BILL NUMBER: AB 153 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 27, 2011
AMENDED IN ASSEMBLY MAY 27, 2011
INTRODUCED BY Assembly Member Skinner
( Coauthors: Assembly Members
Allen and Huffman )
( Coauthor: Senator Leno
)
JANUARY 18, 2011
An act to amend Section 6203 of the Revenue and Taxation Code,
relating to taxation.
LEGISLATIVE COUNSEL'S DIGEST
AB 153, as amended, Skinner. State Board of Equalization:
administration: retailer engaged in business in this state.
The Sales and Use Tax Law imposes 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,
measured by sales price. That law defines a "retailer engaged in
business in this state" to include retailers that engage in specified
activities in this state and requires every retailer engaged in
business in this state and making sales of tangible personal property
for storage, use, or other consumption in this state to register
with the State Board of Equalization and to collect the tax from the
purchaser and remit it to the board.
This bill would include in the definition of a retailer engaged in
business in this state any retailer entering into agreements under
which a person or persons in this state, for a commission or other
consideration, directly or indirectly refer potential purchasers,
whether by an Internet-based link or an Internet Web site, or
otherwise, to the retailer, provided the total cumulative sales price
from all sales by the retailer to purchasers in this state that are
referred pursuant to these agreements is in excess of
$500,000 within the preceding 12 months, except as specified
$10,000, within the preceding 12 months, and provided
further that the retailer has cumulative sales of tangible personal
property to purchasers in this state of over $500,000, within the
preceding 12 months, except as specified . This bill would
further provide that a retailer entering specified agreements to
purchase advertising is not a retailer engaged in business in this
state and would define a retailer to include an entity
affiliated with a retailer under federal income tax law, as
specified. This bill would further provide that these provisions
would not apply if the retailer can demonstrate that the referrals
would not satisfy specified United States constitutional
requirements, as provided .
This bill would provide that the provisions of this bill are
severable.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 6203 of the Revenue and Taxation Code is
amended to read:
6203. (a) Except as provided by Sections 6292 and 6293, every
retailer engaged in business in this state and making sales of
tangible personal property for storage, use, or other consumption in
this state, not exempted under Chapter 3.5 (commencing with Section
6271) or Chapter 4 (commencing with Section 6351), shall, at the time
of making the sales or, if the storage, use, or other consumption of
the tangible personal property is not then taxable hereunder, at the
time the storage, use, or other consumption becomes taxable, collect
the tax from the purchaser and give to the purchaser a receipt
therefor in the manner and form prescribed by the board.
(b) As respects leases constituting sales of tangible personal
property, the tax shall be collected from the lessee at the time
amounts are paid by the lessee under the lease.
(c) "Retailer engaged in business in this state" as used in this
section and Section 6202 means and includes any of the following:
(1) Any retailer maintaining, occupying, or using, permanently or
temporarily, directly or indirectly, or through a subsidiary, or
agent, by whatever name called, an office, place of distribution,
sales or sample room or place, warehouse or storage place, or other
place of business.
(2) Any retailer having any representative, agent, salesperson,
canvasser, independent contractor, or solicitor operating in this
state under the authority of the retailer or its subsidiary for the
purpose of selling, delivering, installing, assembling, or the taking
of orders for any tangible personal property.
(3) As respects a lease, any retailer deriving rentals from a
lease of tangible personal property situated in this state.
(4) (A) Any retailer soliciting orders for tangible personal
property by mail if the solicitations are substantial and recurring
and if the retailer benefits from any banking, financing, debt
collection, telecommunication, or marketing activities occurring in
this state or benefits from the location in this state of authorized
installation, servicing, or repair facilities.
(B) This paragraph shall become operative upon the enactment of
any congressional act that authorizes states to compel the collection
of state sales and use taxes by out-of-state retailers.
(5) (A) Any retailer entering into an agreement or agreements
under which a person or persons in this state, for a commission or
other consideration, directly or indirectly refer potential
purchasers of tangible personal property to the retailer, whether by
an Internet-based link or an Internet Web site, or otherwise,
provided that the total cumulative sales price from all of the
retailer's sales, within the preceding 12 months, of tangible
personal property to purchasers in this state that are referred
pursuant to all of those agreements with a person or persons in this
state, is in excess of five hundred thousand dollars ($500,000).
(B) This paragraph shall not apply if the retailer can demonstrate
that the person in this state with whom the retailer has an
agreement did not engage in referrals in the state on behalf of the
retailer that would satisfy the requirements of the commerce clause
of the United States Constitution.
(C) An agreement under which a retailer purchases advertisements
from a person or persons in this state, to be delivered on
television, radio, in print, on the Internet, or by any other medium,
is not an agreement described in subparagraph (A), unless the
advertisement revenue paid to the person or persons in this state
consists of commissions or other consideration that is based upon
sales of tangible personal property.
