular course of his or her business, to obtain evidence that the operator is the holder of a valid seller's permit issued pursuant to Section 6067.

At any time as the board may specify in a written notice, but in no case more than three times in a calendar year, the board may require a person making sales to operators of catering trucks to submit to the board a listing of operators of catering trucks who purchase goods from that person. Each listing shall be provided to the board within 30 days after the date of the board's notice, and shall include the name and seller's permit number on file of each operator, or, for those operators who do not provide evidence of a valid seller's permit, the operator's name, address, and telephone number. The board may also, by written notice, require a person making sales to operators of catering trucks to promptly notify the board if a newly purchasing operator does not provide to the person, within 30 days of the date of the first purchase, evidence of a valid seller's permit.

Persons required by written notice of the board to obtain evidence, or provide a listing or notification, who fail to comply, may be subject to a penalty not to exceed five hundred dollars ($500) for each failure.

(b) Persons making sales to operators of catering trucks who do not have valid seller's permits or whose permits have been revoked shall report and pay the tax on property as if the property were sold at retail at the time of the sale. Nothing in this section shall relieve any operator of a catering truck of his or her obligations as a seller under this part.

(c) If the board finds that a person's failure to comply with this section is due to reasonable cause and circumstances beyond the person's control, and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, the person may be relieved of the penalty imposed by this section.

Any person seeking to be relieved of the penalty shall file with the board a statement under penalty of perjury setting forth the facts upon which he or she bases his or her claim for relief.

History—Added by Stats. 1985, Ch. 591, effective January 1, 1986, Stats. 1989, Ch. 319, in effect January 1, 1990, added ", by written notice," after "the board may" and ", operated … Safety Code," after "catering trucks" in subdivision (a), substituted current subdivision (b) for "Any person making sales to the operator of a catering truck who fails to comply with this section shall pay a penalty of five hundred dollars ($500) for each such failure to comply." Stats. 1996, Ch. 1023, in effect September 29, 1996, substituted "114295" for "27792" after "pursuant to Section" in the first paragraph of subdivision (a).

6075. Exemption from permit; feed and hay sellers. (a) No permit shall be required of any person who engages in business in this state as a seller of feed, for any form of animal life, that is exempt from taxation pursuant to subdivision (b) of Section 6358 and who engages in no other taxable sales of tangible personal property at retail.

(b) In the case of any seller of hay who is also a grower of hay, the exemption provided in subdivision (a) shall apply only to growers who are either of the following:

(1) A grower who produces hay for sale only to beef cattle feedlots or dairies.

(2) A grower who sells exclusively through a farmer-owned cooperative.

(c) Nothing in this section shall relieve any grower of hay that is not exempt pursuant to subdivision (b) of Section 6358 from obtaining a permit.

History—Added by Stats. 1995, Ch. 696, in effect October 10, 1995, operative April 1, 1996.

6076. Exemption from permit; hay sellers. No permit shall be required of any person who engages in business in this state as a seller of hay to an association or cooperative that has obtained a permit if that person engages in no other taxable sales of tangible personal property at retail.

History—Added by Stats, 1995, Ch. 555, in effect January 1, 1996.

6077. Retail florists. (a) Any retail florist who fails to obtain a permit before engaging in or conducting business as a seller shall, in addition to any other applicable penalty, pay a penalty of five hundred dollars ($500).

(b) Every mobile retail florist shall have a copy of the permit at each sales location which shall be in the possession of a person operating at that location.

(1) "Retail florist" means any person selling any flowers, potted ornamental plants, floral arrangements, floral bouquets, wreaths, or any similar products at retail. "Retail florist" does not include any flower or ornamental plant grower who sells his or her own products.

(2) "Mobile retail florist" means any retail florist who does not sell from a structure or retail shop, including, but not limited to, a florist who sells from a vehicle, pushcart, wagon, or other portable method, or who sells at a swap meet, flea market, or similar transient location.

History—Added by Stats, 1996, Ch. 1130, in effect January 1, 1997. Stats. 2004, Ch. 183 (AB 3082), in effect January 1, 2005, added ", the following … meanings" after "of this section" in subdivision (c), and substituted "ornamental" for "hornamental" after "any flower or" in paragraph (1) of subdivision (c).

