HomeMy WebLinkAboutSB 107 (Walters) - Mandatory GratuitiesREQUEST:
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CITY OF PALM DESERT
COMMUNITY SERVICES DEPARTMENT
STAFF REPORT
CONSIDERATION OF LEGISLATIVE REVIEW COMMITTEE ACTION
ON SB 107 (WALTERS) AT ITS MEETING OF FEBRUARY 24, 2009
DATE: March 12, 2009
CONTENTS: SB 107 Language
RECOMMENDATION:
By Minute Motion, concur with the action taken by the Legislative Review Committee at its
meeting of February 24, 2009, and direct staff to prepare a letter of opposition for the Mayor's
signature with regard to SB 107 (Walters) relative to mandatory gratuity.
BACKGROUND:
The Sales and Use Tax Law imposes taxes on the gross receipts from the sale, storage, use or
consumption of tangible personal properties. If passed, this bill would exempt from sales and
use tax the gross receipts from mandatory gratuities, tips, or service charges that are charged to
a non-profit organization by a hotel, caterer, restaurant or similar establishment for meals, food
and/or beverages. The City of Palm Desert opposes any Legislative action which removes local
control from the manner in which it conducts its day to day business and which might impact
monies collected from local services and programs.
Therefore, the Legislative Review Committee recommends that the City Council oppose SB 107
and direct staff to prepare a letter stating that position to appropriate legislators and committees
for the Mayor's signature.
PATRICIA SCULLY, CFEE
SENIOR MANAGEMENT ALYST
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SHEILA R GILLIGAN
ACM/COMMUNITY SERVICES
CITY
API'
PAUL GIBSON
DIRECTOR OF FINANCE/CITY TREASURER
•
• ; N T. WOHLMUTH
Y MANAGER
• ]NCILACTION
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RECEIVED
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ABSENT: U L On
ABSTAIN: t C (V'.
VERIFIED BY: R�-36CCA
Original on File with City CIA's Office
State Net Bill Text
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2009 CA S 107
AUTHOR: Walters
VERSION: Introduced
VERSION DATE: 01/27/2009
SENATE BILL No. 107
INTRODUCED BY Senator Walters
JANUARY 27, 2009
An act to add Section 6363.4 to the Revenue and Taxation Code, relating to taxation, to take effect
immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
SB 107, as introduced, Walters. Sales and use taxes: exemption: nonprofit organization: mandatory
gratuities.
The Sales and Use Tax Law imposes a tax on the gross receipts from the sale in this state of, or the
storage, use, or other consumption in this state of, tangible personal property. That law provides various
exemptions from that tax.
This bill would exempt from sales and use tax, the gross receipts from the sale in this state of, and the
storage, use, or other consumption in this state of, a mandatory gratuity, tip, or service charge that is
charged to a nonprofit organization, as defined, by a hotel, caterer, restaurant, or similar establishment
for a meal, food, or beverages.
Counties and cities are authorized to impose local sales and use taxes in conformity with state sales
and use taxes. Exemptions from state sales and use taxes enacted by the Legislature are incorporated
into the local taxes.
Section 2230 of the Revenue and Taxation Code provides that the state will reimburse counties and
cities for revenue losses caused by the enactment of sales and use tax exemptions.
This bill would provide that, notwithstanding Section 2230 of the Revenue and Taxation Code, no
appropriation is made and the state shall not reimburse local agencies 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.
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State Net Bill Text Page 2 of 2
Vote: majority. Appropriation: no. Fiscal committee: yes. State -mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 6363.4 is added to the Revenue and Taxation Code, to read:
6363.4. (a) There are exempted from the taxes imposed by this part, the gross receipts from the sale in
this state of, and the storage, use, or other consumption in this state of, a mandatory gratuity, tip, or
service charge that is charged by a hotel, caterer, restaurant, or similar establishment, for a meal, food,
or beverages purchased by a nonprofit organization.
(b) For purposes of this section, "nonprofit organization" means an organization exempt from taxation
under Section 501(c)(3) or Section 501(c)(4) of the Internal Revenue Code.
SEC. 2. Notwithstanding Section 2230 of the Revenue and Taxation Code, no appropriation is made
by this act and the state shall not reimburse any local agency for any sales and use tax revenues lost by it
under this act.
SEC. 3. This act provides for a tax levy within the meaning of Article IV of the 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.
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