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Business Taxes Law Guide—Revision 2024
Transactions And Use Tax Law
Revenue and Taxation Code
Division 2. Other Taxes
Part 1.6. Transactions and Use Taxes
Chapter 4. Refunds of Unconstitutional Taxes*
Section 7276
7276. Tax credit procedures. Any taxpayers located in the jurisdiction in which an unconstitutional tax as described in subdivision (a) of Section 7275 was levied may claim a credit against their total amount of state and county sales or use tax as follows:
(a) An eligible taxpayer shall report sales and use taxes at the rates lawfully in effect in the county but may claim a credit against the total amount of state and local taxes, under rules to be promulgated by the board, in the amount of 0.75 percent. For the purpose of this section, "eligible taxpayer" means any person who resides in, or whose place of business is located in, the county in which the unconstitutional tax as described in subdivision (a) of Section 7275 was imposed, and who is required to report and pay sales tax under Chapter 2 (commencing with Section 6051) of Part 1 and any person required to report and pay or report and collect use tax under Chapter 3 (commencing with Section 6201) of Part 1.
(b) An eligible taxpayer who claims the credit provided in subdivision (a) shall remit to the board all reported tax moneys except those which represent the amount of the credit. Amounts reported, but not remitted under subdivision (a), shall be deemed to have been paid in full. Amounts not reported shall remain subject to assessment under Chapter 5 (commencing with Section 6451) of Part 1. The portion of those assessments representing this tax credit shall be paid from the reserve account provided by paragraph (2) of subdivision (d) of Section 7275.
(c) A taxpayer may not collect sales tax reimbursement pursuant to Section 1656.1 of the Civil Code nor use tax in an amount in excess of the amount required to be reported under subdivision (b) less amounts subject to credit under subdivision (a) during the period for which a credit is allowed. A receipt for use tax issued pursuant to Section 6202 in the amount of tax actually remitted to the board under subdivision (b) shall be sufficient to relieve the purchaser for further liability for the tax computed at the reporting rate.
(d) The tax credit provided by subdivision (a) may be claimed upon notice to eligible taxpayers by the board. That notice shall provide that the credit may be claimed commencing with those taxes due on the first day of the first calendar quarter commencing more than 120 days after the effective date of the act adding this section or after the court decision described in paragraph (a) of Section 7275 becomes final and unappealable, whichever occurs later.
(e) The tax credit shall continue until the board determines that the amount of impounded revenues held by the board and available to fund the revenue losses that result from the tax credit is insufficient to fund the tax credit for another full calendar quarter. Eligible taxpayers shall continue to take the credit on their returns until notified by the board that the credit is terminated.
* Chapter 4 was added by Stats. 1993, Ch. 1060, effective October 11, 1993.