Article 3. Presumptions and Resale Certificates

6091. Presumption of taxability; resale certificate. For the purpose of the proper administration of this part and to prevent evasion of the sales tax it shall be presumed that all gross receipts are subject to the tax until the contrary is established. The burden of proving that a sale of tangible personal property is not a sale at retail is upon the person who makes the sale unless he takes from the purchaser a certificate to the effect that the property is purchased for resale.

Gross receipts.—Where a taxpayer's records show his receipts from sales to be substantially less than his disbursements, the difference, in the absence of explanation, is deemed to represent additional taxable sales. People v. Schwartz (1947) 31 Cal.2d 59.

Overcoming presumption.—Submission of questionnaires by taxpayer to its purchasers to establish that sales were for resale failed to rebut presumption of taxability in the absence of resale certificates. Honeywell, Inc. v. State Board of Equalization (1982) 128 Cal.App.3d 739.

"Retail sale" includes drop shipment under 6007.—Drop-ship rule in second paragraph of section 6007 is constitutional and is an alternative definition of "retail sale" and under section 6091, a seller must overcome the presumption that its sale is at retail, including a "retail sale" as defined by the drop shipment rule. Lyon Metal Products, Inc. v. State Board of Equalization (1997) 58 Cal.App.4th 906, cert. denied (1998) 141 L.Ed.2d 158.

6092. Effect of certificate. The certificate relieves the seller from liability for sales tax only if taken in good faith from a person who is engaged in the business of selling tangible personal property and who holds the permit provided for in Article 2 (commencing with Section 6066) of this chapter.

History—Stats. 1966, p. 176, in effect July 1, 1967, substituted "liability for sales tax" for "the burden of proof", added reference to section 6066, and deleted the last clause providing "and who, at the time of purchasing the tangible personal property, intends to sell it in the regular course of business or is unable to ascertain at the time of purchase whether the property will be sold or will be used for some other purpose."

6092.1. Lessors of mobile transportation equipment. Notwithstanding any other provision of law, any person, other than a person exempt from payment of use tax in accordance with Section 6352, who leases mobile transportation equipment and who cannot otherwise properly issue a resale certificate may issue such a certificate for the limited purpose of reporting his use tax liability based on fair rental value as provided in subdivision (d) of Section 6094 and subdivision (d) of Section 6244. With respect to matters arising out of mergers or acquisitions, the provisions of this section shall apply to any matters pending before the board on the effective date of this section.

History—Added by Stats. 1979, Ch. 1161, operative January 1, 1980.

6092.5. Presumption of taxability; vehicle auction or dismantler. (a) Every qualified person making any sale of a mobilehome or commercial coach required to be registered annually under the Health and Safety Code, or of a vehicle required to be registered under the Vehicle Code or 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, or of any salvage certificate vehicle as defined in Section 11515 of the Vehicle Code, is presumed to be making a sale at retail and not a sale for resale. The presumption may be rebutted by taking a resale certificate from any of the following:

(1) A person that certifies it is licensed, registered, regulated, or certificated under the Health and Safety Code or the Vehicle Code as a dealer or dismantler.

(2) A person that certifies it is licensed, registered, regulated, or certificated under the Business and Professions Code as an automotive repair dealer, or is qualified as a scrap metal processor as described in the Vehicle Code.

(3) A person that certifies it is licensed, registered, regulated, certificated, or otherwise authorized by another state, country, or jurisdiction to do business as a dealer, dismantler, automotive repairer, or scrap metal processor.

(b) A qualified person shall not accept a resale certificate from any person except as provided in subdivision (a).

(c) (1) In addition to the requirements of Sections 6093 and 6243, the certificate shall include the license or registration number of the dealer, dismantler, or automotive repair dealer, as applicable. If the purchaser is not required to hold a seller's permit because the purchaser makes no sales in this state, the purchaser must include on the certificate a sufficient explanation as to the reason the purchaser is not required to hold a California seller's permit in lieu of the seller's permit number. The certificate issued by a purchaser pursuant to this section shall be substantially in such form as the board may prescribe.

(2) A qualified person that does not timely obtain a resale certificate as provided in this section may use alternative methods as prescribed by the board to rebut the presumption provided in subdivision (a).

(d) For the purposes of this section, a "qualified person" means a person making a sale at auction or a dismantler licensed under the Vehicle Code.

History—Added by Stats. 2012, Ch. 756 (AB 2618), in effect September 29, 2012.

6093. Form of certificate. The certificate shall be signed by and bear the name and address of the purchaser, shall indicate the number of the permit issued to the purchaser, and shall indicate the general character of the tangible personal property sold by the purchaser in the regular course of business. The certificate shall be substantially in such form as the board may prescribe.