(D) Notwithstanding subparagraph (C), an agreement under which a
retailer engages a person in this state to place an advertisement on
an Internet Web site operated by that person, or operated by another
person in this state, is not an agreement described in subparagraph
(A), unless the person entering the agreement with the retailer also
directly or indirectly solicits potential customers in this state
through use of flyers, newsletters, telephone calls, electronic mail,
blogs, microblogs, social networking sites, or other means of direct
or indirect solicitation specifically targeted at potential
customers in this state.
(5) (A) Any retailer entering into an agreement or agreements
under which a person or persons in this state, for a commission or
other consideration, directly or indirectly refer potential
purchasers of tangible personal property to the retailer, whether by
an Internet-based link or an Internet Web site, or otherwise,
provided that both of the following conditions are met:
(i) The total cumulative sales price from all of the retailer's
sales, within the preceding 12 months, of tangible personal property
to purchasers in this state that are referred pursuant to all of
those agreements with a person or persons in this state, is in excess
of ten thousand dollars ($10,000).
(ii) The retailer, within the preceding 12 months, has total
cumulative sales of tangible personal property to purchasers in this
state in excess of five hundred thousand dollars ($500,000).
(B) An agreement under which a retailer purchases advertisements
from a person or persons in this state, to be delivered on
television, radio, in print, on the Internet, or by any other medium,
is not an agreement described in subparagraph (A), unless the
advertisement revenue paid to the person or persons in this state
consists of commissions or other consideration that is based upon
sales of tangible personal property.
(C) Notwithstanding subparagraph (B), an agreement under which a
retailer engages a person in this state to place an advertisement on
an Internet Web site operated by that person, or operated by another
person in this state, is not an agreement described in subparagraph
(A), unless the person entering the agreement with the retailer also
directly or indirectly solicits potential customers in this state
through the use of flyers, newsletters, telephone calls, e-mail,
blogs, microblogs, social networking sites, or other means of direct
or indirect solicitation specifically targeted at potential customers
in this state.
(D) For purposes of this paragraph, "retailer" includes an entity
affiliated with a retailer within the meaning of Section 1504 of the
Internal Revenue Code.
(E) This paragraph shall not apply if the retailer can demonstrate
that the person in this state with whom the retailer has an
agreement did not engage in referrals in the state on behalf of the
retailer that would satisfy the requirements of the commerce clause
of the United States Constitution.
(6) Notwithstanding Section 7262, a retailer specified in
paragraph (4) above, and not specified in paragraph (1), (2), or (3)
above, is a "retailer engaged in business in this state" for the
purposes of this part and Part 1.5 (commencing with Section 7200)
only.
(d) (1) For purposes of this section, "engaged in business in this
state" does not include the taking of orders from customers in this
state through a computer telecommunications network located in this
state which is not directly or indirectly owned by the retailer when
the orders result from the electronic display of products on that
same network. The exclusion provided by this subdivision shall apply
only to a computer telecommunications network that consists
substantially of online communications services other than the
displaying and taking of orders for products.
(2) This subdivision shall become inoperative upon the operative
date of provisions of a congressional act that authorize states to
compel the collection of state sales and use taxes by out-of-state
retailers.
(e) Except as provided in this subdivision, a retailer is not a
"retailer engaged in business in this state" under paragraph (2) of
subdivision (c) if that retailer's sole physical presence in this
state is to engage in convention and trade show activities as
described in Section 513(d)(3)(A) of the Internal Revenue Code, and
if the retailer, including any of his or her representatives, agents,
salespersons, canvassers, independent contractors, or solicitors,
does not engage in those convention and trade show activities for
more than 15 days, in whole or in part, in this state during any
12-month period and did not derive more than one hundred thousand
dollars ($100,000) of net income from those activities in this state
during the prior calendar year. Notwithstanding the preceding
sentence, a retailer engaging in convention and trade show
activities, as described in Section 513(d)(3)(A) of the Internal
Revenue Code, is a "retailer engaged in business in this state," and
is liable for collection of the applicable use tax, with respect to
any sale of tangible personal property occurring at the convention
and trade show activities and with respect to any sale of tangible
personal property made pursuant to an order taken at or during those
convention and trade show activities.
(f) Any limitations created by this section upon the definition of
"retailer engaged in business in this state" shall only apply for
purposes of tax liability under this code. Nothing in this section is
intended to affect or limit, in any way, civil liability or
jurisdiction under Section 410.10 of the Code of Civil Procedure.
SEC. 2. The provisions of this act are severable.
If any provision of this act or its application is held invalid, that
invalidity shall not affect other provisions or applications that
can be given effect without the invalid provision or application.