Bill Text: CA AB1072 | 2017-2018 | Regular Session | Amended

California Assembly Bill 1072 (Prior Session Legislation)

NOTE: There are more recent revisions of this legislation. Read Latest Draft

Bill Title: Sales and use taxes: exclusion: garment alterations.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2018-02-01 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB1072 Detail]

Download: California-2017-AB1072-Amended.html

Amended IN Assembly March 21, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill

No. 1072

Introduced by Assembly Member Brough

February 16, 2017

~~An act to amend Section 6006.6 of the Revenue and Taxation Code, relating to taxation.~~ An act to add Section 6018.11 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL'S DIGEST

AB 1072, as amended, Brough. ~~Sales and use taxes.~~ Sales and use taxes: consumer: garment alterations.

Existing sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. Those laws specify that certain sellers of tangible personal property are consumers, and not retailers, of the tangible personal property they sell. Existing law makes a person who received no more than 20% of his or her total gross receipts from the alteration of garments during the preceding calendar year a consumer of, and not a retailer with respect to, property used or furnished by that person in altering new or used clothing, provided that person meets specified conditions that include, among other things, that 75% or more of the person’s total gross receipts represent charges for garment cleaning or dyeing services.
This bill would provide that any person who performs the alteration of garments is a consumer of, and not a retailer with respect to, property used or furnished by that person in altering new or used garments, as provided, so that the retail sale subject to tax is the sale of tangible personal property to the person who performs the alteration.
The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes cities and counties to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and existing laws authorize districts, as specified, to impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which generally conforms to the Sales and Use Tax Law. Amendments to the Sales and Use Tax Law are automatically incorporated into the local tax laws.
Existing law requires the state to reimburse cities and counties for revenue losses caused by the enactment of sales and use tax exemptions.
This bill would provide that, notwithstanding these provisions, no appropriation is made and the state shall not reimburse cities and counties for sales and use tax revenues lost by them pursuant to this bill.
This bill would take effect immediately as a tax levy, but its operative date would depend on its effective date.
The Sales and Use Tax Law imposes taxes on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The law defines “sale” for the purposes of that law as including, among others, a sale at an auction with respect to tangible personal property sold to a successful bidder at the auction upon an agreement or understanding with specified terms.
~~This bill would make nonsubstantive changes to that definition.~~

Vote: MAJORITY Appropriation: NO Fiscal Committee: NOYES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

Section 6018.11 is added to the Revenue and Taxation Code, to read:

6018.11.
(a) Any person who creates or fabricates new garments to a customer’s specification or for retail sale is considered the retailer of those items and tax applies with respect to the sale of those items.
(b) Any person who performs the alteration of garments shall be considered the consumer of, and not a retailer within the provisions of this part with respect to, property used or furnished by that person in altering new or used garments, provided that all of the following apply:
(1) The alteration does not result in a new garment or different garment.
(2) The person was not the retailer of the new garment.
(3) The person performing the alterations does not have a formal agreement or informal agreement with a clothing retailer to perform alterations for the clothing retailer’s customers.
(c) Sales tax shall not apply to the charges for alterations specified in subdivision (b). However, that person is a retailer of any other tangible personal property sold to consumers in the regular course of business and sales tax shall apply to the gross receipts from those sales.
(d) For the purpose of this section:
(1) “Alteration” means mending, shortening, lengthening, taking in, letting out, adding or removing material, rearranging, restyling, or otherwise altering garments.
(2) “Formal agreement” means a contract to perform alterations of new garments for customers of the retailer.
(3) “Informal agreement” means a verbal or written agreement between a person or alteration establishment whereby the person or alteration establishment offers a discount or preferential pricing to alter new items for customers of the retailer.
(4) “New garment” means a garment that was not worn except for trying on or fitting.

SEC. 2.
Notwithstanding Section 2230 of the Revenue and Taxation Code, no appropriation is made by this act and the state shall not reimburse cities and counties for any sales and use tax revenues lost by them under this act.

SEC. 3.
This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. However, the provisions of this act shall become operative on the first day of the first calendar quarter commencing more than 90 days after the effective date of this act.

SECTION 1.Section 6006.6 of the Revenue and Taxation Code is amended to read:
6006.6.
“Sale” includes any sale at an auction in respect to tangible personal property that is sold to a successful bidder at the auction upon an agreement or understanding at the time of the sale that the property involved either will not be delivered to the successful bidder or that any amount that he or she may pay for the property pursuant to the sale will be returned to him or her. The tax shall be computed in such case upon the amount of the successful bid.