6094. Liability of purchaser; accommodation loans. (a) If a purchaser who gives a resale certificate makes any use of the property other than retention, demonstration, or display while holding it for sale in the regular course of business, the use shall be taxable to the purchaser under Chapter 3 (commencing with Section 6201) of this part as of the time the property is first used by him, and, except as provided in subdivisions (b), (c), and (d) of this section, the sales price of the property to him shall be the measure of the tax.

(b) If such use is limited to the loan of the property to customers as an accommodation while awaiting delivery of property purchased or leased from the lender or while property is being repaired for customers by the lender, the measure of the tax is the fair rental value of the property for the duration of each loan so made.

(c) If the property is used frequently for purposes of demonstration or display while holding it for sale in the regular course of business and is used partly for other purposes, the measure of the tax is the fair rental value of the property for the period of such other use or uses.

(d) If the property is mobile transportation equipment as defined in Section 6023, and the use is limited to leasing the equipment, the purchaser may elect to pay his use tax measured by the fair rental value, if the election is made on or before the due date of a return for the period in which the equipment is first leased. The election must be made by reporting tax measured by the fair rental value on the return for that period, or in such other manner as the board may prescribe. Tax must thereafter be paid with the return for each reporting period, measured by the fair rental value, whether the equipment is within or without the state. The election may not be revoked with respect to the equipment as to which it is made.

(e) As used in subdivision (d), the term "fair rental value" means the rentals required by the purchaser under the lease except where the board determines that such rentals are nominal. The term shall not include any reimbursement payments made by the lessee to the purchaser for such use tax.

History—Stats. 1953, p. 2460, in effect September 9, 1953, substituted "taxable to the purchaser under Chapter 3 of this part" for "deemed a retail sale by the purchaser" and "sales price of the property to him shall be the measure of the tax" for "cost of the property to him shall be deemed the gross receipts from such retail sale" in the first sentence, added the second sentence, and substituted "sales price" for "cost" in the last sentence. Stats. 1965, p. 5447 (First Extra Session) operative August 1, 1965, deleted last sentence providing, "if the sole use of the property other than retention, demonstration, or display in the regular course of business is the rental of the property while holding it for sale, the purchaser may elect to include in his gross receipts the amount of the rental charge rather than the sales price of the property to him." Stats. 1966, p. 176, in effect July 1, 1967, added reference to section 6201, and deleted the last sentence providing, "Only when there is an unsatisfied use tax liability on this basis shall the seller be liable for sales tax with respect to the sale of the property to the purchaser." Stats. 1967, p. 2061, in effect November 8, 1967, added most of the language of (b). Stats. 1968, p. 1999, in effect November 13, 1968, divided the former section into subdivisions, added the reference in (a) to subdivisions (b) and (c), added "or while property is being repaired for customers by the lender" to (b), and added (c). Stats. 1971, p. 3835, in effect December 16, 1971, operative January 1, 1972, substituted "subdivisions (b), (c), and (d)" for "subdivisions (b) and (c)" in first paragraph, and added subdivision (d). Stats. 1978, Ch. 1211, effective January 1, 1979, deleted the last sentence in subdivision (d): "The purchaser's use tax liability may not be charged to the lessee as separately stated tax or tax reimbursement." Stats. 1980, Ch. 1352, effective September 30, 1980, added (e).

Commingling property purchased with property produced by purchaser.—An oil company which purchases crude oil for resale and commingles it with crude oil of its own production, refines the mixture and uses a portion thereof in its own business, is liable for the tax upon that proportion of the refined product so used by it which is equal to the proportion that the purchased crude oil bears to the total crude oil refined. Union Oil Co. v. Johnson (1943) 58 Cal.App.2d 636. See, however, Sections 6095 and 6245, as to the application of the tax on and after July 1, 1943.

Out-of-state contractors.—Where tangible personal property purchased under a resale certificate in this state undergoes fabrication in this state for use in performing a construction contract, the puchaser is subject to tax under this section, as it existed prior to 1953, even though the job site is located out of state. Levine v. State Board of Equalization (1956) 142 Cal.App.2d 760. But see Section 6386 for present law.

Property Treated as Depreciable Assets.—Horses held for resale were subject to use tax when capitalized and treated as depreciable assets for income tax purposes. McConville v. State Board of Equalization (1978) 85 Cal.App.3d 156 (as modified, 85 Cal.App.3d 1032a).

6094.1. Leases; election to pay use tax. If a purchaser acquires property in a transaction described in subdivision (a) of Section 6006.5 and leases such property, the purchaser may elect at the time the property is first leased by him, after the effective date of this section, to pay use tax measured by the purchase price of the property. Purchaser shall include a transferee who acquires property in a transaction which qualifies under the provisions of subdivisions (b) of Section 6006.5 and, for purposes hereof, the purchase price of the transferee shall be the same as that paid by the original purchaser.

History—Added by Stats. 1966, p. 192, in effect April 26, 1966, operative as to all transactions occurring after July 1, 1965 (except that retroactive operation shall not affect the state's right to any tax which vested prior to the effective date).

6094.5. Improper use of certificate. Except as provided in Sections 6012.8 and 6012.9:

(a) Any person, including any officer or employee of a corporation, who gives a resale certificate for property which he or she knows at the time of purchase is not to be resold by him or her or the corporation in the regular course of business for the purpose of evading payment to the seller of the amount of the tax applicable to the transaction is guilty of a misdemeanor punishable as provided in Section 7153.

(b) Any person, including any officer or employee of a corporation, who gives a resale certificate for property which he or she knows at the time of purchase is not to be resold by him or her or the corporation in the regular course of business is liable to the state for the amount of tax that would be due if he or she had not given such resale certificate. In addition to the tax, the person shall be liable to the state for a penalty of 10 percent of the tax or five hundred dollars ($500) whichever is greater, for each purchase made for personal gain or to evade the payment of taxes.

History—Added by Stats. 1953, p. 3384, in effect September 9, 1953. Stats. 1977, Ch. 607, operative January 1, 1978, numbered existing first paragraph as (a), and added new paragraph (b). Stats. 1980, Ch. 1149, operative January 1, 1981, added "Except as provided in Sections 6012.8 and 6012.9:". Stats. 1984, Ch. 512, effective July 17, 1984, added "or her" after "him" in (a), added "or her" after "him" and "or she" after "he" in (b), added last sentence in (b). Stats. 1984, Ch. 1490, effective September 27, 1984, added "including … corporation" after "any person" and "or the corporation" after "her" in (a) and (b), added "punishable as provided in Section 7153" at end of (a), substituted "such" for "the" after "given" in (b), and deleted comma after "($500)" in (b).

6095. Resale certificate; fungible goods. If a purchaser gives a certificate with respect to the purchase of fungible goods, or purchases those goods for resale in the regular course of business, and thereafter commingles these goods with other fungible goods not so purchased but of such similarity that the identity of the constituent goods in the commingled mass cannot be determined, sales from the mass of commingled goods shall be deemed to be sales of the goods so purchased until a quantity of commingled goods equal to the quantity of purchased goods so commingled has been sold. Goods removed from the commingled mass for consumption shall be deemed to be a consumption of goods not so purchased until a quantity of commingled goods equal to the quantity of goods not so purchased has been consumed.

History—Added by Stats. 1943, p. 2455, operative July 1, 1943. Stats. 1983, Ch. 377, in effect January 1, 1984, added "or purchase … business," after the first "goods" in the first sentence, and added the second sentence.

Article 4. Inclusion of Support Services in Sales Tax*

* Article 4 was added by Stats. 2010, Ch. 725 (AB 1612), in effect October 19, 2010, but operative if and when specified federal approval is granted.

6150. Definitions. For purposes of this article, notwithstanding any provision of Chapter 1 (commencing with Section 6001), the following words have the following meanings in extending the sales tax to support services:

(a) "County" means a county, city and county, or a public authority or nonprofit consortium, as defined in Section 12301.6 of the Welfare and Institutions Code.

(b) "Gross receipts" means the total amount of the sales of a provider, valued in money, whether paid in money or otherwise, without any deduction for the cost of materials used, any costs of transportation of the provider, or any other expenses. "Gross receipts" shall not include a supplementary payment received by a provider pursuant to Section 12306.6 of the Welfare and Institutions Code.

(c) "Personal care services" means (1) assistance with ambulation, (2) bathing, oral hygiene, and grooming, (3) dressing, (4) care and assistance with prosthetic devices, (5) bowel, bladder, and menstrual care, (6) repositioning, skin care, range of motion exercises, and transfers, (7) feeding and assurance of adequate fluid intake, (8) respiration, and (9) assistance with self-administration of medications.

(d) (1) "Provider" means a natural person who is authorized by law to provide all of the support services defined in subdivision (i) and who makes a retail sale.

(2) "Provider" also means a nongovernmental person that arranges for the retail sale of all support services defined in subdivision (i). When this definition applies, any natural person described by paragraph (1) who provides services under the direction of the nongovernmental person is not a provider.

(e) "Recipient" means a natural person who receives support services.

(f) "Retail sale" means a sale to a recipient.

(g) "Sale" means the furnishing of support services for a consideration.

(h) "Seller" includes the State Department of Social Services in its capacity as the state agency that oversees the In-Home Supportive Services program, or a county in which county staff serve as homemakers pursuant to Section 12302 of the Welfare and Institutions Code in those instances where the department is not the seller, or a county that contracts with a nongovernmental contractor to arrange for the retail sale of support services to eligible recipients pursuant to Section 12301.6 or 12302 of the Welfare and Institutions Code, or any other nongovernmental person that arranges for the retail sale of support services, wherever located.

(i) "Support services" means the following services provided by a provider:

(1) Domestic services and services related to domestic services.

(2) Heavy cleaning.

(3) Personal care services, as defined in subdivision (c).

(4) Accompaniment when needed during necessary travel to health-related appointments or to alternative resource sites.

(5) Yard hazard abatement.

(6) Protective supervision.

(7) Teaching and demonstration directed at reducing the need for other supportive services.

(8) Paramedical services that make it possible for the recipient to establish and maintain an independent living arrangement, including those necessary paramedical services that are ordered by a licensed health care professional who is lawfully authorized to do so, which persons could provide for themselves but for their functional limitations. Paramedical services include the administration of medications, puncturing the skin, or inserting a medical device into a body orifice, activities requiring sterile procedures, or other activities requiring judgment based on training given by a licensed health care professional.

6151. Imposition and rate of sales tax. (a) Beginning on the date for which the federal Centers for Medicare and Medicaid Services approves implementation of the state plan amendment described in subdivision (c) of Section 12306.6 of the Welfare and Institutions Code, but no earlier than July 1, 2012, for the privilege of selling support services at retail, the sales tax is hereby extended to all providers at the rate, as described in subdivision (b), of the gross receipts of any provider from the sale of all support services sold at retail in this state.

(b) The rate extended by subdivision (a) is the rate, as may be amended from time to time, imposed by Article 1 (commencing with Section 6051) plus the rate imposed by Section 35 of Article XIII of the California Constitution for the privilege of selling tangible personal property at retail in this state.

(c) Notwithstanding the implementation date of this article as provided for in subdivision (a), no tax shall be collected pursuant to this article prior to the receipt of approval by the federal Centers for Medicare and Medicaid Services of the implementation of Section 12306.6 of the Welfare and Institutions Code.

History—Stats. 2012, Ch. 47 (SB 1041), in effect January 1, 2013, substituted "2012" for "2010" after "than July 1," in subdivision (a).

6152. Registration of sellers. For the efficient administration of this article and the collection of tax from providers, a seller shall register with the board, collect the tax from the provider, and report and pay the tax to the board.

6154. Prepayment exception. For the efficient administration of this article and the collection of tax from providers, Article 1.1 (commencing with Section 6470) of Chapter 5, pertaining to prepayment of taxes, shall not apply to sellers until no later than three months after the date that federal approval is obtained pursuant to subdivision (c) of Section 12306.6 of the Welfare and Institutions Code.

6156. Application for permit. A seller shall file with the board an application pursuant to Section 6066, which shall state that the applicant will actively engage in arranging for the retail sale of support services.

6158. Issuance of permit. After compliance by the seller with Section 6156 and by the seller and the board with Section 6067, the board shall grant and issue a permit or permits to each applicant pursuant to Section 6067, except that the board shall grant and issue a single permit to the State Department of Social Services without regard to its multiple places of business.

6160. Inactive permit. A permit issued pursuant to this article shall be held only by a seller that is actively engaged in arranging for the retail sale of support services. Any seller not so engaged shall forthwith surrender its permit to the board for cancellation. The board may revoke the permit of a seller found to be not actively engaged in arranging for the retail sale of support services.

6162. Seller as retailer. For purposes of Section 6486, a seller is a retailer.

6164. Records. Every provider and seller shall keep any records, receipts, invoices, and other pertinent papers in such form as the board may require.

6166. Examination of records. The board, or any person authorized in writing by the board, may examine the books, papers, records, and equipment of any seller or provider, and may investigate the character of the business of the seller, pursuant to Section 7054.

6168. Personal Care IHSS Quality Assurance Revenue Fund. Notwithstanding Section 7101, all revenues, less refunds, derived from the taxes extended by this article shall be deposited in the State Treasury to the credit of the Personal Care IHSS Quality Assurance Revenue Fund, which is hereby created. Notwithstanding Section 13340 of the Government Code, the money in the fund is continuously appropriated, without regard to fiscal years, to the State Department of Social Services for disbursement in the manner, and for the purposes, set forth in Section 12306.6 of the Welfare and Institutions Code. All interest or other increment resulting from investment or deposit of moneys in the fund shall be deposited in the fund, notwithstanding Section 16305.7 of the Government Code.

6170. Operative date of article. (a) (1) This article shall become operative only if federal Medicaid approval sought by the Director of Health Care Services pursuant to paragraph (1) of subdivision (c) of Section 12306.6 of the Welfare and Institutions Code is granted.

(2) If approval is granted as described in paragraph (1), within 10 days of that approval the Director of Health Care Services shall notify the State Board of Equalization, and the fiscal and appropriate policy committees of the Legislature, of the approval pursuant to paragraph (3) of subdivision (c) of Section 12306.6 of the Welfare and Institutions Code.

(b) The Department of Finance shall notify the board, within 10 days of the final decision, of a final decision by the California Supreme Court or any California Court of Appeal that the revenues collected pursuant to this article that are deposited in the Personal Care IHSS Quality Assurance Revenue Fund are "General Fund revenues which may be appropriated pursuant to Article XIII B" or "General Fund proceeds of taxes appropriated pursuant to Article XIII B" as used in subdivision (b) of Section 8 of Article XVI of the California Constitution, without regard to the validity of this section. This article shall become inoperative on the first day of the next calendar quarter following 30 days after the date of that final decision.

6172. Repeal of article. This article shall remain in effect only until the January 1 following the date the tax extended by this article becomes inoperative pursuant to subdivision (b) of Section 6170, and as of that date is repealed.

Article 5. Inclusion of Medi-Cal Managed Care Plans in Sales Tax*

* Article 5 was added by Stats. 2013, Ch. 33 (SB 78), in effect June 27, 2013.

6174. Definitions. For purposes of this article, notwithstanding any provision of Chapter 1 (commencing with Section 6001), the following words have the following meanings in extending the sales tax to sellers of Medi-Cal health care services:

(a) "Gross receipts" means the total amount received by a seller of a Medi-Cal managed care plan in premium or capitation payments for the coverage or provision of all health care services, including, but not limited to, Medi-Cal services. "Gross receipts" shall not include amounts received by a Medi-Cal managed care plan pursuant to a subcontract with a Medi-Cal managed care plan to provide health care services to Medi-Cal beneficiaries.

(b) "Seller" means any person, other than an insurer as described in Section 12003 or a dental managed care plan as described in Section 14087.46 of the Welfare and Institutions Code, or any entity that enters into a contract with the State Department of Health Care Services pursuant to Article 2.7 (commencing with Section 14087.3), Article 2.8 (commencing with Section 14087.5), Article 2.81 (commencing with Section 14087.96), Article 2.82 (commencing with Section 14087.98), Article 2.9 (commencing with Section 14088), or Article 2.91 (commencing with Section 14089) of Chapter 7 of, or pursuant to Article 1 (commencing with Section 14200) or Article 7 (commencing with Section 14490) of Chapter 8 of, Part 3 of Division 9 of the Welfare and Institutions Code.

(d) "Sale" means the provision of a Medi-Cal managed care plan.

6175. Imposition and rate of tax. Notwithstanding any other provisions in this part, for the privilege of selling Medi-Cal health care services at retail, a tax is hereby extended to all sellers of Medi-Cal managed care plans at the rate of 3.9375 percent of the gross receipts of any seller from the sale of all Medi-Cal managed care plans sold at retail in this state.

6176. Registration of sellers. For the efficient administration of this article and the collection of tax from sellers, a seller shall register with the State Board of Equalization and report and pay the tax to the State Board of Equalization, which shall collect the tax.

6177. Prepayment exception. For the efficient administration of this article and the collection of tax from sellers, Article 1.1 (commencing with Section 6470) of Chapter 5, pertaining to prepayment of taxes, shall not apply to sellers until no later than three months after the date that federal financial participation is available and any necessary federal approvals have been obtained.

6178. Application for permit. A seller shall file with the board an application pursuant to Section 6066, which shall state that the applicant will actively engage in the retail sale of Medi-Cal health care services.

6179. Issuance of permit. After compliance by the seller with Section 6178 and by the seller and the board with Section 6067, the board shall grant and issue a permit or permits to each applicant pursuant to Section 6067.

6180. Inactive permit. A permit issued pursuant to this article shall be held only by a seller that is actively engaged in the retail sale of Medi-Cal health care services. Any seller not so engaged shall forthwith surrender its permit to the board for cancellation. The board may revoke the permit of a seller found to be not actively engaged in the retail sale of Medi-Cal health care services.

6181. Seller as retailer. For purposes of Section 6486, a seller is a retailer.

6182. Records. Every seller shall keep any records, receipts, contracts, and other pertinent papers in such form as the board may require.

6183. Examination of records. The board, or any person authorized in writing by the board, may examine the books, papers, records, and equipment of any seller, and may investigate the character of the business of the seller, pursuant to Section 7054.

6184. Disposition of proceeds. Notwithstanding Section 7101, all revenues, less refunds, derived from the taxes extended by this article shall be deposited in the State Treasury to the credit of the Children's Health and Human Services Special Fund. Funds deposited in the Children's Health and Human Services Special Fund pursuant to this section are hereby continuously appropriated to the State Department of Health Care Services solely for purposes of funding managed care rates for health care services for children, seniors, persons with disabilities, and dual eligibles in the Medi-Cal program that reflect the cost of services and acuity of the population served. The State Department of Health Care Services shall provide a quarterly reconciliation of tax revenue utilization to Medi-Cal managed care plans including an itemized accounting of the dollars as a part of the ratesetting process.

6184.5. No local taxing authority. Notwithstanding the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200)), the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251)), and Part 1.7 (commencing with Section 7285), no county, city, or district shall impose a sales or use tax on the gross receipts defined in Section 6174.

6185. Controller's use of funds. Notwithstanding any other law, the Controller may use the funds in the Children's Health and Human Services Special Fund for cashflow loans to the General Fund as provided in Sections 16310 and 16381 of the Government Code.

6186. Monthly capitation payments. A seller subject to the tax imposed pursuant to this article shall be assessed the amount the seller will be required to pay, but the seller shall not be required to pay the tax if the State Department of Health Care Services has not fulfilled its obligations to provide actuarially sound, monthly capitation payments to the seller, which are certified as actuarially sound by State Department of Health Care Services' actuaries or contracted actuaries.

6187. Implementation of article. This article shall be implemented only if and to the extent that federal financial participation under Title XIX of the federal Social Security Act (42 U.S.C. 1395 et seq.) is available and any necessary federal approvals have been obtained. This article is automatically repealed if it is delayed based upon a challenge under federal law.

6188. Force or effect of article. This article shall have no force or effect if there is a final judicial determination made by any state or federal court that is not appealed, in any action by any party, or a final determination by the administrator of the federal Centers for Medicare and Medicaid Services, that disallows, defers, or alters the implementation of this article.

6189. Operative date of article. This article shall be operative on July 1, 2013, and shall become inoperative on July 1, 2016. As of January 1, 2017, this article is repealed. A tax imposed by this article shall continue to be due and payable until the tax is paid.

Laws, Regulations and Annotations

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Business Taxes Law Guide—Revision 2024

Sales and Use Tax Law

Revenue and Taxation Code

Division 2. Other Taxes Part 1. Sales and Use Taxes Chapter 2. The Sales Tax

Article 1. Imposition of Tax

Article 2. Permits

Article 3. Presumptions and Resale Certificates

Article 4. Inclusion of Support Services in Sales Tax

Article 5. Inclusion of Medi-Cal Managed Care Plans in Sales Tax

California Constitutional Provision

Article 2. Permits

Article 3. Presumptions and Resale Certificates

Article 4. Inclusion of Support Services in Sales Tax*

Article 5. Inclusion of Medi-Cal Managed Care Plans in Sales Tax*

Division 2. Other Taxes
Part 1. Sales and Use Taxes
Chapter 2. The Sales Tax